WHAT HAPPENED TO THE BIG DEAL??
Novmeber 26, 2001

Soooooooooooooooooo, the big money from out east has decided to invest in T-Bills @ 2% for the time being instead of closing the much talked about deal (a month before the season gets under way) because of the 9/11 tragedy and ensuing economic fallout. Shocked, surprised - you shouldn't be. Think for a minute what has really happened here: A couple of real estate salespeople/developers/whatever you want to call them came into your fine town 8 months ago with a grandiose plan to purchase the mountain, improve the existing situation and develop to add value to the entire region over a number of years with all benefiting. Slick PowerPoint presentations, earbending conversations with the local politicians and spin-doctors, promises of renewed economic stimulus to local businesses blah, blah, blah. Now with these tragic events it no longer makes any sense? What a load of bull*&^%. Change hats for a minute - what if you were them! Lets see, in an already declining economic environment, the events of 9/11 occur and you immediately think that you are overpaying for an asset that needs to be seriously retrofitted. You got a big hole in parking lot, alder all over the place and plans that you have outlined to the locals that indicate millions of dollars of investment over the next several years. You even go as far to get the master plan pushed through all the channels (great stall tactic, while you economy watch) so when the deal is consummated its, lets develop! Of course, you have no idea how to actually operate a ski resort, so you are going to have to expend big money in hiring the right people to get it done properly. Then, the area in which you are an expert, real estate development/sales (in Ontario mind you), looks a little shaky in a resort town as the free world re-patriots assets. Hmmm.... might not be good for condo sales (low dollar and all). This deal was purely and simply a real estate play, with a small ante to get in (the mountain). The big money was going to come from development it always has and always will. The big talk of expansion, hotels, new lifts etc., etc. all cost money. Lots of money! So, under the circumstances, resort real estate development would not be high on anyone's list currently and the buyers have backed off for that reason only. This was never a long-term proposition for anyone - except the people whose livelihood depends on the mountain. This in my humble opinion is the unfortunate side of this situation. Here's the silver lining: Maybe someone who understands how resort management should be undertaken will step up to the plate with a current business and management plan that can be implemented immediately. I'm sure the price hasn't gone up, and with interest rates where there are today versus 8 months ago, the cost of financing has decreased dramatically. Development will transpire over time and will be done when appropriate because of increased demand for a quality product (Red Mountain). Locally people will buy into the proposition because it will provide the lifestyle that all out there have grown to love with the possibility of some increased prosperity (I'm not talking big dollar signs - how about some job security, a pension plan, year round employment) now that's greed (sic). Hard work, time and patience versus making a quick buck flipping real estate where a few get richer and the majority get left holding the bag was the model. It would seem that for the time being praying for a little snow versus, "The Big Deal" could make a little more sense! Rock On!

- Sall