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Mammoth Ski Resort Founder Is Selling Stake After 68 Years

Dave McCoy's decision puts 4,000 acres on the block and sets off a flurry of speculation.

February 24, 2005|Louis Sahagun and Roger Vincent | Times Staff Writers

After 68 years, the old man is ready to part with the mountain.

Dave McCoy, the legendary outdoorsman who founded the Mammoth Mountain Ski Area, is putting up for sale his controlling interest in the Eastern Sierra winter resort.

The news touched off speculation and uncertainty in the scenic town about 300 miles north of Los Angeles along U.S. 395. Mammoth's skiing and related operations employ nearly half of the area's 7,700 residents, and host an estimated 1.4 million skiers annually.

"When you have a straight-talking, sincere and established entrepreneur like David leaving the mountain after 60-some years, that's a jolt," said Andrea Lawrence, who runs an organization dedicated to striking a balance between conservation and economic growth in the region.

For The Record
Los Angeles Times Saturday February 26, 2005 Home Edition Main News Part A Page 2 National Desk 1 inches; 42 words Type of Material: Correction
Ski resort -- An article in Thursday's Section A about a possible sale of Mammoth Mountain Ski Area implied that any sale would include the land on which the resort sits. In fact, the land is leased from the U.S. Forest Service.

On Wednesday, the company's 3,000 workers were notified that its far-flung operations -- 4,000 acres of ski areas at Mammoth and June mountains, 185 ski trails served by 35 lifts, a lodge and more than a dozen stores and dining venues -- were on the block.

"As healthy and engaged as Dave is, the fact is he is 89 years old and won't live forever," the company said in a statement. McCoy couldn't be reached Wednesday.

Financial bankers hired by McCoy said a "handful" of companies had expressed interest in the properties, which one analyst estimated could fetch as much as $200 million.

Residents and local officials were in a tizzy about who the new owners would be and what -- if anything -- they might do with the resort. Speculation about prospective buyers included McCoy's chief executive, Rusty Gregory; development partner Intrawest Corp.; Walt Disney Co.; and actor Robert Redford.

Intrawest, a giant Canadian resort developer that teamed up with McCoy in the mid-1990s, has first dibs on his stake. Intrawest spokesman Tim McCurty declined to say whether the company planned to buy McCoy out, noting that executives also could join McCoy in selling their interest in its operations.

Intrawest has spent more than a decade investing in the development of Mammoth Lakes and is the most obvious buyer, said ski industry analyst Dennis McAlpine of McAlpine Associates.

"They've been developing a village there, and I would be surprised if Intrawest would walk away," McAlpine said.

Vancouver-based Intrawest is one of the largest resort developers and owners in the world. The company owns or is a partner in 14 mountain resorts in North America and Europe, including the Village at Squaw Valley USA in Northern California, the Village at Solitude in Utah and Tremblant in Quebec, Canada. Intrawest earned $60 million on $1.5 billion in sales last year.

The sale won't affect Intrawest's plans to build a 230-room, $140-million Westin hotel in Mammoth Lakes, McCurty said.

Another likely bidder is Colorado-based Vail Resorts Inc., one of the leading mountain resort operators in the U.S. with properties in Vail, Beaver Creek, Breckenridge and Keystone, Colo., and the Grand Teton Lodge Co. in Jackson Hole, Wyo. Vail lost $6 million last year on sales of $721 million.

A spokeswoman for Vail Resorts declined to comment on the Mammoth Mountain sale.

Intrawest and Vail are the only North American ski companies large enough to buy Mammoth, said industry analyst William C. Marks of JMP Securities in San Francisco.

Other potential buyers could include Wall Street investment firms and large real estate developers.

When Vail paid almost $100 million for Heavenly Ski Resort in the Lake Tahoe area in 2002, the facility had about 850,000 skiers a year, Marks said.

Based on that figure and the potential growth of the Mammoth resort after an expansion of the airport, "we think the Mammoth resort could be worth twice as much as Heavenly," Marks said.

Investment banking firm Houlihan Lokey Howard & Zukin was hired to sell McCoy's stake.

Mammoth Lakes has a general aviation airport but no regular passenger carrier. City officials are working with the Federal Aviation Administration in the hope of getting commercial flights approved.

Disney officials said they had no interest in investing in the Mammoth Mountain operations. In the 1960s, the company's co-founder, Walt Disney, briefly flirted with the idea of developing a mountain resort in the Mineral King area in the western Sierra Nevada. Those plans ended when Congress voted to make the area part of Sequoia National Park.

CEO Gregory declined to say whether he planned to make a bid to buy McCoy's interest in the company. Redford couldn't be reached for comment.

The company's skiing and other operations, which include skiing and mountain-biking lessons and the Tamarack cross-country ski lodge, are profitable, generate about $115 million in annual sales and have little debt, Gregory said.

He and McCoy had hoped to build a new hotel on the site of the Mammoth Mountain Inn, and develop a hotel and retail project in nearby Juniper Springs, Gregory said.

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