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A Fire Sale on Ice
Fifty-three percent of the skiers at Arizona Snowbowl drive up from metropolitan Phoenix--29 percent come from northern Arizona and the rest from elsewhere in Arizona and from California--and so it is not surprising that the man who heads the limited partnership that owns the resort is a Scottsdale businessman.
Eric Borowsky, 57, has a brandy-smooth voice and gray-haired good looks that recall the actor John Forsythe. He owns a pair of Valley companies that buy and sell and broker sales of apartment complexes. In 1992, he learned that Snowbowl, then called Fairfield Snow Bowl, was for sale.
"It was strictly an accident," he says. "I was looking at a [real estate] catalogue. We were actually looking at a hotel in San Diego that was going to be auctioned. And to my surprise, the Snowbowl was in the catalogue. I didn't even know it was for sale, and I'm fairly active in the Arizona real estate market."
Fairfield Communities, Inc., which owned hotels and resorts across the country, had filed Chapter 11, and was auctioning the property for a minimum bid of $4 million, a fire-sale price.
As ski-industry journalist Peter Shelton quips, "Four million is one chair lift at Vail--a relatively short one."
Borowsky had been a skier for most of his life and he had a second home in the Flagstaff area, and so he was familiar with the resort and intrigued that it was for sale. His research told him that the mountain got an average of 250 inches of snow and 125,000 skiers each year. Then he put together a limited partnership, raised $1.8 million as a down payment and financed the rest. He claims that the venture has been so profitable that he expects to retire the debt within the next two years. Between 1993 and 1995, according to Forest Service records, the resort reported sales of between $4.8 million and $5.8 million annually, and even last year, the worst snow year on record, it still grossed nearly $2.3 million.
"We don't buy anything unless it's a moneymaker," Borowsky says. "We looked at this as a business that had a very high return on investment and for the first three years the numbers were exactly right. And even in the fourth year, which would be called a disaster from a skiing standpoint, the business operated at break-even. This is going to be another excellent year."
Had Borowsky been in the ski business already, he might have turned the page of the real estate catalogue.
While Arizona Snowbowl was up for sale, bigger companies had come to take a look and turned away, uninterested, partly because it was clear that the Snowbowl would always look like skiing 30 years ago. Never mind the high altitude, the usually reliable snow and the ready labor source in Flagstaff, especially among the university students.
There was no room for expansion into the surrounding snow fields and no real estate to sell off aside from a scant 80 acres seven miles down the access road, and no chance of snowmaking because there's no water to make it with.
The national trend in the ski-area industry is toward consolidation. Vail built Beaver Creek, right up the road in Colorado, and then roared across Vail Pass to gobble up Keystone, which had already swallowed Breckenridge and Arapahoe Basin.
The trend is hardly limited to the megaresorts. Boyne in Michigan bought Big Sky, Montana; Brighton, Utah; and Crystal Mountain, Washington. Sun Valley, Idaho, owns Snow Basin, Utah. A former owner of Vail is buying areas in Washington and California and Wyoming. A ski-area operator in Maine has been systematically buying up resorts in New England.
And it has to do with spreading the liability should one resort suffer a snowless season, as happened in Arizona last year.
These are "areas that have an upside potential to them," says Mike McMenamy of the National Ski Areas Association. "You could feed one resort with another."
Arizona Snowbowl, however, is as upright isolated as the mountain it sits on, a 12,000-footer rising alone out of the desert. There are tiny ski hills in Williams and Tucson, and a large resort owned by the White Mountain Apache Tribe; little hope of synergy there.
McMenamy lumps Snowbowl in with what he describes as "southern" resorts, and he says they are "printing presses for money." But no mountain in North Carolina has elevations over 10,000 feet and the dry desert snow and vertical drop that can be had at those altitudes.
In fact, what are perceived as business weaknesses in the ski industry are Snowbowl's business strengths.
Without hotels and snowmaking, without the debt load of major investment, Borowsky contends, the resort's overhead is low.
"The other benefit over Aspen or Vail, is they have to import labor," he continues, "and it's very expensive for people to live around there, so the wages are higher. College students make up a large percentage of our employment and they're very flexible. They prefer to work only a few days a week so they can go to school and the main benefit to them is they get a ski pass."
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