I share an observation with you: In my professional life, I am often asked to raise capital for resort development opportunities. Always, the requests come from very intelligent, committed, passionate people who are determined to keep skiing and riding alive and thriving, by creating or re-creating ski areas that are ripe for development. In almost every case, these passionate, creative people seek capital after they have exhausted their own capital supply, that of their friends and families, or they never had any capital to begin with. In almost every case, the people that find me had no idea of the magnitude of the project they were undertaking, either in dollars or in time. By the time they get to me, they are of limited cash and have exhausted many likely sources of funding by trying to sell their passion rather than by offering an investment opportunity that does what any investor demands, providing a desired return on investment for the level of investment risk involved.
A prospective client recently asked if I had any thoughts on his requirement to raise about $22 million to reopen a closed ski facility. Thoughts? Why, YES! YES I DO HAVE SOME THOUGHTS ON THE PROJECT. And many other similar projects that are brought to my desk to see if I can raise development capital for them.
Here’s the background on the specific development opportunity that I am thinking of, but there are at least five similar projects that I have been contacted about over the last two years which could benefit from digesting the following thoughts. For this example, there’s a closed ski resort an hour from a major population center, with a population that skis, rides, snowmobiles, cross country skis. The target location is the second closest ski area to the population center, has way more elevation and acreage than any ski area requires, receives early snow fall in adequate amount to open and stay open in a competitive manner. This scene and scenario, with very minor modifications, can be in New England, New York, Montana, Colorado, California or Canada. It could be in Pennsylvania.
The requirement, at this time, is to find a capital source or sources, to support a rebuild of the original infrastructure, so that the area becomes revenue producing. In this case, the requirements are rebuild existing lifts that can be rebuilt, add new lifts where appropriate, construct a base lodge, install some snowmaking, create a plan for some bed base development and have some working capital to keep operating while building a following enough to support the $22 million in raised capital. ( Or whatever the number ultimately becomes.)
I inject here, I toured this particular area. Over three thousand acres of terrain in some of the most spectacular mountains and valleys on the face of the earth. The area is laid out so that it skis 360 degrees, has alpine lakes, streams, one of a kind rock formations and is relatively easy to get to by a skiing population. My point: it should be a ski area.
Here are my thoughts on this project and every other project that is similar in nature:
1. Make sure before the project is started that there are enough dollars available to make a professional presentation to the investor groups that might be interest in the project.
2. With some of those dollars, prepare a business plan the is reasonable in terms of cost and time and shows a return on investment that your target market will demand
3. Run a market study to make sure that your assumptions meet with the preferences of the market you intend your project to serve.
4. When you present to investors it is fine to sell the sizzle for about 30 second of the presentation. Then get down to how it will make the investor money.
Those are my thoughts. What are yours?
MIrus Resort Advisors