August 22, 2013 Posted by Emily in Business, Local
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The big merger


As Big Sky, Moonlight and Spanish Peaks consolidate under CrossHarbor and Boyne, the next chapter is still being written

By Emily Wolfe Explore Big Sky Managing Editor

Under Chet Huntley’s dream, Big Sky began as a company town.

The 1960s NBC newscaster envisioned “a picturesque village of 3,000 people nestled in a large, green valley basin complete with well-maintained golf greens, an air strip, a trap and skeet shooting facility, indoor swimming pools, tennis courts, equestrian showgrounds and a dude ranch nearby,” according to a Feb. 17, 1970 special edition of The Gallatin County Tribune.

Under Sam Byrne, principal owner of the Yellowstone Club, that vision may now come true 40 years later.

A new partnership between Byrne’s Boston-based investment firm CrossHarbor Capitol Partners, LLC and Boyne Resorts, owner of Big Sky Resort, is behind the merger of Big Sky and Moonlight Basin that many say was inevitable. For some locals, it means a loss of jobs, causing friends to move away. To others, it’s a powerful consolidation that will strengthen the Big Sky community, economy and brand.

CrossHarbor and Boyne announced the definitive purchase and sale agreement with Lehman Brothers Holdings to acquire the assets of Moonlight Basin on Aug. 14. With its July 19 acquisition of the bankrupt Club at Spanish Peaks, the partnership will control four of the five ski areas in the immediate area.

The only exception – the Nordic ski center Lone Mountain Ranch – was also up for sale by Lehman, which has accepted a bid from a family-owned California corporation, according to LMR General Manager Bob Foster. That sale is also scheduled to close in October.

The CrossHarbor/Boyne partnership plans to combine ski operations at Moonlight, Big Sky and Spanish Peaks, “operating the properties seamlessly and solidifying the Big Sky brand as a premier ski destination and global brand,” according to a statement released Aug. 14. Combined, the resort will have “more than 5,700 acres of skiable terrain, with 4,350 vertical feet, 23 chairlifts and 10 surface lifts,” making it the largest in the country.

Some are saying this puts Big Sky on par with entities like Vail Resorts – which operates 10 resorts – or Squaw Valley Ski Holdings, owner of Squaw and Alpine Meadows. But Big Sky and Moonlight have shared a border since Moonlight first opened for skiing in the season of 2003/2004, and they’ve offered the joint Biggest Skiing in America pass since 2005/2006, so the merger’s implications for the community are much larger than for the skiing itself.

Questions and rumors flew around Big Sky after the Aug. 14 announcement, which called this, “the creation of one of the largest and most compelling mountain resort experiences in North America.”

Slow down.

Big Sky and Moonlight’s management teams have been meeting “nonstop,” says Big Sky Resort Director of Sales Brandon Bang, but the deal isn’t set to close until sometime in early October. On Aug. 21, the teams spent the morning meeting at Moonlight’s Madison base area. They were unable to comment on the details, but the overall vibe was positive.

“We have all our smartest leaders trying to figure out what’s best for our employees, guests and community,” said Moonlight President and General Manager Greg Pack. “There’s a lot to do.”

Jobs

During high season, Moonlight typically has just over 400 employees, and Big Sky has 1,000.

“The vast majority of jobs will remain,” Big Sky Resort General Manager Taylor Middleton told EBS. “We’ve got a great resort drawn with great people already running it.”

An Aug. 14 letter from CrossHarbor/Boyne told Moonlight employees the same: “Moonlight employees have long demonstrated expertise, commitment and professionalism that is highly valued and much needed as we integrate the resort operations of Moonlight Basin and Big Sky Resort.”

Economies of scale come with any business deal this large, and there are bound to be casualties.

“I do wonder what it will mean for the Moonlight diehards and the people who might be looking at pay cuts,” said Grizzly Outfitters employee Matt Dodson, who’s lived in Big Sky four years. “I have a lot of friends that work over there, and I hope they stick around.”

Some Moonlight employees were in that diehard cult, and others were people who didn’t quite fit the mold of Big Sky Resort or Yellowstone Club, said 40-year local J.C. Knaub. As owner of Andesite Construction, Knaub is already benefitting from the acquisitions. During the recession, he went to the oilfields outside of Williston, N.D., to find work, but now he’s busy excavating a new spec home in The Club at Spanish Peaks for Teton Heritage Builders.

“As a business person, the worst thing is uncertainty,” Knaub said. “[Now] there’s fresh money… The train’s already left the station, from my perspective.”

Culture and community

In its decade of existence, Moonlight built a small but loyal following.

“The strong community that grew at Moonlight over the past decade was a special event in the history of ski culture, no less than the glory days of Vail and Summit County, Colo., in the ‘70s, or the early rugged days of Jackson Hole, Wyo.,” wrote Moonlight local Pat Gannon in an email. Gannon worked as a ski instructor and freeride coach at Moonlight for seven years.

With its cheaper ski tickets and M-T program offering discounts to students from around the region, Moonlight also catered to families and college students on a budget.

Another dedicated local, Liz Welles, has had a dual pass since 2005/2006. “One of my favorite things about Moonlight was how relaxed, happy and friendly people were – in the lodge, up the lift or seeing a patroller in the Headwaters,” she said.

An athlete ambassador for both mountains, Welles sees pros and cons to the change, and ultimately says she’s excited to see how the area will grow. “Change isn’t always a bad thing around here. I think it’s going to bring with it a lot of potential for a lot of people.”

But the Big Sky area is more than just skiing, and a community has formed in the 40 years since Huntley’s crews cut the first ski trails.

Loren Bough, Chairman of the Big Sky School Board and Vice Chair of the Yellowstone Club Community Foundation, is ecstatic about the changes. “Sam Byrne is the best thing to happen to Big Sky since Chet Huntley,” Bough said. “He shares my vision to make Ophir and Lone Peak High School the best schools in the state.”

The more engagement the community has with CrossHarbor, the better, Bough says.

Jackie Robin, co-owner of the Hungry Moose Market and Deli with her husband Mark, says that while there is “a lot of initial trepidation among locals… there’s more curiosity as to what this is going to look like.”

A business plan

CrossHarbor brought the Yellowstone Club out of bankruptcy for $115 million in 2009.

“What we had in this community was a lot of dreamers who came in and threw money around but didn't have a business model, just selling real estate,” said Bough, also a Y.C. member. “We’re replacing that with CrossHarbor, and Sam has a one-year, five-year, 10-year business plan for all these different assets.”

The details of that business plan, however, are not public.

“I really emphasize that [Byrne] has a tenured track record at Big Sky and it’s all positive,” Bough said. “The Yellowstone Club is booming. Not just a little bit, I mean, absolutely booming.”

Other foreign investors looked at Moonlight and Spanish Peaks and passed on them, he pointed out.

Byrne, a homeowner in Big Sky for 10 years and an avid skier, lives near Boston. He declined to comment for this story.

"This investment is another important step forward for Big Sky and underscores the strength of our new partnership with Boyne Resorts," Byrne said in the Aug. 14 release. "In the near term, the transaction will provide some much needed stability to Moonlight Basin. But the investment also reflects the broader potential we see for the region and sets the foundation for long-term growth."

Bough added additional perspective:

“[Imagine] if a Vail came in here, or some other corporation that didn't have a vision of the community as Boyne does or as Yellowstone Club does… the scenarios of what could’ve happened.”

The skiing

Yes, your ski pass will work this year.

“We can assure customers that any products they’ve already purchased at either resort will be valid,” said Big Sky Resort’s Public Relations Manager Sheila Chapman.

Both resorts are selling season’s passes for the upcoming winter season, with Big Sky’s early-bird deal ending Sept. 30, and Moonlight’s college sale Aug. 21-25.

The skiing at on Lone Mountain compares to Jackson Hole, Squaw, Telluride, Crested Butte and Snowbird/Alta, says POWDER magazine Editor-at-Large Matt Hansen, who wrote about the merger on powdermag.com.

“Those places are known for their big mountain terrain," Hansen said in a phone call. "I’ve always thought that it could be considered in that same arena of skiing, it just wasn't known... I think the best thing that would come of this would be for people to be able to ski both [Big Sky and Moonlight] and not have to spend an arm and a leg in order to do it. It is a huge place, and the skiing off the top of the tram can be as good as anywhere in the country.”

Economic stabilization and growth

For the Big Sky Chamber of Commerce, this is big news in terms of marketing the larger area for tourism. Chamber director Kitty Clemens sees the merger as a sign to the travel and tourism community that Big Sky is a good place to invest.

The merger will be good for the real estate market, says realtor Martha Johnson, who owns Montana Living ~ Big Sky Real Estate. “I think the market has to stabilize in all facets of real estate in Big Sky before we’ll see a true shift in prices rising, but what this will do is help take the macro risk from the area.”

That macro umbrella includes everything from Gallatin Canyon to Moonlight, Johnson said. “CrossHarbor [and Boyne] took down the 800-pound gorillas, which will allow the mom and pop shops to come back in… Things like [the new Mexican restaurant] El Patron opening, and the Gallatin Riverhouse Grill being purchased out of a distressed environment and turning into a thriving family barbecue joint – those are all positive steps in the stabilization of the Big Sky economy.”

The growth is more sustainable than the pre-recession bubble, Johnson says, because the point of entry is lower. “Locals bought the Riverhouse because they could afford it, so hopefully the sustainability is there, putting out a great product.”

The questions

With rumors churning and very few answers available, Explore Big Sky polled the local community to get a sense for its most common questions on the merger. They are listed here.

What is the hiring process going to look like? Timeline?

How this upcoming winter season be affected? Will the resort(s) want to make a big statement right away (access, cost of passes, etc.), or wait until 2014-15?

Does CrossHarbor plan to invest anything into Moonlight’s facilities? Big Sky’s?

Will this affect the status of Jack Creek Road?

What is the nature of the partnership between CrossHarbor and Boyne? Did Boyne put any cash into this deal? Who owns the actual land and infrastructure that Moonlight sits on?

How much is the sale? Is there anything that could throw the deal off?

The resorts had disparate cultures. How will the merger change that?

Is Boyne managing mountain operations at Moonlight? Who will manage Moonlight lodging? The golf course? Dining? Real estate?

There are three community foundations in Big Sky (Yellowstone Club Community Foundation, Spanish Peaks Community Foundation and Moonlight Basin Community Foundation). How will the merge affect them?

What is going to happen to Moonlight membership? Spanish Peaks membership? The Moonlight golf course?

Will there be big pressure on the airlines now to have more direct, more affordable flights to BZN?