I’ve held off on posting, for a few reasons. I could go on for pages, but I will not. I’ll just say that I have had a fair amount of involvement with Rob Katz since his Apollo PE days. My brother is a retired PE “big hitter”, and we {I think} understand it. Along with the ski business.
As part of a large and long active ski family, we have been really conflicted as investors in MTN, and in fact we’re now all out. As of this fall. Full disclosure, we are in on KSL.
MTN has been a great “roll up” model for in particular Rob Katz, his senior team and the organizations who hold most of the stock. Rob has coined enormous personal wealth as have many of his now and mostly former senior staff. A quick look at their bios will show that these are not “ski people.” Nor, really, is Rob. This is not a ski company. Not close.
My brother goes back to the Booth Creek days, and has been pitched, hard, many times. He’s a very serious skier, lots of experience and friends, but he has largely stayed away from VR as he felt so conflicted.
Years ago, he told me that while he did not think Katz was all that smart, he felt he was “absolute genius” in structuring this. I will not go into all of the weeds, but think of a few key factors:
1. Public Company, with really no similar competitors. Because all of the big firm NYC analysts following the stock also follow cruise lines, casinos, beach resorts, golf resorts, etc. nobody would really dig into this.
2. Katz and team put enormous effort into selling this group, who essentially make the market for the stock, on the fact that his Epic Pass was revolutionizing the industry in many positive ways..for all. So….they pretty quickly made Epic Pass Sales….the number sold {not even the $$$} the most important metric. All that mattered. “How are Epic Sales, Rob?”
2A. That is very unique. You can grow revenue a lot of ways. It has never really seemed to matter for MTN if it was organic growth, or by acquisition. Which seems odd. But then again, Katz was not some slimey casino guy…..he’s a Wall Street guy living the dream on the front range. So if he seriously overpays to get more passholders….that still works.
3. Obviously, you need to hit your numbers. As somebody now retired from a couple of C level public company jobs, and two stints in PE, I have never missed the Q EPS numbers….and did “a lot of quarter to quarter managing” to do so. Katz knows the game. Do not miss.
4. So we see these acquisitions that to skiers make NO SENSE if you really dig into them. The feeder mountain strategy only appeals to the clueless. We see and experience a long list of operating snafus…almost disasters. We see the old guard if real ski operators moved out. We see a lot of departments gutted and centralized. All standard stuff for a “roll up.” And we see huge problems with crowds.
5. We sell the analysts on this really being the experience of a lifetime. I wonder if any visit? If they do, they get ultra special treatment….like the most important guests ever, because they are.
So….Katz is no fool. He knows that at some point this gets ugly. He gets a bit of a hall pass with COVID. The potential future of weather in ski land is only discussed to the point where the brilliant Epic Pass protects them. ALL ABOUT EPIC NUMBERS.
They know full well that people are furious with Vail. The most furious are either thise who’s home mountain was acquired and now “just totally sucks.” Or, the big hitters who come to Vail, BC and others on their private jets, for a couple of weeks at Christmas as they always have….and now experience this total and complete shit show.
I have not checked Katz’s trading. As the non exec chair of the board, unloading piles of his holdings is not totally unusual. But, he knows.
Meanwhile the analysts start to open their eyes, maybe talk quietly amomg themselves. WTF is going on with MTN?
And MTN is ahead of it. Some COVID issues, serious shortage of employees, problems with the usual So. American workers, and….lousy weather, lack of snow. Huge lack of open terrain and lifts. Shitty grooming and snow. Mostly Omicron…… Lots of “reasons” to be sold.
There is much to be learned by the analysts, but again, it’s one sliver of what they cover. So how much do they care. Hell the stock has been a good one.
But WE don’t ski as investors. Conflicting goals.
I am not alone in thinking that Katz knew that the street would buy whatever he sold them, and that he could greatly influence things. And he sure did.
Was the VR internal focus on the ski experience, the ski product? Hmmm. Maybe not so much. ONLY to the extent that it had to be.
In terms of this looking like a big “ski company” run by “ski people” trying to win new customers, and keep the loyal others, by having a GREAT ski experience…I would say no chance. That’s where the Vail Sucks rants come from…deservedly so.
So you have Katz driving up until recently “The Ski Investment Experience of a Lifetime”….while the actual ski experience sure seems problematic. It is.
I know so many real long time, multigenerational ski families who these days pretty much hate skiing. Almost always crowd related. In every respect. Traffic, parking, the lodges, liftlines, crowded hills, packed lodges.
A friend in Stowe told me yesterday that he would “gladly” pay five times their current pass cost, or more, if he could roll the clock back.
Not sure where this is headed…..it sure is a mess. I would like to see the stock actually tank more, but I do not see how and when that improves the product.
If you’re on a call and the question is “How do we improve the experience and the product, and make MORE customers happy, while also keeping our financials solid and the stock price up?”
Good F’ing Question.
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