What Should Alterra Invest In Next?

Besides, you know, buying Arapahoe Basin

Editor’s note: the original headline of this article was “What Should Alterra Do With $3 Billion?” That was based on an erroneous interpretation of an announcement by KSL Capital, one of Alterra’s owners, on Jan. 29. In a subsequent conversation with Alterra CEO Jared Smith, he clarified to me what KSL Capital’s $3 billion “single-asset continuation vehicle” was. What it is not is new money for Alterra to invest as it pleases. You can read that conversation here. I regret the error.

Here is the old intro:

Ikon Pass skiers have 3 billion reasons to get excited

As I was wrapping up this nearly 6,000-word post, news broke that Alterra has entered into an agreement to purchase Arapahoe Basin. So I guess we know what they’re doing with at least part of the $3 billion that parent company KSL announced it had secured last week to keep the Alterra Voltron growing. The money is being airdropped via something called a “single-asset continuation vehicle,” which I am not going to try to or pretend to understand. Instead, I’m going to play fantasy ski resort and tell you what I think Alterra ought to do with that $3 billion.

And yes, I’ll write an A-Basin story soon.

And here is a revised intro:

Boy, Alterra sure is growing fast. Why, just today they announced they were purchasing Arapahoe Basin, their 19th ski resort! By gum golly is this exciting. As the company continues to grow, here are four investment areas I believe they ought to focus on in my genius expert opinion:

1)    EXECUTE CRUCIAL LIFT UPGRADES

Sometimes a lift upgrade is just a lift upgrade. It improves capacity and reliability on a crucial line, but does not fundamentally transform the ski experience. Alterra achieved such upgrades last year by bumping Canyon at Mammoth, Eagle at Solitude, and Pioneer/Wild Spur at Winter Park from high-speed quads to high-speed sixers. But an aggressive replacement can be the equivalent of replacing a shovel with a backhoe, as when Schweitzer finally pulled the ancient Musical Chairs out-of-base Riblet double this summer and replaced it with the Creekside Express high-speed quad. Alterra purchased that Idaho resort well after construction was underway on Creekside, but there are at least two obvious pinch points within their portfolio that would benefit from similar upgrades:

June – replace the J1 chairlift

June Mountain was the color television Alterra got as a bonus gift for purchasing hotrod Mammoth, which had owned its smaller neighbor for decades. But Alterra already has like seven televisions, and June’s been sitting in a box in the garage since they brought it home. On paper, June is a banger, a perfect overflow mountain, 2,590 vertical feet and 1,500 acres just six miles overland from sprawling Mammoth. But despite some fun terrain, June suffers from a pinched layout and dated infrastructure. Its newest lift is a 36-year-old Yan detachable quad. Reaching this lift requires riding two double chairs that are a combined 118 years old. The only lift out of the parking lot is J1, a 1960 Riblet double. June removed a parallel Yan funitel in 1996 after that company’s lifts started killing people, and never replaced it.

There is no more obvious location for a lift upgrade in Alterra’s sprawling fleet than the wretched J1, whose low capacity plugs up the base area and makes lapping the lower-level black-diamond terrain almost impossible. The obvious solution for the 1,045-vertical-foot line is a gondola, which would also provide stress-free downloading over the steep lower-mountain terrain. An even more ambitious version of this lift could move up and over the hill looker’s right, replacing J2 and J3 with a four-station, three-stage machine.

Imagine rolling up to June, throwing down $199 for a lift ticket, and staring at an hour-long queue to board a chairlift that predates the invention of the fax machine. Does this feel like a cool, immersive retro experience, or a rip-off? There’s plenty of room in America for slow lifts, old lifts, funky hills, and throwback character. But as an out-of-base mover for a mountain in Cali-freaking-fornia owned by the world’s second-largest ski area operator, J1 is an embarrassment that should have been retired decades ago.

Stratton – replace that awful gondola

I’m not sure why Stratton engineers of the late 1980s determined that the best place to position a gondola was 900 feet off the ground on an exposed slope. But there she sits. And mostly, she sits. This lift seems to be on wind hold roughly 80 percent of the time. Anytime a pinecone falls in the forest or high tide hits on the coast of New Hampshire or Titan crosses onto the dark side of Saturn, it causes a ripple in the space-time continuum sufficient to still Stratton’s gondola.

In theory, Stratton has a great lift fleet: four six-packs, the gondy, and a high-speed quad, supplemented by several carpets and old fixed-grip machines. But when the gondola fails, the whole thing falls apart. Last year, Sunday River built a practically wind-proof eight-pack chair up wind-prone Jordan Peak. It has bubbles and heated seats and a load terminal that makes it feel like a ride at Six Flags. I don’t know how much that lift cost, but I know Alterra can afford one just like it.

2)    CONTINUE RENOVATING ITS CABINS INTO MCGETAWAYS

You know that friend who says “hey you guys should come up to my cabin this weekend,” and you get there and the place has like 11 swimming pools and a private zoo? “My grandparents lived in that woodshed over there for 65 years, but we made a few renovations after they willed it to us.” That’s Alterra, which has transformed Steamboat from an end-of-the-road getaway that stood mostly above the Colorado fray into the second-largest ski resort in the state; knitted its two side-by-side Tahoe resorts together with an impossibly expensive gondola; and is in the process of upgrading Deer Valley from the sixth-largest ski area in the Wasatch to the fourth-largest ski area in America.

Alterra can’t expand all of its resorts. Geography, politics, regulation, and existing neighbors will forever fence some properties in their current pens. But here are a few potential terrain expansions that the company has already articulated in some form or another:

Super-size Winter Park

Busy Winter Park, owned by the City of Denver and operated by Alterra, can and should be bigger than it is. An aggressive masterplan, updated two years ago, has been on file with the Forest Service for decades. It calls for a massive intermediate expansion on Vasquez Mountain and a three-stage gondola connecting the base village to the town of Winter Park, two miles downhill. Here’s an overview: