Two of the most powerful elected leaders in San Miguel County flew out to California to visit Telluride ski resort owner Chuck Horning in the last week of December and offered him a deal.
Meehan Fee, the mayor pro-tem of Telluride, and Marti Prohaska, the mayor of Mountain Village, were not representing town governments when they corralled a group of investors willing to pay Horning $127.5 million for 51% ownership of Telluride Ski and Golf in a deal that would give control of the resort to a board of community-focused investors.
The proposal would have ended many years of contention between Horning, who bought the resort and surrounding real estate in 2005 for around $45 million, and the local communities. The conflict with Horning boiled over Dec. 27 when the Telluride ski patrol launched a 13-day strike. Horning closed the ski area the day the patrollers walked out of work, sending local businesses into a tailspin during the critical holiday period.
“Really it was a conversation about what options there could be to create a better future for all of us because our businesses were suffering. Long before the strike our businesses had been declining because of a lack of tourism and a decline in visitation,” said Fee, who has lived in Telluride for more than 20 years and runs a hospitality company that produces events and consults for hospitality developers.
Neither Prohaska, who grew up in the valley and works as a ski patroller, nor Fee gave their councils advance warning about the trip to visit Horning. They said they went as private citizens and were invited to southern California by Horning’s team to discuss the resort’s struggling relationship with the local community.
“We really thought this offer was an amazing opportunity,” Prohaska said.
The social media rumor mill in Telluride is particularly robust. Online comments suggested that Fee and Prohaska were leveraging the ski patrol strike as a tool to get Horning to sell. Some even suggested that patrollers orchestrated the walkout to support a political push to replace the owner. Patrollers were asking for a wage increase to better entice new patrollers and encourage veterans to remain on the job.
The connection between the patroller strike and the proposal to Horning is “completely, totally false,” Prohaska said.
“There is absolutely no way that can even be a possibility,” Fee said.
But the two women did offer strategies to help Horning end the strike. They urged him to replace the resort negotiator who had spent more than 200 hours working fruitlessly with the ski patrol union to reach a deal. They also urged him to offer patrollers more money. Horning did both and the strike ended Jan. 9 with patrollers accepting about 50% less than what they initially requested as the community leaned on them to end the walkout. The resort reopened Saturday.
“That showed he was not immovable,” Prohaska said. “It was a sign that he is willing to move off a previous hard-line position to try to move things in a more positive direction.”
Offer estimates Telluride resort’s annual earnings at nearly $20M
As of a few days ago, Horning was indicating he supported the contract, Fee and Prohaska said. He had responded with a desire to slightly increase the sale price, Fee said.
The proposed deal marked another significant shift in Horning’s position. His initial embrace of the sale contract revealed his willingness to cede operational control of the ski area to a board chaired by himself with Prohaska and Fee exercising 51% control. Both women think the pressure of the patrol strike — as well as evidence of declining visitation and fewer destination tourists after Horning eliminated the resorts’ marketing budget — weighed on that pivot.
Horning years ago enlisted a silent partner — Southern California billionaire Henry Samueli. The offer allowed Horning to retain 29% ownership of the resort company and Samueli kept 20%, with the remaining 51% going to the investors in the newly formed Telluride Resort Fund.
Fee and Prohaska said the $127.5 million offer represents around 51% of 13 times the resort’s annual earnings before interest, taxes, depreciation and amortization, or EBITDA. For decades ski areas have sold for around 8 to 10 times EBITDA, though exceptionally coveted ski areas, like Whistler Blackcomb and Deer Valley, have sold for much higher multiples in recent years. The contract proposal pins Telluride Ski and Golf’s annual earnings around $19.2 million a year.
The resort company is privately owned and the offer “was a best-guess type of number” and “rough estimate,” Fee said, based on the company’s lift ticket sales, which have been publicly discussed as both town governments in Telluride and Mountain Village considered a tax on ticket sales to fund the free gondola that connects the towns.
Late Tuesday night, the contract appeared online, posted by an anonymous Facebook user, igniting conspiracy theories that local elected leaders were trying to force Horning to sell. Fee and Prohaska suspect Horning leaked the contract, indicating he is no longer on board with the plan to sell majority control of the ski area.
They have not heard from him so far Wednesday.
Horning did not return calls and emails from The Colorado Sun on Wednesday morning. On Tuesday night, resort and Horning representatives filed several Colorado Open Records Requests seeking emails and correspondence between government officials during the patrol strike.
In a statement, Telluride Ski and Golf said the request for public records was connected to “a purchase offer of the ski company, water rights agreements and eminent domain among other records.”
“This request was accompanied by written statements by certain local government officials that the two local governments could take action that benefitted the ski resort, if Mr. Horning agreed to the sale,” the statement reads. “The local government officials were listed as managing partners of the investment group in the purchase offer. It is important to note that the ski area is not for sale.”
Prohaska said Horning “has a deep distrust of government.”
“Part of the intention of the trip for me personally was that this is not a time to be contentious and acrimonious,” she said. “This is a time that the community needs us to be working in the same direction toward similar goals. I think that distrust of government and his paranoia and people sharing untruths with him are feeding conspiracy theories and that has maybe turned the tables.”
Fee said she and Prohaska are “committed to standing in the light” and are talking publicly about their offer.
“For whatever reason now, instead of working to lay down swords and working to heal this community and repair the reputation of this community, it feels like now there is a desire to make this yet another negative PR moment,” Fee said. “I think he thinks he’s got a gotcha and he doesn’t.”
Prohaska and Fee spent several days negotiating with Horning and his team. Horning, who is 81, told them that he has health issues that prevent him from returning to Telluride because of the high altitude.
The two presented several plans, backed by the yet-unnamed group of investors, that would either leave Horning in control of the ski area with new capital investors or give control of the ski area to the community-based board of investors, Fee said.
But there was little looking backwards at possible ways Horning could have better handled management of the ski area over the last 21 years that have seen him fire several of the resort industry’s top managers.
“He feels very strongly that the model in which the ski resort currently operates is not only appropriate but excels,” Fee said. “I do not think he sees a need for any new structural changes. I think he feels that the way it is set up right now is running as a smooth operation. With the exception of conversations around the strike in regards to the replacement of their mediator, we did not talk about any perceived shortcomings at the resort. What we talked about specifically was one of the paths forward in which all of his publicly stated goals and the needs and desires of the community could be met in a way where everyone ultimately wins.”
There was no talk about the lift tax approved by voters in Mountain Village — and rejected by voters in Telluride — imposing a 5% tax on lift ticket sales to help pay for upgrades and eventually replacement of the free gondola between the towns. There was some discussion about plans by Mountain Village to triple the rates the town charges the resort company for its snowmaking water.
Both Fee and Prohaska said they were clear they were negotiating as residents and could not make any promises on behalf of the town councils.
Prohaska said there was some discussion that new investors could support snowmaking infrastructure upgrades that would benefit the Mountain Village community that could, as previously noted in water rate discussions, reduce the costs to the resort.
“I truly believed he was excited about the future,” Fee said. “Ultimately, everyone’s goals are the same here. Everyone wants Telluride to be one of the most exceptional resorts in the world and it can be and it should be and we offered Chuck a path to that future.”