Would You Buy a Ski Resort That Only Opens in Summer?

0:00Welcome to Acquisitions Anonymous, the internet's number one podcast about buying, selling and investing in small businesses. I am Michael, one of your co-hosts. Heather and I today went through a deal that I think you'll find fascinating. It is totally run off a generator and out in the middle of nowhere and with a very patient seller who is willing to take as long as it takes to sell the business. So I think you'll enjoy what we did with this one. And also it's in Montana. So stay tuned and see what we thought of it. Here you go.

0:35the plus inventory line. Hey, everyone. I just want to tell you that this episode is brought to you by VeriVend, which is the only platform purpose-built for independent sponsors and private market investors who want to move faster and eliminate friction. VeriVend is cool because it combines investment management and secure instant payments into one platform. So that means capital calls, deployments, and distributions, they all work like Venmo. One-click real-time transfers with no transaction limits and automatic reconciliation. So from raising capital to returning it, VeriVend handles it all.

1:09Deal marketing, data rooms, KYC and accreditation for your investors, signatures, capital flow, dashboards for your investors, and even fund administration, accounting, and taxes. So whether you're raising a single deal or managing a full fund, VeriVend gives you the speed and confidence to execute all in one single platform. So you can check it out and learn more at veryvend.com. V-E-R-I-V-E-N-D.com. Heather, I have some great news. Oh, good. I got in today with an Allen wrench and I took the arms off of my chair so I can get closer to the screen so I can see. Okay. I thought we were going to just see more of you, like your face is going to be bigger, but you just want to be able to see, which I totally get.

1:51I got glasses too. Yeah. Well, I have the thing where I get, you know, you get new glasses and they make them a little bit too aggressive when you get the glasses intentionally. And then you have to get accustomed to them. And so I'm in that phase right now where each year I'm getting stronger and stronger glasses. It happens as we age, as you know. And so I've gotten new glasses. So that means I have to be like eight inches from the screen to see anything clearly. I know. It is rough. The reading glasses thing, I didn't enjoy that when that started. It is a pain. I saw a quote from a guy in his 70s and somebody was interviewing him.

2:30He's like a rich old guy in his 70s. And the young guy goes, hey, like, what's it like, you know, being old? And it's like a 20-year-old asking like a 70-year-old. 70-year-old. And the 70-year-old goes, every morning I wake up and I feel like I'm a 20-year-old inside. And I look in the mirror and a 70-year-old looks back at me. I was like. I get it. Shit. I do get it. shit. This sucks. So anyway, as that segue, can I pitch you on this ski destination for sale? Okay. Now I know why you're excited. A ski destination. Heather, this is a no judgment zone. Okay. Okay. All right. This is going to be a really good business, right?

3:12It's going to be a good business. Okay. It's a crazy business. I'm actually familiar with this business because, well, I'll share it with you because it's fascinating. So it comes from actually from a listener named Derek Bergman. And Derek is a B-School student in LA and he's at the UCLA Anderson School of Business. If you can find my mouse pointer here, I'll read you. And he says, can you value this summer only ski resort? Hi, first, thanks for the podcast. I'm a UCLA MBA interested in entrepreneurship through acquisition. And this has been such an incredible resource. Here's a challenge for you.

3:49It's a Wyoming ski resort called Beartooth Basin, and it's listed for sale. It's located on a remote section of the Beartooth Highway, and the resort is one of the only summer-only ski resorts in North America. Honestly, I doubt this business generates much cash flow, but I would love to hear you guys evaluate if there's any case for acquiring this business and at what price. If you're interested in tackling this, here are some key facts compiled with the help of ChatGPD. ticket pricing and capacity daily lift tickets are priced at 50 with half day tickets available for 40 and season packets passes are 395 the season ski area limits daily sales to 100 to preserve the experience and manage resources all right i'll pause there and tell you i'll skip a little bit because he's got more analysis here he's very mba all right then he says okay so So what's special about this ski resort, so it's in the middle of nowhere in Montana, and it actually only exists on a road that is open only during the summer.

4:53That's why it's summer only, because you can only get there. I get it. Okay. It's an unplowed. I need to understand that. I was very confused. Now I get it. Yeah, it's an unplowed road, so it's not maintained in the winter. So it's only open in the summer, but it's in a part of Montana that is snow-capped all the time, and then there is no amenities whatsoever. The amenity is they have a little hut there. And as you can see here from the picture, because I pulled up their website, that it's for sale. Basically, they have a ski lift and there's no power, obviously, here in the middle of nowhere.

5:24Yeah. So they run this ski lift with a generator. Hmm. And it's one ski lift. Yeah. It's a ski. Both ski areas have ski lifts plural. This one has ski lifts singular. Ski lift. So the owners haul out a generator to power the thing each season and run the ski lift. Fascinating. This is fascinating. Boy, oh boy. There's no EBITDA or any of that. We're not getting to that or we're not going to, no one has that? So we don't know. but our friendly neighborhood uh mba student has a analysis that he's done of what he predicts is the profitability and the revenue but here i pulled up baretooth and where this is and believe it or not somebody went up to the baretooth pass in a google uh street view car yep they sure did and And here it is.

6:29There it is. Got snow. The bear cheese stuff. And it's obviously summer then because there's an RV up there. And that's really kind of cool. Yeah. So I don't know where the actual, I can't see the ski lift from here. But it's up there somewhere. I mean, yeah, that's another like probably dirt road, right? Off to somewhere. It's up there somewhere. Yeah. Because there's not enough snow where this highway is. So it's got to be a dirt road further back in or further up or something. But that is really, really interesting. Oh, so here it is, actually. Oh, there you can see it. There's the ski lift.

7:06There it is. You're right. So it looks like this is actually one of those, you park up there and it looks like you ski down and then the basin is down there somewhere. Okay. And then you take that lift back up. Yep. As long as the generator is working. Otherwise, you better hope the generator doesn't break. Otherwise, you're walking your ass up to hell. You freeze to death. Oh my gosh, this is crazy. I didn't know such a thing could even exist. I don't, I mean, do we know if they own the land? It doesn't seem like they do. This looks like a national forest because the next thing they say here is it's a 20-year permit allowing year-round operations to 90 acres and 1 ,000 vertical feet.

7:47This exclusive ski area permit is on the Beartooth Highway. They have a two high speed, oh, they have two lifts. two high-speed double-mire service lifts, three snowcats, a portable g-ser generator, seven trailers, and all tools and equipment need to operate the ski area. Serious inquiries only. Beartoothbasin at gmail.com. You better be serious if you're thinking about this one. It is still for sale or for partial or full investment. We will continue to operate the business until we find the right group that shares our vision for independent community-based ski operations. Come take a lap at the basin this summer to generate your interest.

8:24So I think the first thing maybe for us to talk about, this is in the middle of nowhere. I mean, it's at the border with Wyoming, and I think the nearest airport appears to be Billings, Montana. Okay. Which is... Still quite a ways. Yeah. Are you ready to take a leap into business ownership, but you don't know where to start? Well, look no further than Acquisition Lab, the premier resource for entrepreneurs seeking to buy their dream business. Founded by Harvard MBA and acquisition expert Walker Deibel, the lab is your fast track to success in the search, diligence, and acquisition process. With hands-on support, world-class resources, and a community of like-minded entrepreneurs, Acquisition Lab gives you the tools and confidence to navigate every step of the journey.

9:12And we're proud to call Walker and Chelsea, the lab's director, long-time friends of the podcast. They're passionate about helping entrepreneurs like you take the next big step. So don't wait to make your business ownership dream a reality. Visit acquisitionlab.com today to learn more and schedule your free consultation. And when you do, be sure to tell them the Acquisitions Anonymous podcast sent you. So this is kind of a local thing. Like they sort of said it already in the description. It's a community thing. It's people that live within an hour or so, I guess, of their might be a really novel experience because you're skiing in the summer and you can just drive up the highway and get out of your car and there you are you're basically at the lift right out right off the highway but it is out in the middle of nowhere and someone spent the money to you know put those those chair lifts in and uh the generator and the trailers and all the equipment that was needed i can't imagine i really have no idea what that cost i really that's that's kind of the first place i want to go is what would that have cost?

10:16I mean, those lifts are a million bucks. I mean, they're super expensive. And, you know, it said they're high speed. So I don't know what that means in terms of how modern they are, but Doppelmayr is like a real brand. Those are like Swiss or German. Like those are the ones you want to be on. They're super safe. Yeah. Okay. So it's not some old-fashioned tow line or something crazy from the past. It's a real modern ski lift that costs a lot of money to put in there, but you can't generate much cash flow. Yeah. Well, so the Mr. Bergman here went through an analysis for us. Daily lift tickets are priced at 50 bucks with half day tickets for$40 and season passes are$395.

11:00Beartooth Basin plans to operate from May 28th to July 6th, totaling approximately 40 days, assuming favorable snow conditions. conditions. The estimated revenue, assuming full capacity, because they only sell up to 100 tickets each day, is$50 per ticket over 40 days. So that means potential daily revenue before any, you know, any sort of like food, beverage, amenities and stuff like that is daily tickets at$50. So$5 ,000 per day. Total revenue is$5 ,000 per day for 40 days. That's$200 ,000 in total revenue. You know, this estimate excludes additional income from season pass sales and merchandise infrastructure and so on and repair and stuff like that.

11:42So your total cash flow is about 200 ,000 if everything goes great and you get your whole 40 days in. But imagine any weird weather or road conditions. You may not always get your 40 days in. And you can't sell. There's no food, right? There's no services. so you can't sell other things. They said they have trailers and stuff, so they may be selling people snacks and that sort of thing. Maybe there's some snacks. Okay. And drinks. I mean, the first problem with this thing is if somebody's going to drive to the middle of nowhere to get there and ski at this thing, which is arguably like a pretty amazing pilgrimage to do as a skier, they're going to pay more than 50 bucks.

12:25Like, why are they priced like in stupid land? Yeah. That's my first question. This is a unique experience, right? Yeah, this is the case in point of why, you know, Vail, Beaver Creek and all that kind of stuff, why they charge$300 a day. It's really expensive to run a ski thing. But people are paying for a once in a lifetime experience to go to, you know, Deer Valley, right? And just have like a luxury experience. So I don't understand$50 a day. It makes no sense. Yeah, there you go. But maybe they've, who knows, maybe they've tested higher prices and that didn't go well because of the population that they serve.

12:59That could be the other problem. But yeah, I mean, pretty novel to say you're going skiing in June, you know, and be able to enjoy it all day right there. I just don't, I don't know what they can possibly say. I can't believe someone spent the money to put those lifts there. It had to have been a personal passion, right? Uh, there is, you are probably better off if you want to ski in the summer to fly to Chile and ski there than you are to try to get to this place. I would be willing to bet that it would take me just as much time to get from here in Texas to Santiago, Chile, and then drive the two hours to the ski resorts there as it would to get to Nowheresville, Montana, and drive six hours from Billings and connect.

13:45I mean, you're going to have to connect through. There's only a couple of connections that get you there. Like, it just doesn't make any sense. And then there's no hotel. You know, you got all the way out there. Where's the hotel? That's probably two hours back the other way if there is one. So, yeah, this is kind of crazy that somebody did this. So here's where I'm at on this one. I will give it a thumbs up because it's freaking awesome and somebody should totally do this. I will be your customer. But based on the revenue numbers here, I don't see how this is working. I don't see how it's even coming close to breaking even.

14:20And the way they write on the website is they've got patient money that's kind of willing to wait this out. More power to them. But I think as an investment, it's horrible. They could maybe lease it to an operator. If the reason they're selling it is they just don't want to run it every year, maybe they can enter into some kind of lease and have somebody operate it for some kind of profit sharing or something. But you really can't sell this for much of anything. Yeah, not unless there's a bunch of revenue flying in that we just don't even know about. Yeah. But to your point, you could do price discrimination, right?

14:57Like, okay, Wyoming and Montana residents get$50 a day. Everybody else is$250 a day. Yeah, but then you got to do some marketing. Because how are you going to bring people here? Yeah. So that's a spend right there. And marketing on destination kind of vacation stuff, you know, you're competing with, like you said, chili. you're competing with so much you know that your marketing spend is probably really maybe futile a little bit yeah 100 all right so uh you're gonna put an offer what are you thinking i am not putting in an offer but i would love to hear about it if this does trade i'm thumbs down unfortunately a pretty cool find yeah and listener of the day award goes to derek bergman from UCLA Anderson who's interested in ETA.

15:45Strong, strong submission, Derek. Thanks for doing it. And if you have a deal that you'd like for us to value, I don't know if we valued this one. I think I valued it at zero. Negative. It's valued negatively. Please submit it to us. This is some great content, so I loved it.

16:12Thank you.