Jay Peak Auction Set for Wednesday, Sept. 7 – At Least 3 Bidders Will Participate
Jay Peak Auction Set for Wednesday, Sept. 7 – At Least 3 Bidders Will Participate
“It's highly likely that ... we'll know a lot more about our future ownership structure after Wednesday of this week” - Jay Peak General Manager Steve Wright, in a memo to staff
An auction for Jay Peak Resort in Vermont will take place on Wednesday, Sept. 7, The Storm Skiing Journal has learned.
In a memo sent to resort staff on Monday – provided to The Storm by a source with access to internal communications – General Manager Steve Wright confirmed that the resort has “introduced more potential buyers into the mix via resort tours, conference calls, and diligence requests” over the past several weeks. “Several more potential buyers” have put in deposits since Pacific Group Resorts tendered an initial offer of $58 million on Aug. 1.
At least three bidders, including Pacific Group Resorts, will participate in the auction, the source confirmed. Their identities may or may not be revealed prior to Wednesday’s auction, which is closed to the general public.
“While I can't get into specifics relating to who these new potential groups are, suffice to say they are all well capitalized, understand and believe in the vision we've developed, and, most importantly, understand how significant of a competitive advantage we have in our staff and team members,” Wright said in the memo. “It's highly likely that, as advertised, we'll know a lot more about our future ownership structure after Wednesday of this week.”
Jay Peak has been on the market for years, and the sale would end a long period of uncertainty for what is arguably New England’s best ski area. I summarized the whole ordeal last month:
…in 2008, a bonehead named Ariel Quiros purchased the resort from Canada’s Mont Saint-Sauveur, which had started an EB-5 visa program. Quiros continued this program. EB-5 is supposed to work like this: foreign investors can gain permanent residence for every half million dollars they commit to projects that create at least 10 jobs. More than 800 investors from more than 70 countries provided their $500,000 (or more). Quiros raised more than $450 million altogether. He promised to spend the money on things like a $110 million biotechnology center in Newport, Vermont. Instead, he spent tens of millions on things like luxury Manhattan apartments and back taxes. He also used the money to finance his purchases of Jay and Burke, a smaller Vermont ski area.
For a while, he got away with it. Then he didn’t. In 2016, a line of black Escalades pulled into the Jay Peak parking lot.
Quiros and several co-conspirators quickly found themselves in federal custody. Earlier this year, a federal judge, calling the scandal “the largest fraud” in Vermont history, sentenced Quiros to five years in prison and fined him $8.3 million. Bill Stenger, then Jay Peak president, and William Kelly, described by Vermont Digger as “a longtime friend and adviser to Quiros” each received 18-month sentences for their roles in the scandal.
So for the past five years, the federal government has effectively owned Jay Peak and Burke, under the supervision of court-appointed receiver Michael Goldberg. Precedent did not necessarily suggest a healthy outcome from this arrangement. In 2009, at the height of the Great Recession, a court-appointed receiver had shuttered Idaho’s Tamarack Resort. It was a rash and disastrous decision, one that cost the ski area a full season and, eventually, its Wildwood Express quad (which now stands at Brian Head, Utah). The ski area ultimately survived and replaced the lift, but it is still recovering, as Tamarack President Scott Turlington explained to me on the podcast in January. But Goldberg decided immediately to keep both Jay and Burke open. He has never wavered from this. It is an unsung moment in New England ski history. Had the two resorts closed, the implications for Northeast skiing could have been vast and brutal. Instead, skiers whose idea of news is the latest edit from Rolly McSickmore probably still have no idea that anything has been awry at Jay or Burke over the past six seasons.
But Jay has been for sale for years. Burke has drifted in a strange limbo, trying to satisfy EB-5 requirements prior to starting a sales process. In 2019, 15 bidders* submitted nonbinding offers to purchase the resort from between $38 million and $70 million, according to Vermont Digger. A tussle with the town of Jay ensued over the resort’s valuation, which the municipality had pegged at $121 million for property tax purposes. Jay argued that its true value was… $58.5 million. Which, when PGRI finally emerged as a potential buyer this week, was their starting offer.
That the resort did not collapse during this period of uncertainty is due, I wrote, largely to Wright’s leadership:
He has kept the resort open, kept morale high, and kept his head straight, even as Vail, Alterra, and the Epic and Ikon passes landed in Vermont; Covid reverse flip-kicked the ski industry into 2030; the Canadian border stayed locked down for most of two seasons, shutting out half of Jay’s traditional customer base; Vermont locked the state’s borders with the nation’s strictest travel restrictions in 2020; and labor shortages and inflation further complicated the operation of an already intricate ski area machine. He retrenched, started a popular seasonal rental program that could accommodate remote workers, joined the Indy Pass. Most important, he made the resort profitable.
“When the receiver took over the Jay Peak Resort in April, 2016, it was on the verge of collapse having little money and making very little profit,” documents submitted by Goldberg along with the PGRI bid read. “In fact, the receiver had many sleepless nights during the summer of 2016 wondering if he would be able to even make payroll. Now, after more than 6 years, the Jay Peak Resort is significantly more profitable and hundreds of jobs have been saved. The receiver attributes this success to his top-notch management team and the dedicated employees who work tirelessly to make Jay Peak one of the greatest ski resorts in the country.”
Read the full article here:
I will send updates on the identities of the bidders or the results of the auction as soon as I have them.
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