Taking a run at anti-trust law in the current legal environment is one way to signal to the world that you, too, are a gambler. I agree with Ken that is likely a fishing expedition, but not for settlement. I think they are looking for discovery, and hope to turn this into some other sort of litigation. Because I agree with Stuart that operators are under-estimating the consumer sentiment on price rise. I personally do not believe that snowsports are reserved for rich people, for two reasons. First off, there are not that many "rich" people, yet the mountains are allegedly always crowded. Second, anybody who has been on a slope and in a slope parking lot in the last ten years can see for themselves that there is tremendous variance in who's out there. But if you grew up skiing (like me), and now take your kids skiing because your parents took you skiing, then the conversation of "this has gotten way more expensive" is unavoidable.
Good analysis; as a lawyer and the skier I just don't see the anticompetitive effects. Indeed, not only do Alterra and Vail have to compete with each other (and to some extent Indy), both individual mountains as well as mountain companies, e.g., Boyne, Bear Den Partners, etc. have to compete with them (and each other) as well. As a New England skier, I've had the IKon and Indy passes since their inception. However, this year, due in part to Stuart's recent excellent analysis on the New England pass, my wife and I have decided not to renew our Ikon base passes opted instead for the New England Bronze Pass, giving us midweek access to Loon (a half mile down the street from our condo) as well as Sunday River and a road trip or two to the Loaf, and saving a couple of hundred bucks each in the bargain.
Stuart, appreciate your analysis on this. Not being an attorney, I can't comment intelligently on the legal merits of the case. But agree they have a very weak case if the court compares Epic and Ikon pass prices to historical single-resort season pass prices. And you pointed out that Epic already offers various local passes for Tahoe, Colorado, the Northeast, 4 resorts in Ohio, and several individual resorts including Afton Alps, Kirkwood, Wilmot, Keystone, Stevens Pass, etc.
If the plaintiffs can avoid historical season pass price comparisons, they could argue that there is no Epic pass to the specific bundle of destination resorts they want. Like maybe one customer wants Vail, Breck, Park City and Crested Butte without Keystone, Tahoe, the Northeast and the Midwest resorts. Or they could take that argument up against Ikon, which does not appear to offer any Ikon pass packages that cover specific combinations of Ikon resorts (just full and Base Pass bundles). They would then argue that buying the individual season passes from several Ikon resorts is prohibitively expensive. If the jury/judge somehow agree with the plaintiffs, Vail and Ikon can solve it simply by offering more regional pass options.
Or as you also mentioned, a more successful legal strategy might be to go after the high day ticket prices. I'm pretty sure that the practice of offering price discounts for advance purchase has never been ruled illegal, so just saying "Buy this pass in advance and get lower pricing" shouldn't be considered an illegal monopoly practice. But one could argue that Vail and Alterra are colluding to drive up both pass prices and day ticket prices. Not sure if a court will agree, but if I were filing a class action lawsuit, I'd probably go that way.
My assumption - and it is only an assumption - is that they considered basing the complaint on pricing, and then determined, based upon some precedent, that they would have better luck proceeding with the bundling argument. I’d be curious to hear what a lawyer thinks. They don’t like to be on the record 😂😂😂
Stuart, thanks for a great analysis! I think you're spot-on in cautioning about being careful what we wish for.
I'm not as convinced that this will be an easy win for Alterra and Vail, though. The class period (starting March 2022) seems chosen intentionally to highlight a big runup in megapass prices... the complaint shows +37% Epic price and +40% Ikon price during this timeframe, which is much faster than inflation. And the suit specifically calls out among its alleged harms the skyrocketing day ticket prices.
I'm a bit curious whether this might be a trial balloon for a much larger class action suit against the "vacation club" quasi-timeshare schemes, selling prepaid bundled hotel rooms while other units of the same companies keep raising individually-booked hotel room rates far faster than inflation. If they can establish the precedent that raising day lift ticket prices to encourage sales of a bundled product is anticompetitive, it seems an easy transfer to hotel rooms.
This is brilliant analysis and the cable / streaming analogy is key... Let's hope these fools don't get what they are really asking for... For example I really like my 3 days at Sunday River thrown in with my
all you can eat pass at Pleasant- The last thing I need is for the operator to "comply" by simply cutting the extra benefits...
To me, this appears to me no more than a fishing expedition by a group seeking a settlement payment to have them go away.
The mega passes are a great benefit to anyone planning to ski more than seven or so days a season. As you document, this results in season pass prices declining at all but a few areas. This reminds me of frivolous government regulation of big tech because they effectively reduced their costs of services to consumers to zero, thwarting competition. Only in America are lower prices anti-competitive. As Frederic Bastiat famously opined “the interests of the consumers are the interests of the human race.”
Using my ancient experience as a cost accountant, I find it interesting in this debate that no one asks what it costs to turn the lifts every day. In my early years as a CFO at a ski area, I took the time to determine the total cost, considering all factors: labor, materials, direct overhead, and indirect overhead. If you factor in the undetermined number of paying skiers by day, there are more days you lose money than make money based on pre-mega pass times pricing, both from passes and day tickets
So from my perspective, the argument that mega passes are overpriced, be careful what you ask for, because they are a super deal based on what the costs are. Yes, the lift ticket pricing is a bit over the top and reflective of the cost/person and does drive one to look at the alternative of buying a pass, but is that illegal?
I'm not a big fan of the corporate ski area structure, but not because of their pricing. It is more about the lack of local control and local vibe. Yeah, I know Alterra says they let the mountains run how they want, but that just isn't the way it is. Just ask the GM of an Alterra Mountain.
The pricing of these passes factors in the benefit to these companies of shifting a lot of risk onto their customers and improving their cashflow. The benefit of getting your money 6-9 months early is easy to measure.
Only the sellers of these passes have the data to show conclusively how much the risk angle helps them. We know that in a winter like the one the Rockies just experienced that Vail and Alterra do much better having sold these passes than if they had not sold them, but that isn't the only risk they're avoiding. Plans change, people get sick. They offer some "coverage" for season-ending injuries, but if you happen to get the flu the day you're supposed to go to Stowe for a week you are not getting your money back from Vail just because you bought a pile of Epic passes for your family that will no longer ski that many days at their resorts.
I personally have too many passes. Season pass to my small local hill that I get a ton of value out of. Aforementioned Epic pass that was my personal gift to the Vail skiing company this year. Ikon session pass for days skiing with my sister at Steamboat. If my season goes as planned my cost per day is pretty good, but if any of those risks I have taken on become a reality then I can wind up spending way more than I would have without Epic/Ikon.
PS None of this has to do with this lawsuit, which is absurd. If they win this suit we can sue every chain of fitness clubs that offers a national pass than includes lots if locations most members will never visit and plenty of other multi-location businesses that sell passes or memberships.
As a lawyer, I don't see this surviving Summary Judgment for the exact reasons you point out. As much as I am anti-Vail and pro-Indy, the epic pass is still cheaper than most season passes, and certainly the season pass at any destination resort. Aside from the facial weakness of the 'anticonsumer bundle pricing', there is also a clear business rationale to encouraging passes over individual lift tickets beyond unfairly maximizing profit; stability of revenue streams keeps mountains from going bankrupt of there's a year or two of bad winters.
Not surprised you and I agree. Again. Idiotic lawsuit. I would pick and nit and make the case that Vail has degraded the ski experience at several of their resorts, especially Park City and Whistler. Lousy operations and service, too damn many recreational skiers from Brooklyn. No complaints about any Alterra joint I've visited. If skiers couldn't get justice after the Vail melt down year ripped them off, there never will be justice. Oh, well. Bad snow year and I won't get my Ikon under 70 bucks a day. Sucks. I should sue.
Taking a run at anti-trust law in the current legal environment is one way to signal to the world that you, too, are a gambler. I agree with Ken that is likely a fishing expedition, but not for settlement. I think they are looking for discovery, and hope to turn this into some other sort of litigation. Because I agree with Stuart that operators are under-estimating the consumer sentiment on price rise. I personally do not believe that snowsports are reserved for rich people, for two reasons. First off, there are not that many "rich" people, yet the mountains are allegedly always crowded. Second, anybody who has been on a slope and in a slope parking lot in the last ten years can see for themselves that there is tremendous variance in who's out there. But if you grew up skiing (like me), and now take your kids skiing because your parents took you skiing, then the conversation of "this has gotten way more expensive" is unavoidable.
Good analysis; as a lawyer and the skier I just don't see the anticompetitive effects. Indeed, not only do Alterra and Vail have to compete with each other (and to some extent Indy), both individual mountains as well as mountain companies, e.g., Boyne, Bear Den Partners, etc. have to compete with them (and each other) as well. As a New England skier, I've had the IKon and Indy passes since their inception. However, this year, due in part to Stuart's recent excellent analysis on the New England pass, my wife and I have decided not to renew our Ikon base passes opted instead for the New England Bronze Pass, giving us midweek access to Loon (a half mile down the street from our condo) as well as Sunday River and a road trip or two to the Loaf, and saving a couple of hundred bucks each in the bargain.
Stuart, appreciate your analysis on this. Not being an attorney, I can't comment intelligently on the legal merits of the case. But agree they have a very weak case if the court compares Epic and Ikon pass prices to historical single-resort season pass prices. And you pointed out that Epic already offers various local passes for Tahoe, Colorado, the Northeast, 4 resorts in Ohio, and several individual resorts including Afton Alps, Kirkwood, Wilmot, Keystone, Stevens Pass, etc.
If the plaintiffs can avoid historical season pass price comparisons, they could argue that there is no Epic pass to the specific bundle of destination resorts they want. Like maybe one customer wants Vail, Breck, Park City and Crested Butte without Keystone, Tahoe, the Northeast and the Midwest resorts. Or they could take that argument up against Ikon, which does not appear to offer any Ikon pass packages that cover specific combinations of Ikon resorts (just full and Base Pass bundles). They would then argue that buying the individual season passes from several Ikon resorts is prohibitively expensive. If the jury/judge somehow agree with the plaintiffs, Vail and Ikon can solve it simply by offering more regional pass options.
Or as you also mentioned, a more successful legal strategy might be to go after the high day ticket prices. I'm pretty sure that the practice of offering price discounts for advance purchase has never been ruled illegal, so just saying "Buy this pass in advance and get lower pricing" shouldn't be considered an illegal monopoly practice. But one could argue that Vail and Alterra are colluding to drive up both pass prices and day ticket prices. Not sure if a court will agree, but if I were filing a class action lawsuit, I'd probably go that way.
My assumption - and it is only an assumption - is that they considered basing the complaint on pricing, and then determined, based upon some precedent, that they would have better luck proceeding with the bundling argument. I’d be curious to hear what a lawyer thinks. They don’t like to be on the record 😂😂😂
Stuart, thanks for a great analysis! I think you're spot-on in cautioning about being careful what we wish for.
I'm not as convinced that this will be an easy win for Alterra and Vail, though. The class period (starting March 2022) seems chosen intentionally to highlight a big runup in megapass prices... the complaint shows +37% Epic price and +40% Ikon price during this timeframe, which is much faster than inflation. And the suit specifically calls out among its alleged harms the skyrocketing day ticket prices.
I'm a bit curious whether this might be a trial balloon for a much larger class action suit against the "vacation club" quasi-timeshare schemes, selling prepaid bundled hotel rooms while other units of the same companies keep raising individually-booked hotel room rates far faster than inflation. If they can establish the precedent that raising day lift ticket prices to encourage sales of a bundled product is anticompetitive, it seems an easy transfer to hotel rooms.
Nuts
This is brilliant analysis and the cable / streaming analogy is key... Let's hope these fools don't get what they are really asking for... For example I really like my 3 days at Sunday River thrown in with my
all you can eat pass at Pleasant- The last thing I need is for the operator to "comply" by simply cutting the extra benefits...
To me, this appears to me no more than a fishing expedition by a group seeking a settlement payment to have them go away.
The mega passes are a great benefit to anyone planning to ski more than seven or so days a season. As you document, this results in season pass prices declining at all but a few areas. This reminds me of frivolous government regulation of big tech because they effectively reduced their costs of services to consumers to zero, thwarting competition. Only in America are lower prices anti-competitive. As Frederic Bastiat famously opined “the interests of the consumers are the interests of the human race.”
Using my ancient experience as a cost accountant, I find it interesting in this debate that no one asks what it costs to turn the lifts every day. In my early years as a CFO at a ski area, I took the time to determine the total cost, considering all factors: labor, materials, direct overhead, and indirect overhead. If you factor in the undetermined number of paying skiers by day, there are more days you lose money than make money based on pre-mega pass times pricing, both from passes and day tickets
So from my perspective, the argument that mega passes are overpriced, be careful what you ask for, because they are a super deal based on what the costs are. Yes, the lift ticket pricing is a bit over the top and reflective of the cost/person and does drive one to look at the alternative of buying a pass, but is that illegal?
I'm not a big fan of the corporate ski area structure, but not because of their pricing. It is more about the lack of local control and local vibe. Yeah, I know Alterra says they let the mountains run how they want, but that just isn't the way it is. Just ask the GM of an Alterra Mountain.
The pricing of these passes factors in the benefit to these companies of shifting a lot of risk onto their customers and improving their cashflow. The benefit of getting your money 6-9 months early is easy to measure.
Only the sellers of these passes have the data to show conclusively how much the risk angle helps them. We know that in a winter like the one the Rockies just experienced that Vail and Alterra do much better having sold these passes than if they had not sold them, but that isn't the only risk they're avoiding. Plans change, people get sick. They offer some "coverage" for season-ending injuries, but if you happen to get the flu the day you're supposed to go to Stowe for a week you are not getting your money back from Vail just because you bought a pile of Epic passes for your family that will no longer ski that many days at their resorts.
I personally have too many passes. Season pass to my small local hill that I get a ton of value out of. Aforementioned Epic pass that was my personal gift to the Vail skiing company this year. Ikon session pass for days skiing with my sister at Steamboat. If my season goes as planned my cost per day is pretty good, but if any of those risks I have taken on become a reality then I can wind up spending way more than I would have without Epic/Ikon.
PS None of this has to do with this lawsuit, which is absurd. If they win this suit we can sue every chain of fitness clubs that offers a national pass than includes lots if locations most members will never visit and plenty of other multi-location businesses that sell passes or memberships.
As a lawyer, I don't see this surviving Summary Judgment for the exact reasons you point out. As much as I am anti-Vail and pro-Indy, the epic pass is still cheaper than most season passes, and certainly the season pass at any destination resort. Aside from the facial weakness of the 'anticonsumer bundle pricing', there is also a clear business rationale to encouraging passes over individual lift tickets beyond unfairly maximizing profit; stability of revenue streams keeps mountains from going bankrupt of there's a year or two of bad winters.
Not surprised you and I agree. Again. Idiotic lawsuit. I would pick and nit and make the case that Vail has degraded the ski experience at several of their resorts, especially Park City and Whistler. Lousy operations and service, too damn many recreational skiers from Brooklyn. No complaints about any Alterra joint I've visited. If skiers couldn't get justice after the Vail melt down year ripped them off, there never will be justice. Oh, well. Bad snow year and I won't get my Ikon under 70 bucks a day. Sucks. I should sue.
Thanks for the analysis - I think the lawyers who filed this should have retained you first!!