Anyone who has observed how the owners of the Aspen Skiing Co. operate had to be flabbergasted last month when Jim Crown’s smiling face appeared in a series of full-page newspaper advertisements.To say that the Crowns have kept a low profile in the 19 years they have owned part or all of the company would be an understatement.The Crowns were 50-percent owners of the company from 1985 until 1993, when they bought out the other interests. Lester Crown and his seven children, as well as multiple members of the extended family, have a stake in the ownership. But as president of Henry Crown and Co., Jim Crown plays the most active role in running the Skico.Crown briefly appeared in public in Aspen in fall 1987 to help quell what was close to a community rebellion over the Skico’s pricing policies. But, by and large, he and his family have stepped back and let the upper management be the voice of the company.For Crown to emerge again this summer for ads, press conferences and community forums demonstrates just how important it is for the family to get the Base Village proposal approved in Snowmass Village.The town government has been reviewing a proposal from the Skico and its partner, resort developer Intrawest, since October 2003. The “village” plan features 64,000 square feet of retail space, 349 condominiums and 264 hotel rooms.The developers scaled back their plan in June in response to community criticism. But company representatives have insisted that there will be no more revisions – the Town Council must take or leave the proposal as it stands. That’s something Crown reiterated in a variety of forums last week.”We really need to know if this is going forward,” he said.Crown explained that he has stepped out of his usual background role to emphasize how badly the Skico wants – he says “needs” – this project. Without the village as a way to re-energize Snowmass and draw more tourists and skiers to the biggest of its four ski areas, he said, the Skico will be on a “trajectory to a less competitive ski company.”He lamented that the Skico and its partner on the Aspen Highlands Village project, the Hines development firm, compromised too much and reduced Highlands Village too drastically during the review by Pitkin County in the mid-1990s. The result was an economic disaster at the base of that ski area. Crown vowed that won’t happen again.But to make good on the vow, he knows the Skico needs to win over the hearts and minds of Snowmass Village residents. “We expect a referendum,” he said.In an interview with The Aspen Times last week, Crown discussed whether he now views his family’s decision to wholly buy the Skico in 1993 as a mistake, how the industry has changed in 11 years, whether the family would consider selling the Skico and the future of the industry.In 1993, when your family acquired 100 percent of the Aspen Skiing Co., did you see the direction the ski industry was going?In ’93 we talked about the ‘arms race,’ we talked about the new capital required in the industry. But we really thought that was where the analysis ended. We thought that if you put in a bunch of high-speed chairlifts, you would hold or build your customer base. We didn’t have a clear grip on demographics. We had a mild recession in the early ’90s, and we probably didn’t have that fully in front of us. And we clearly didn’t see the linkage between real estate and skiing.Would you still have acquired 100 percent of the company if you had seen the direction the industry was going?That’s hard to speculate on. We may well have felt we should have paid a lesser price than we did.I’ll answer your question a little differently – we absolutely didn’t achieve the numbers after ’93 that were the basis of our purchase decision. The numbers we were looking at for skiing and for profit after ’93 never happened.Will you ever get back to what the skier-visit records were?Oh, I sure hope so. I’ll give you two reasons why it’s possible, and let’s talk about 1.5 million skier visits across the four mountains. We had 1.5 million skier visits in 1997-98. Since then we have gotten more snowmaking, more lifts, more runs and a better ability to handle our guests once they get through the turnstile. So whatever this valley could handle in ’97-98 we can handle better now.The ski industry spent the better part of the 1990s wandering between 52 and 54 million skier visits per year. Since 2000 that number has jumped to 56 million. Last year it was 56.8 million. There is more demand for skiing, more echo boomers [children of the baby boomers] buying tickets, the snowboarding phenomenon is real, the X Games mean something, and there is demand for skiing over and beyond what there was in the ’90s.It’s not coming here. It’s going to Beaver Creek. It’s going to Whistler/Blackcomb. It’s going to the places that are more accommodating to families. It’s going to places with more fully developed base villages that can handle the nonskiing spouse, the shopping, the ease of getting out of your car and staying on foot for several days. It’s going to the places that are new and user friendly.The industry is in pretty good shape, all things considered, but we haven’t been able to participate in that.In a previous interview with The Aspen Times, in the 1990s, you said your family has ‘patient capital’ when it came to running the Aspen Skiing Co. What does that term mean, and are you still patient with the company?To me, being in the ski business requires certain things and one of them certainly is patient capital. To be in the ski business, you have certain variables you control – your grooming, your snowmaking, your lifts, your service, your ski school.You have certain variables you don’t control – the economy, the weather, the pricing and marketing behavior of your competition.Then you have certain variables you wish you could control, like the bed base.When a couple of those variables go wrong, people get washed out of business. You see that happen in a lot of ski areas that have had turnover. You see that in some places where they are thinly capitalized and you don’t have a real estate solution.You think of the ski [companies] that have tipped over – Booth Creek and American Skiing Company – and you think of the ones that have [sold] – Telluride, Crested Butte, Steamboat. At the root, the ownership didn’t really have staying power.Vail is rumored to be for sale. They had staying power. It’s just they’re probably done with their agenda there, and they’re ready to let someone else take it over.For us, we’re still going to take advantage of our stamina and take advantage of the fact that we didn’t need to put a lot of debt on this company. But we’re also trying to run it as best we can and for us that also requires a real estate component and a bed base.We’re trying now to bring a lot of capital to the town of Snowmass Village and front-end load that capital in uphill improvements, some $40 million plus in uphill improvements, and take the risk capital in the village. We hope to recover that through sales, and if we can build out the village and recover all that capital and re-energize Snowmass, we expect to see a lot more demand.We’re down to 700,000 skier visits from a peak of 900,000. We’re trying to get back to 900,000. We’re not trying to double what this mountain has ever seen. In fact, we’re frankly trying to get back to the good old days.If we do that, we’ll be satisfied from our returns from the skiing business, we’ll be comfortable that this is a competitive product. We’ll be able to hold onto this company as a good business and something providing a good return. That whole process takes patience. I just gave you a seven-to-10-year game plan with all the risk up front and all the benefit at the end. That’s what I would categorize as patient capital.Would you sell the Aspen Skiing Co. if Base Village doesn’t get approved?That’s such a heavy question, to which I really don’t have an answer. I will say two things: Whatever the likelihood of our selling may be – and we have no current plans to sell – it would be increased significantly with no Base Village. It would be hard to understand how we’re going to make a go of this without building back some of the bed base. We’ve gone from 16,000 beds (in Aspen and Snowmass Village) a decade ago to 13,600 now, while others have increased. We can’t afford to continue to keep running four mountains for a steadily dwindling population.Has the Aspen Skiing Co. been successful in the 11 years your family has wholly owned it?It’s been reasonably successful. I’d like to put it on a pass-fail grade rather than a letter grade, and it is certainly a pass. It’s a difficult business. I wish we generated more free cash, and it’s hard to do that without real estate. To me, free cash means cash that doesn’t get pulled right back into the business. It’s wonderful to have a profitable year, but if you have to turn right around and buy four new lifts and six new snowmaking pumps and a bunch of snowcats, then it was profitable for a moment and felt like break-even right after that.Was buying Aspen Highlands the right decision?You have to break it into Highlands the mountain and Highlands the village. Highlands the mountain – it was the right thing to buy it. We overpaid but it was the right thing to buy it because it helped us offer a portfolio of four mountains with unique personalities, and the sum is greater than the parts. We are thrilled, proud and excited into the future with what we were able to do with Highland Bowl and what we might be able to do with the Deep Temerity lift, because it is such a charming and fun place.Highlands the village just hasn’t worked out as we had hoped. We took too long in the [Pitkin County land-use review] process. We ended up taking a plan that was financially unsustainable. We have a wrong mix of retail in there.If I had Highlands to do over again, we really should have seen that we were overpaying, and I wish we would have done something totally different at the base, from a financial point of view. Robert Stearns is a wonderful architect, and the plaza is a lovely, fun place to be on a sunny day, but from an ownership perspective, a developer perspective, it isn’t what we hoped for.Any time somebody says real estate and Aspen in the same sentence, your mind goes to ‘Somebody just made a lot of money,’ right? Well, that is not a reasonable conclusion there.Did you take a serious look at acquiring Telluride or Crested Butte?Yes, we did. We looked very hard at Telluride. We think it’s a similar mountain environment to Aspen, and it’s somewhat of a kindred spirit in its history and its offering. We were burdened by knowing this industry very well and by preparing a financial pro forma and an indication of a bid that reflected our sense of the ski industry as we know it – and also our sense of what you had to go through to get real estate sold.The buyer was somebody who was interested in the sizzle and was interested in the trophy value of Telluride. We can’t and won’t compete on that basis. We wish them good luck. It’s a wonderful mountain. But it would have been financially irresponsible to compete at the level that thing ended up selling for.[Crested Butte] we studied less and didn’t get as far on.Is a four-mountain interconnect, a transportation gondola, something you ever want to pursue?Oh, I doubt that will ever happen. It is fundamentally a transportation solution, not a skiing amenity. It is hugely expensive and not without engineering difficulties. My sense of the community is it would be hard to approve and would not be funded with public monies. As a ski company, there is no way we could afford it, and I don’t see the compelling business need to do it. It’s nice to have, especially Snowmass to Buttermilk, frankly, but it’s hugely expensive without any visible effect on our skier visits.Are we in danger of fouling the area because of growth, including Base Village?I don’t mean to dismiss the question by saying I’m not concerned about this environment and keeping the quality we enjoy at high levels, but we are really talking about a partial restoration of lost beds, a partial restoration of lost skiers and with better roads, better parking, better lifts to handle them. So I just don’t see Base Village or any of the other additions that we’ve contemplated along the way materially stressing the system.Scott Condon’s e-mail address is email@example.com.
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