powderstud;c-56011 wroteJoshua, to answer your question, I have no animus towards Les Otten. I've never met him nor do I care to. I just think the Balsams development is a delusional fantasy, nothing more, nothing less. And while there were good things that have come from Les Otten's career, the negatives outweigh the positives in my opinion.
My first "encounter" with Otten was as a Sugarbush skier, and yes, a lot of things got better during ASC's tenure at Sugarbush. So I was positively inclined towards ASC/Otten. At that time of my life I was in my first career--in finance--and one day a very wealthy client called me and asked me what I thought of the ASC IPO. I told him, I haven't looked into it. He told me a trusted friend of his told him he thought it was a good opportunity, and this client asked for my opinion on it. So I got the IPO documents and read them. I took a look at the financials and was shocked. Two things were perfectly clear within 10 minutes of a not terribly deep review of the documents: 1) This was a house of cards waiting to collapse because it was largely a debt-fueled binge with insufficient capital (even with the IPO); and 2) the biggest sin of which no one discusses is that Les Otten ROUTINELY OVERPAID for his acquisitions. In particular his western acquisitions (particularly Steamboat and Heavenly Valley) were nothing short of a disaster. Sin #1 is survivable (even if the odds are low), but Sin #2 is fatal 100% of the time. I told my client this isn't even a close call, he should stay away. He did, and repeatedly thanked me for that advice for years to come.
One of the things I love in life is how the narrative of someone successful can often greatly deviate as time goes on from what really happened. I've seen this happen first-hand in several instances. Les Otten is not one of those I've seen first-hand by the way, but the "narrative" that was spun on him clearly is different than the reality. If you read Les' PR during this era, it never mentioned what I'm about to tell you but rather focused on his rags-to-riches success story. Fact: Les Otten grew up in wealth. His father was a highly successful and extremely wealthy investment banker. Les did not have to hustle to raise money to acquire Sunday River the way most people have to if they are not born into wealth and privilege as Les was, nor to raise capital for its expansion. In fact, the entire Sunday River deal would have been impossible for Otten to pull off had it not been for daddy helping him, becuase if Otten was not from a wealthy and well-connected family, no one would have touched the deal. I'm not saying daddy wrote the checks and that was that, but when you've got a father who is well-connected and whose job in life is to raise money for businesses, well, you're starting on third base even if you might feel you actually hit a triple on your own. When I've talked with even informed people about Les Otten, almost no one knows his family background or that he came from serious money. He is the opposite of Al Fletcher Sr., who started with nothing and built a fabulously successful business from the ground up with determinations, smarts, and ingenuity.
Finance has never been Les Otten's strength. Duh! He routinely overpaid for everything he purchased. That fact can be masked when you're on a growth trajectory and there's a lot of dealmaking going on which can hide underlying debt servicing and cash flow realities, but eventually the piper has to be paid. Otten's strengths from what I can tell are marketing and operational execution. Those are not insignificant strengths, by the way, but that means Otten should be a cog in a corporate operation, not its CEO. Further, when I read his own post-mortem on what happened with ASC, he blamed the investment bankers for the whole mess, saying he should have rejected their advice. I'm wondering which advice it was that he should have rejected, that he should not have acquired Steamboat and Heavenly for an ungodly sum of money, which they forced him to do? etc. I will say that when I read the ASC prospectus, I was shocked that Morgan Stanley could underwrite such a flimsy transaction and give it their seal of approval. But that's on me, because none of these firms have any scruples and all they care about is making a buck, even if it's on a stupid deal that should never have been done.
Now let me acknowledge where I was wrong about Les Otten. I thought it was insanity that he purchased Park West. Being well familiar with the place, I thought it was the stupidest of the many stupid things Les Otten did. Actually, had that deal happened sooner in his career and he had more time to work things out, it could have potentially saved the entire ASC ship from going down, and bailed him out of many of his self-made problems. So I don't have infinite wisdom for sure. And credit Les for being a visionary on that one whereas I didn't see the possibilities. For sure I had read about them, but I didn't imagine it could ever be made to happen AND be successful. Good for him! I have never skied the place since he transformed it, but friends have and told me there's some great skiing to be had there.
The Balsams deal suffers from many of the same delusions that have been the hallmark of Les Otten's career. So I have been extremely negative about it. It's a fantasy and a guaranteed pathway for people to lose money. The only thing that would change my opinion on this is if an interstate highway is put in which makes it a lot more accessible than it is now. But that is never going to happen. So neither should the Balsams deal.
I'm not negative about other efforts to revitalize closed ski resort operations. There's been no bigger fan of what's going at Saddleback than yours truly. Some other ones seem to me to be misguided, but as I well know, I don't have infinite wisdom, and one has to always open themselves to what they don't know and don't understand. But I do think I understand Les Otten well. I believe I understand where he's come from, why he's had the success he's had, what are his strengths, and what are his weaknesses. And it's for those reasons that I think the Balsams situation has nothing but red flags waving.
Remarkable how two offspring of successful money men had such divergent paths in the ski industry: LBO and WIn Smith. That being said, the latter stuck to one resort, not a dozen (?). Maybe that is the key? Hello, Vail?
