Let it Snow, Let it Snow, Let it Snow
from Winter 2000
by Randy Wyrick
As the 2001 ski season gets under way, nobody prays for snow more fervently than the 17 board members of Vail Resorts, a team best known for its prowess on Wall Street’s Grand Slalom. Among them: Leon Black, Marc Rowan, and Robert Katz (all principal partners of Apollo Advisors, which has a 21% stake in the company); Loews Corp. CEO James Tisch; Ralcorp Holdings President and CEO Joe Micheletto; and Frank Biondi, chairman and CEO of Biondi Reiss Capital Management.
Last season’s sparse snowfall not only chilled profits—they fell 68.8% from 1998, to $12.8 million, on revenues of $476 million—but was something of a personal affront to the directors. “Everyone on the board skis, and everyone is out there for extended vacations,” says Rowan, who includes himself in that description.
Moreover, in this age of multimillion-dollar pay packages for some directors (see page 70), Vail Resort’s board members don’t get paid at all. They don’t even get their own downtown parking spots, which would have been a great perk. Vail Resorts recently sold some heated indoor spaces for $50,000 a pop.
What keeps these directors flying their corporate jets into Vail Valley Jet Center is really pretty simple. They get treated like royalty, in a town where royalty is regularly sighted. The company picks up the tab for lift passes, restaurants, ski gear, and about everything else that goes with the territory. The Apollo partners have their own private condo. Lodging is free for directors who are in town for committee meetings—and all executive committee meetings are held in town. (The annual meeting takes place in New York City.)
Vail Resorts does demand that its directors be familiar with the product. “One of the problems you have with boards in general is that members are not informed,” says Katz, who serves on the executive committee. “Our philosophy is for our board members to be informed. That means becoming familiar with the lifts, the restaurants, the snowmaking, and even the crowding. They need to be discerning consumers.”
In addition to its ski areas in Beaver Creek, Keystone, Breckenridge, and Vail, the company also operates 12 hotels, many of them acquired over the past four years. The most recent: Grand Teton Lodge Company in Jackson Hole, Wyoming, its first summer resort. Apollo has stakes in many companies but, says Katz, “Vail Resorts is our favorite asset.”
All of this is a long way from 1962, the area’s first official ski season. Vail was a rough-and-tumble town with big dreams and dirt streets. Legend has it that the owners, mostly World War II veterans who first skied the Rockies while training in the famed 10th Mountain Division, used to put monthly bills into a hat, draw them out one at a time, and write checks until the money ran out. Any creditor who squawked was left out of the next drawing. In the 1970s President Gerald R. Ford put Vail on the map when he made it his Western White House.
Investor George Gillett purchased the resort in 1985. The story goes that Gillett had boarded a ski lift with financier Henry Kravis, who, in the 20 minutes it took to reach the top, convinced him to buy the place. Gillett propelled Vail into the No. 1 spot by adding high-speed quad lifts, expanding the ski school, and promoting it on his TV stations. When Gillett’s junk bond financing fell apart, raider Carl Icahn loomed as a possible owner. Instead, Apollo won control. Predators’ Ball, Barbarians at the Gate and other tales of junk bond knavery became hot reading among the locals.
For a while, Apollo considered turning a fast profit. Instead, the partners opted to stay, and in 1997 took the company public. Despite some upward blips, the stock was recently trading in the $20s, about where it started.
Given enough snow this season, the entire board of Vail Resort could meet together on the slopes—a first in company history. So far, no Directors’ Downhill is planned. But if it were, who’d win? Company president Andrew Daly, a recent inductee to the Skiing Hall of Fame, has the inside track.
