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Ski Cooper: battling with the big boys

Article by Allen Best

Ski industry – May 2001 – Colorado Central Magazine

IT WAS THE TUESDAY after Washington’s Birthd5ay Weekend, and the parking lot at Ski Cooper was nearly empty. “We might do 140 today,” Joe Fox was saying.

“When you have more employee cars than customer cars, you know you have a problem.

Seasonality plagues all ski areas. People arrive in droves at Christmas, then shrug off wonderful April skiing. This choppiness is extreme at Ski Cooper, a few miles north of Leadville at the top of Tennessee Pass, where 80% of the business occurs on weekends and holidays.

“It cost us $8,000 a day to operate the place,” explained Fox, general manager and president. “We lose money mid-week all the time. We depend upon our weekend business to even it out.”

Even so, the margin is razor thin. Every year Ski Cooper works furiously to stay in the black, only to fall even more behind larger ski areas. Owned by Lake County, which itself has skated on thin ice for most of the last 20 years, Ski Cooper has no capital for significant upgrades. The situation is worsening, and for several reasons.

First, skiing has become easier to do, thanks to technological refinements.

Snowboarding was the greatest change of recent decades. Riders can become proficient more rapidly than skiers. For various reasons, snowboarding caught the interest of the younger generation, which always comprises the largest number of people at a ski area.

A later technological twist was the introduction of shaped skis. Similar to snowboards, shaped skis make it easier for a person to ski on steeper slopes, and enjoy it. Even in the realm of free-heel skiing, something similar has occurred. Telemark-turners have broadly embraced the wider and shorter boards as well as high-plastic boots, which altogether give them more control.

These changes that make it easier to have good control are all relevant to Ski Cooper because, even before they arrived, it was an extraordinarily easy mountain to ski. “Steep” and “Ski Cooper” should never be used in the same sentence. Now, with these new wrinkles in sliding technology, it is less challenging yet. For many people, that means boring.

COOPER DOES HAVE A REPUTATION as a family ski area, but that reputation is for a narrow range of child-rearing years. Soon, Johnny wants the steeps, and so does Dad. “We can attract the mom and daughter, but we can’t attract the rest of the family,” says Clint Yant, vice president for operations.

Closely related is the small size of Cooper, just 400 acres. “You can ski that whole thing in a morning, and they say you usually need enough terrain to keep people’s interest for three days, the starting point for a destination resort,” says one knowledgeable source. That, combined with the fact that Cooper is within an hour’s drive of four of the largest ski areas in the country, gives Cooper thin appeal to destination visitors.

Second, the number of skiers flattened 20 years ago, about the time Baby Boomers (78 million of them) began having families. Gen X (45 million) was a bust numerically, and the Echo Boom Generation (73 million) isn’t far enough along in the pipeline to make a difference.

Colorado ski areas have defied this flat growth, but mostly at the big ski areas, where owners have invested heavily in new technology, particularly $2 million high-speed detachable quad lifts. That leaves few scraps for the little resorts. Except for one year, when a two-for-one promotion spiked numbers, Ski Cooper has steadily recorded 68,000 user days. If income per user day were rising steadily, to keep up with costs, that would be OK.

It’s not.

Third, the reason income per user is not rising is because of Colorado’s unprecedented price war. Everybody that competes for Front Range business is affected. Ski Cooper attributes 30% of its business to the Front Range.

WINTER PARK FIRED the first volley in this war, but may not be able to finish the war with deep-pockets competitors. First, there’s Vail Resorts Inc., which has Vail and Beaver Creek, plus Keystone and Breckenridge — and arguably, through a marketing alliance, Arapahoe Basin. The company offered unlimited skiing, from Nov. 1 to July 4th, at the three ski areas in Summit County, all for $250. For $50 more, you can ski at Vail and Beaver Creek 10 times. That’s $5 a day. The other deep-pocketed competitor is Intrawest, which owns Copper Mountain and in April was offering lift tickets for as low as $7.50 a day.

Ski Cooper, as well as other small areas, tried to respond. A season pass that several years ago cost $185 plunged to $99. Sales quadrupled, but daily ticket sales, despite some two-for-one offerings, have flagged. Ski Cooper officials decline to reveal revenue, but do say that skier days declined 14% in January and 9% in February.

How can these big resorts do it? There are several theories. First, they may be making enough in up-front revenue to recoup their losses in individual sales. Vail Resorts, for example, sold more than 100,000 of its cut-rate passes. Second, they might be recouping lost revenue through ancillary sales, such as food and rentals. Somebody skiing for very little might be more inclined to spend $9 for a cup of coffee and a bowl of soup.

Idaho’s Bogus Basin, which began the deep discounting on season passes three years ago, now reports overall greater revenues. However, its closest competitor is 125 miles away.

Kelly Ladyga, Vail Resorts spokeswoman, confirmed that the lower-priced sales have produced more ancillary business for such things as lodging and lessons, although not of real estate. It is, she said, “one example of our company’s commitment to begin to grow the sports long-term.”

In the world of skiing, the difference between Cooper and Copper is far more than a single letter. Copper Mountain admits its low skiing prices are intended to draw potential buyers to its new $66 million base village. “We’re trying to get people to come test drive this place, kick the tires, and if we can provide them a good experience, we think they will come back to Copper in the future,” explained Ben Friedland, Copper Mountain spokesman.

Real estate has been the big story at ski areas for most of a decade, and for several reasons. There’s the initial income on real estate, and then the commissions on resale of the condominiums. It also produces more people more likely to ski at a certain area in the future, regardless of the cost.

FINALLY, it draws people in summer, helping produce income from associated operations such as restaurants and knick-knack stores. Intrawest is highly skilled at this, and Vail Resorts only slightly less so.

What kind of big picture does this imply? Think of regions as they have grown in population and affluence. When a town gets big enough, Wal-Mart arrives and puts a half-dozen old establishments out of business. Denver has boomed like never before, but there are now fewer newspapers published each week, with advertising rates three or four times higher. Subscriptions, instead of selling for pennies, have become expensive.

Even before the Denver papers reached this truce, I was hearing warnings about the fallout from this skiing price war from Jerry Jones, the familiar “ski industry insider” identified in many news stories. Similar to the Denver newspaper wars, he sees havoc from ski areas selling their product at below-cost prices. The greatest threat is to small ski areas and to skiers themselves, who may well pay sharply higher prices once this price war is over.

Jones has been around. He started working at a ski resort as a 16-year-old busboy at Sun Valley. Immediately he decided it was more fun hanging around with “older women” (21-year-old women) than it was driving trucks of potatoes for his father 16 hours a day. He was at Snowmass in the late ’60s, then at Keystone from 1973 to 1986, followed by several years at Vail-Beaver Creek.

Over the years Jones has earned his stripes as a marketing strategist. He sees a dim market for skiing, but a bright market for mountain real estate. “I’d say it’s a slam dunk on the real estate. It’s a challenge on the ski side.”

THE IMPULSE toward mountain real estate is simple enough. Just as baby boomers once inspired growth in the ski industry of 10 to 20% a year, now they (and we) are planning to retire. That means 56 million people wanting second homes — homes away from the city and congestion. That has growing repercussions for Central Colorado, even Leadville, if more so in summer than winter.

And skiing? “We have not done a very good job of inviting all economics groups and minority groups into the sport, and certainly we haven’t taken advantage of the international opportunities.”

When it comes to this price war, Jones doesn’t see it specifically aimed at the small fry like Ski Cooper. “They (the big ski areas) have not set out to put them (small ski areas) out of business,” he says. “What they have set out to do is take market share.”

Focus on one figure, and one figure only, he instructs. Look at the average revenue per skier. Because of the price war, small ski areas have been forced to lower their average lift ticket prices ($24 average last year for Ski Cooper). For small ski areas, that’s all that matters.

“They have no other profit centers to speak of to make up for the loss in lift ticket revenues. They don’t own hotels. They don’t sell real estate. They don’t have property management companies. They don’t have retail.

“So the price war puts the little guy in grave danger, because not only might he lose his skier visits, but the ones he does get are at a lower price. He has no other means to capture those lost dollars,” says Jones.

Ultimately, adds Jones, big ski areas need small ski areas, to help groom new customers. And consumers need small ski areas tomorrow, to provide an alternative once prices at the big ski areas have gone up again.

At Ski Cooper, Joe Fox understands much of this, and you can’t blame him for feeling discouraged. And helpless. During the Martin Luther King holiday in January, his wife, Linda, went to DIA to pick up friends.

Returning on Saturday morning, they pulled off I-70 at Copper Mountain, along with a steady stream of other cars, many apparently lured by a two-for-one deal.. Orange traffic cones placed in Highway 91 assumed all cars were going to Copper Mountain, and none to Leadville or Ski Cooper.

“Just another thing I have no control over,” thought Fox, when he heard his wife’s report.

How can Ski Cooper get out of this corner? First, let’s find out more about how it got there.

COOPER IS ONE of the oldest ski areas in Colorado. The ski runs were cut in 1942 in preparation for training 10th Mountain ski troopers at nearby Camp Hale. After World War II, Lake County paid $1 for the lease to Copper Hill.

The T-bar that was originally installed remained in use in 1972, when it was replaced by the two-person lift that, with modifications last year, remains in operation.

That new lift in 1972 doubled skier days, to 40,000 per year. Another lift in 1983, coupled with expansion to daily operations, escalated the annual user count to nearly 68,000. It hasn’t budged since.

Lake County doesn’t want to incur long-term debt on Ski Cooper, so managers must upgrade as savings permit. Last summer Fox and his crew replaced the top and bottom drive terminals on that front-side lift, allowing it to move 500 feet a minute faster. Now, it moves half as fast as a high-speed detachable quad. That upgrade consumed seven years of savings. And for generations accustomed to 56k Internet access, the lift barely exceeds the speed of drying paint.

Fox wants expansion and a base village. By expanding, Ski Cooper could get some marginal black-run skiing, essential if the resort is to draw both Bart and Homer Simpson. As is, even many Arkansas Valley skiers are inclined to ski at Monarch or Copper Mountain, both with more varied terrain.

The improvements Fox envisions are basic, bringing Cooper more in line with Taos, his model for skiing as it should be. He has no use for expensive high-speed quads. Although Cooper is one of only three of Colorado’s 26 ski areas without snowmaking, that’s not on his wish-list. Too expensive, for starters. But he does see a need for expansion, “so we’re not fearing for our lives all the time.”

A new master plan completed last year envisions an expansion that includes four new and steeper runs and one new lift. As the land is federal, the law requires all disclosure of the many and varied impacts. That process of master planning cost $238,000. Actual expansion would cost much, much more, however, and could be 10 years off.

EVEN THEN, it’s minuscule compared to expansions currently underway along the I-70 corridor. “We’re talking about adding 45 acres, whereas Vail is adding 500 at a time,” says Anne Dougherty, Ski Cooper marketing director.

That brings us to the dearth of mid-week skiers. Base area real estate tends to produce more mid-week business, which is partly why Intrawest and Vail Resorts are making such a play for it. Aware of this, Lake County several years ago spent $1.5 million to buy the 1,159-acre Hollenbeck Ranch south of Leadville. The county hoped to exchange the land to the Forest Service for land adjacent to the ski area. Rough plans called for a mix of retail and residential, both of second homes and short-term lodging.

Lake County had some interest from developers. “Some names would be recognizable in the resort development industry,” says Mike Conlin, a consultant from Leadville who also helped put together the Mineral Belt trail.

Does this concept really make sense? Maybe, but maybe not. Wolf Creek engineered a land exchange a decade ago, and still hasn’t figured out the interest in a base village.

Lake County, however, didn’t even get that far. Land exchanges are often controversial, and exchanges that produce ski area developments are even more controversial. The EPA was showing unfriendly interest. On top of this was the chance that the development could impact migration of a threatened species, the Canada lynx, protected under the Endangered Species Act.

Although the federal government might have eventually said yes to the plan, Lake County feared greater scrutiny, as this would have been one of the first test cases. What they had optimistically predicted would cost $30,000 and require a nine-month environmental assessment promised to balloon into a more lengthy and expensive environmental review.

“Anytime there’s something new, it’s difficult being the first out of the chute,” says Conlin. The county decided to mothball the idea.

(Vail Associates had started planning work on its expansion into Blue Sky Basin, i.e. Category III, in 1986, and formally submitted the plan to the Forest Service in 1994. As such, it was five or six years ahead of Ski Cooper).

What else can Ski Cooper do? Jones, the marketing strategist, has pulled off many coups in his days. At Ski Cooper he sees real work.

“How in the hell are you going to compete with these other guys? Maybe Ski Cooper becomes the only black ski area in the United States, or Hispanic, or Japanese, or the all-nude ski area,” he says.

Like magazines, all ski areas have personalities and themes. Breckenridge is an old mining town and Steamboat a place for cowboy wannabes. Aspen is Democratic, full of actors and the nouveau rich from Manhattan and Los Angeles — an adult wonderland, rated R. Vail is Republican, Fortune 500 — more family oriented, conservative, and high-tech.

SO, HOW ABOUT a blatant pitch to religion? “A multi-denominational ski area with church services on weekends and no liquor,” suggests Jones. “There could be appeal in that, but it would take some thought and planning.”

That, incidentally, is something Monarch markets. Monarch appeals to church groups, religious schools, and wholesome Texas and Oklahoma youth groups who want to escape their temperate climes to play in the snow.

As for Cooper though, could it become a farm team for one of the major players? Fox explored that idea several years ago with an executive from Vail, but the executive moved on, and the idea was dropped.

Could Lake County sell it to a private individual or company? Perhaps, but anybody actually looking to make money might be better off investing in bonds.

Whatever the answer, Fox feels pinched hard. To retain employees, he needs to keep salaries competitive. The I-70 corridor resorts have boosted wages considerably, and although Fox can pay less, as workers don’t have to commute, he’s still had to boost wages by a buck or two an hour, and he would like to pay more. That means he needs more revenue, but he hasn’t been getting it.

IS IT ANY WONDER that he shows up for work in neither skiing clothes nor a sports jacket? After all, he also assists in janitorial work, parking cars, and occasionally even fixing snow cats.

“From what I’ve learned in four years, it’s just really scary,” says Jim Morrison, former Lake County commissioner. He sees Ski Cooper as being operated well, without frills, but needing a deep well of money to get modern.

Despite the fears, there are many people who believe that Ski Cooper will hang on. It does have many attributes, including remarkably consistent snow.

“As long as we don’t try to do something stupid, like stay open through April just because we have the snow, Ski Cooper can survive,” one community member familiar with operations said several years ago.

Jones allows slight optimism. Some ski areas can survive if they don’t fall into the trap of trying to solve every problem with a big-ski area solution.

And maybe the business cycle will loop around again.

A decade ago, the trend on the ski industry horizon was consolidation into megaresorts. But once that happened, Jerry Jones, who predicted that trend, started saying we should look for the break-up of the chains. That’s also happening, if not yet on the I-70 corridor.

Maybe, as boomers develop creakier knees, they will once again crave gentle slopes and snow that is actually soft, instead of ground down. Perhaps that sort of experience will be worth a premium someday.

Recently, a wave of nostalgia has resulted in houses and even shops along the I-70 corridor being built in the style of National Park Service lodges from a century ago. If that nostalgia persists, maybe there really will be throngs of people looking to indulge in skiing as it used to be. And for both better and worse, that old-fashioned ski experience is what Ski Cooper does best.

Allen Best skis all over the place, and has edited newspapers in Vail and Winter Park.