Vail Resorts on Wednesday announced it had entered a long-term lease to operate Canyons Resort ski area in Park City, Utah, further expanding the national reach of the largest resort operator in North America.
The 50-year lease — with six 50-year renewal options — gives Vail Resorts its 10th ski area in five states and its first in Utah.
Vail Resorts said the 4,000-acre Canyons will be included in the 2013-14 Epic Season Pass program.
In a deal with similarities to its long-term lease at California's Northstar and its resort-only acquisition of California's Kirkwood ski area, Vail Resorts takes over ski-area operations, and Utah's Talisker Corp. retains the right to develop 4 million square feet of real estate at the resort. Talisker, a Toronto-based, privately held real estate firm, recently completed $75 million in resort improvements at Canyons.
"It's pretty easy to see the value that this transaction immediately creates for so many skiers and riders," said Vail Resorts chief Rob Katz, whose Epic Pass now includes unlimited skiing at 10 ski areas in five states and free days in Switzerland and Austria.
Canyons sees about 450,000 skier visits a year. Katz told analysts in a conference call Wednesday that "it's hard to be profitable at that level."
He said his company's well-honed marketing and resort-operations machine will increase that number, earning Vail Resorts higher revenues.
The lease with Talisker has Vail Resorts paying at least $25 million a year, with increases based on inflation. Vail Resorts also will pay Talisker 42 percent of Vail Resorts' earnings over $35 million. Vail Resorts expects annual resort earnings from Canyons of about $15 million in fiscal 2014, increasing to $25 million in 2017.
In 2007, Vail sued to stop Talisker from acquiring Canyons from the broken American Skiing Co. for $100 million, accusing Talisker of conspiring to poach the sale despite an exclusivity deal. The lawsuit, filed in Denver District Court in July 2007, saw Vail Resorts up its bid from $100 million to $110 million and even later promise American Skiing almost a third of net proceeds from future real estate development.
"The Canyons, however, has been historically underdeveloped and underutilized in comparison to peer mountain resort properties," read Vail Resorts' complaint. "No other similar property development opportunity exists in North America, and it is rare in the mountain resort industry for such properties to come on the market, let alone property with build-out value estimated in the billions of dollars."
Jason Blevins: 303-954-1374, email@example.com or twitter.com/jasontblevins