MOUNT CRESTED BUTTE — They dreamed big in Colorado, the Mueller clan.
Hoping to mirror their dizzying success at Vermont’s Okemo ski area, Tim and Diane Mueller pursued plans for a major resort outside Steamboat, bid to operate Denver’s Winter Park, came within an hour of owning Steamboat ski area and labored through the Great Recession as last-of-a-breed family owners of Crested Butte Mountain Resort.
But after more than 20 years of pushing and pulling in Colorado, they never quite found Mueller Time.
“I think a lot of our time here has been about bad timing,” Tim Mueller said.
Now the Muellers are leaving Colorado, and their celebrated ski hill will be in the hands of Vail Resorts, the corporate giant once trumpeted as Crested Butte’s antithesis.
In June the family announced the sale of Crested Butte Mountain Resort, Okemo and New Hampshire’s Sunapee ski area to Vail Resorts for $82 million. Vail Resorts also agreed to pay off $155 million in debt owed to private equity partners who floated the Muellers through the economic downturn.
The family (it’s Mull-er, not Mew-ler) is keeping a swath of real estate in the Upper East River Valley around the ski area, as well as prime property at the base of the ski area. But they are bidding adieu to a Colorado ambition that never matured
“All the things that many people hoped were going to happen didn’t happen,” said John Norton, a former executive at Aspen Skiing who led Crested Butte Mountain Resort in the early 2000s while while then-owners Ed Callaway and Scout Walton labored to sell the resort. “That isn’t necessarily the fault of the Muellers though. It just didn’t happen the way everyone hoped.”
When Diane and Tim bought the financially strapped Crested Butte ski area in 2004, they said the renowned resort had “so much potential.” The Walton and Callaway families had not been able to invest heavily and the Muellers promised to change that.
Tim and Diane sketched aggressive plans that included building a new base village and tearing down dilapidated buildings to make room for luxury slopeside condos. The first phase, Mountaineer Square, went up quickly.
They proposed a 1,000-acre expansion onto nearby Snodgrass Mountain, anchored by a 800-home village and a pair of gondolas. They stamped high-end ski-in, ski-out homesites on the backside of the ski area.
The family was competing with heavy-hitting, publicly owned resort companies that were pushing real estate as the catalyst for sweeping upgrades on the mountain. The Muellers played along, touting a $200 million plan for resort upgrades and village projects, and promising all real estate revenue would be poured into the ski area.
The investment spurred hope that the resort could return to its mid-1990s heyday, when it logged more than 550,000 skier visits a year, up from a low of around 330,000 in the early 2000s.
Then came the economic collapse in 2008 and lenders stopped the flow of money. Ski operations could have carried the real estate projects until the market revived, Tim said, but the lack of financial support to bridge the gap made that impossible.
And, in an added blow for the Muellers, the Forest Service in 2009 killed plans to expand onto Snodgrass Mountain, arguing the project was no longer in the public interest and citing local opposition to the project.
“Most resort communities got the big pound from the metaphorical mallet at that time, but I think we got two or three,” said Tim and Diane’s son, Ethan, who led the family’s work at Crested Butte Mountain Resort.
It took work to get here
Diane and Tim always eyed Colorado as the place to grow their resort business. The couple used a second mortgage on their home to take over Vermont’s struggling Okemo ski area in 1982.
In short order, they transformed the resort into one of the most successful ski areas in New England, a transformation that remains the stuff of legend in the ski resort world, growing visits to more than 600,000 a year from around 90,000.
With Okemo booming, Tim and Diane turned to Colorado, taking a stake in a plan to develop a giant new resort outside Steamboat Springs. The Forest Service gave preliminary approval to the Lake Catamount Ski Area in the early 1990s. The concept was grand, with a 2,800-acre ski area towering above 3,800 homes, hundreds of hotel rooms, a village, golf courses and a marina on a man-made lake. But when Texas-based Mitchell Energy — the money behind the plan — pulled the plug, the project foundered.
When the Muellers bid to operate Denver’s Winter Park ski area in 2001, industry giant Intrawest won that long-term contract with a promise to invest heavily in the ski area in return for building and selling condos at the base.
Tim was sitting at a New York City real estate firm’s closing table in March 2002 with a fat check in hand, ready to buy Steamboat ski area for $91.4 million. But American Skiing Co. killed the deal at the last minute, choosing to keep Steamboat and instead sell its Heavenly ski area in California to Vail Resorts for $99 million.
A year after the Steamboat debacle, the Muellers secured a deal with the longtime owners of Crested Butte Mountain Resort. Details were not disclosed but a grassroots community effort to buy the ski area at the time said it needed $52 million.
The Muellers were one of the few remaining independent ski area operators left in the business.
Their rivals were mighty, spending billions on acquisitions, upgrades and villages. But after about 20 years of consolidation, two giant players have emerged, Vail Resorts and Alterra Mountain Co. Three other smaller but vibrant players operate in the same realm: Boyne Resorts, Powdr Corp., and the Midwest’s thriving Peak Resorts.
Successful major resorts outside that circle — like Sun Valley, Taos, Telluride, Snowbird and Jackson Hole — are controlled by very wealthy owners. Those owners didn’t make their money in skiing. But they spent it on skiing.
“We came from the ski industry and we don’t have the deeper pockets and the opportunity for that kind of financing,” said Erica Mueller, Tim and Diane’s daughter, who was part of the management team at Crested Butte Mountain Resort. “My parents haven’t been saving and giving themselves big distributions over the years, much to some people’s disbelief.”
Tim and Diane are 68 now. They are ready to take a step back. Maybe retire. When Vail Resorts came knocking, they sat down with Ethan and Erica and went over the options.
One path was to take on more debt and buy back the assets they sold in 2008 to CNL Lifestyle Properties, a Florida-based real estate investment trust, as part of a financing move that delivered the cash and a long-term lease to operate the resorts. CNL sold those assets — as expiring, short-term REITs do — to another private equity firm, Och-Ziff Capital Management, in 2016 in a 14-resort deal.
Resort owners, including Mountain High’s Karl Kapuscinski and Boyne Resort’s Stephen Kircher, earlier this year bought back the ski areas they had sold to CNL. The Muellers were planning to do the same and the process was underway when Vail Resorts called.
“It’s kind of a bird in the hand is worth two in the bush,” Tim said. “That was the thinking at least.”
Ethan and Erica admit they are bummed to be leaving the administrative offices at Crested Butte.
“It’s not going to be as fun to just watch,” said Ethan, joking that he may start spending his time writing letters to resort-area newspapers blasting perceived missteps by operators.
But the family feels confident the boutique resort will thrive under the right owner. And Vail Resorts, they are certain, is the best owner possible for their end-of-the-road ski hill.
“We thought, and I still think, they are the best company to do this. We are happy they came knocking rather than some of the others,” Tim said.
Why Vail doesn’t want some of the most valuable real estate in Crested Butte as part of the deal
The Muellers are keeping some critical real estate, including 11 unsold lots and undeveloped acreage in the Prospect Development, 148 acres in the North Village Reserve once slated as a base for the Snodgrass plan, the slopeside Treasury Center and the ground-floor commercial shops at Mountaineer Square at the base of the ski area.
From the outset, Vail Resorts said it didn’t want that real estate. Tim didn’t believe them.
“I thought, oh, that’s a negotiating ploy. ‘We don’t want it but if you throw it in, we’ll take it.’ That kind of thing,” he said. “I was somewhat surprised they didn’t take the real estate.”
But the industry is littered with the carcasses of resort operators who dove deep into billion-dollar developments and withered in the recession.
Today, Vail Resorts lets third parties handle risky development. The company sells its Epic passes — more than 750,000 a year — for the bulk of its revenue. It’s a model followed by the newly minted Alterra, which began selling its rival Ikon passes this spring, creating a season-pass cold war.
And deals like Alterra’s acquisition of Utah’s iconic Deer Valley and Vail’s purchase of Crested Butte Mountain Resort will mark the most fiery salvos in that war.
Vail Resorts — which hasn’t finalized the purchase yet but expects to close soon — has not outlined specific plans for the four resorts beyond a promise to invest $35 million over the next two years.
Chris Jarnot, a Vail native who heads Vail Resort’s mountain division, hopes to spend the winter at the resort talking with locals and employees about where best to direct investment.
One option will be continuing plans for the Teocalli 2 expansion, which the Muellers proposed in their 2013 master plan as a way to address Forest Service prodding to look elsewhere for additional acreage following the Snodgrass denial.
The Teo 2 plan would add about 500 acres of intermediate and expert terrain to the backside of the mountain. Plans are deep into environmental review by the Forest Service.
“This is not Vail.”
In the late 1990s, before the Muellers arrived, Crested Butte Mountain Resort ran an ad campaign that touted “This is not Vail.”
But after seeing firsthand the trials and tribulations of a family-owned resort in the ever-shifting resort industry, locals seem to be coming around to the idea of an owner that can invest in the ski area with new chairlifts, improved snowmaking and even an expansion.
“Now we are finally in the hands of someone who can make things happen,” said Norton, who crafted the “This is not Vail” marketing drive during his tenure as the Crested Butte’s chief.
Locals brought up the “This is not Vail” campaign in June, when Jarnot visited the resort to announce the deal.
“They told me they are not Vail and we see that as a good thing. We already have a Vail and a Park City and a Whistler and a Breckenridge and that’s not what we are buying at Crested Butte. We are buying Crested Butte because it’s different,” Jarnot said last week.
Jim Schmidt was mayor of Crested Butte when the Muellers arrived. Now serving his fourth term as mayor, he remembers telling the Muellers that he was so proud of his town “and I wanted to be proud of the ski area.”
“They really started on the right track. The village, better grooming, they replaced a chairlift and did some upgrades,” Schmidt said, “and then 2008 happened and things stopped progressing.”
The mayor’s biggest lament isn’t necessarily how the ski area has languished so much as how the Muellers were forced to abandon the development of affordable workforce housing.
“I’ve talked with Chris at Vail Resorts and he has said very clearly that they are not in the real estate business and I said ‘Maybe you need to be, especially when it comes to workforce housing,’” Schmidt said.
The Muellers laugh heartily — as they often do — when asked what kind of advice they might offer should Vail Resorts chief Rob Katz ask.
“Crested Butte and the Gunnison Valley is a place where pretty much anything you want to do is harder to do than most other places, whether that’s running a ski area or ranching or whatever,” Ethan said. “So if everybody is not working together, it’s just that much harder to get ahead.”
This story first appeared in The Colorado Sun’s newsletter, The Sunriser. You can subscribe here: cosun.co/thesunriser