The Missed Deadline: What Does it Cost? The Story of Vail's Takeover of the Park City Ski Area b/c of a missed lease renewal

The story of the missed lease renewal in Park City, Utah

This simple story consists essentially of missing a deadline. Unlike missing a flight, a conference call, a weekly meeting, or missing a bill payment, this error cost a major ski resort operator millions of dollars in present and future value; literally changing the course of the company’s future. The instructions weren’t confusing; they're written in plain English on a lease; and yet, they missed it. This story also involves economics, management, law, history, negligence, opportunity, litigation, blame shifting, and most of all a ski resort! 

Introduction:

Had management recognized this lease document represented one of the company’s most valuable assets, it would have exerted all means necessary to see that its value and longevity were protected. Instead, it acted like the “third steward” entrusted with the care of money, in the Parable of the “Talents,” by locking the lease away in a file cabinet, where no one would get to it. (see Matthew's gospel, Ch. 25)

Call it negligence, but lack of care for the valuable asset of the very ground upon which they worked, caused an irreparable rip in the fabric of the company. In short, carefully inventorying assets and protecting those of highest economic value by watching them, reading them, encouraging them, nurturing, growing, and maintaining them in whatever form, must be a management priority.

The Operator:

Powdr Corp., privately held company founded in 1994, operates ski resorts, and is one of the three big companies like this in North America. It runs resorts in Vermont and Oregon, but its headquarters are in Park City, Utah. This corporation and its employees are the tragic characters of this story, because all this waste could have been prevented.

 The Resort:

Ultimately, this battle centered on the ski area called Treasure Mountain Resort opened in 1963,  with a single gondola, base and summit lodges, a chairlift, a J-bar, and a 9-hole golf course. Like any asset it grew into the wintry jewel of Utah.

By 1966, it changed its name to Park City Ski Area, and ground-leased the terrain from United Park City Mines, ("UPCM") with an annual lease payment of only $155,000 per year. A ground lease allows a business to operate as if they were landowners, for long periods of time.

In 1975, the parties amended the lease to expire on April 30, 1991; but added options to extend the lease for (3) three 20-year terms, possibly extending the lease out through 2051.

The Combatants:

The aggrieved party is Powdr Corp., who purchased Park City Ski Area in 1994 and renamed it Park City Mountain Resort ("PCMR").

Your opportunistic jerk is Canada-based, Talisker, acquiring United Park City Mines in 2003.

The ground lease between the successors-in-interest, Talisker and PCMR, covered approximately 2,852 acres of prime ski terrain, much larger than Aspen, Colorado; indeed, twice the size of the Texas Medical Center, and over 3 times the size of Central Park.

The Problem:

PCMR missed sending a timely 1^st renewal notice letter to Talisker (successor to UPCM). The lease required at least 60 days notice of the extension before the expiration  of the lease agreement, which was April 30, 2011. At a minimum, the letter had to be sent by March 1^st, 2011. Boom.

Seeing economic opportunity to make a better lease deal than they had w/ PCMR, Talisker decided to lease the land to Vail Resorts, Inc., one of Powdr Corp.’s biggest competitors. (Villain Vail could then link the PCMR land to their adjacent resort “Canyons”, making one of the biggest ski areas in North America).

Villain Vail paid much more in annual rent than PCMR’s $155,000; but they controlled 2 of the 3 resorts in the Park City Ski area (see map above). Twenty (20) years after the renewals were instituted, on the first opportunity to renew, PCMR failed to properly execute on the agreement. It was their fatal mistake.

The Lawsuit:

It took Talisker 8 months to respond to PCMR’s mistake but when they did, the lessee, PCMR filed suit against Talisker, claiming that Talisker waived, or was “estopped” by its own conduct from enforcing the notice provision in the lease. It was a desperate plea.

For these reasons and many others, this “high-profile lawsuit” involved most of the terrain underlying one of the largest ski resorts in North America. At one point in the litigation, PCMR foolishly presented a fake, "backdated" letter to make it seem as if the renewal was timely submitted; nevertheless, this tactic didn’t even come close to working, and they were severely punished by the court.

After Talisker reached their new lease agreement with the new tenant, Vail, they commenced an eviction action based on the expired lease with PCMR, sort of like getting rid of the ex-wife! The new marriage between Vail and Talisker was a 50-year deal, w/ six 50-year renewal options. Vail agreed to pay at least $25 million a year in lease rent; but the contract also leaves Talisker with the development rights to 4 million square feet of real estate on the resort. It was a win-win for the new parties to this agreement; but PCMR was left out in the snow without any skis.

The Ruling:

In 2014, Utah's 3rd District Court Judge Ryan Harris ruled in favor of Talisker because the resort missed a 2011 lease renewal deadline. He ordered eviction unless the parties could get together to settle the case before the 2014-2015 ski season. Naturally, PCMR wanted to appeal, but the parties couldn’t even agree on a bond amount for PCMR to post during the continuing court proceedings. Meanwhile, in June, 2014, the judge ordered the parties to Mediation.

Just two days after PCMR announced that it would pay the $17.5 million bond required to continue litigation and operate the ski area during the 2014-2015 season, PCMR's owner, Powdr Corp., announced the sale of the ski area to Vail Resorts, Inc. for $182.5 million in cash.

It was finally over, and the sale cancelled the bond and ended over 4-years of litigation between Toronto’s Talisker Land Holdings, LLC and PCMR, costing many millions of dollars in legal fees. Vail Resorts now owned both Canyons and PCMR in the Park City Utah ski area (colored purple and orange in the picture above). PCMR had to absorb decades of lost profits, for what was basically one simple sentence in a lease.

The Aftermath:

Previously, Talisker showed that Powdr CEO testified that the chief financial officer of Powdr Corp. was responsible for "understanding the lease," CEO Cumming said in his deposition, however:

 "that a 'combination of people' had responsibility for the Leases and that, as CEO of Powdr Corp., he was ultimately responsible for renewing the Leases."

CEO Cumming also said in his deposition:

"I run this business. Ultimately I'm responsible. And I have chosen not to try to pin the tail on the donkey . . . So the miss has been pinned squarely on me." Mr. Cumming viewed written confirmation as a “mere technicality.” 

At one point, Mr. Cumming, who was also a member of the board of directors of Powdr Corp., encountered a distraught PCMR President and General Manager, Jenni Smith, on May 2, 2011, after the deadline was missed:

"He explained that he was 'trying to tell her that things like this happen. Things like this mess that's going on right now happen,'"

Powdr Corp.'s chief financial officer at the time, Jennifer Botter, testified that:

"she thought the option to extend was 'automatic.'" According to court records, Botter, "actually testified that she believed the Leases had been extended because the renewals were 'automatic and . . . had already been gained verbally."

Botter resigned from Powdr in 2014. The moral of the story: don't let "things like this happen," read the lease and follow its provisions; or risk losing your business, a good job, and your favorite ski run.

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[much of this story is summarized from earlier news reports, but the fair use of any copyrighted material shown or paraphrased herein, is not an infringement of copyright. 17 USC.Sec.107]

Opinions©Mark H. Pillsbury

The last will be first, and the first will be last

RE: Parables in the Bible (Matthew 20):

It has been said a parable is “an extended simile or a metaphor that explains aspects of spiritual truth in everyday terms.” The word parable describes the act of placing two objects or ideas side by side for comparison. They allow us to see ourselves in contrast to other people.

Christ’s use of parables is often commended to preachers and teachers today as an alternate way to reveal a truth; however, Jesus used parables primarily to conceal or hide His message from casual, indifferent, or unbelieving hearers. “It is given unto you to know the mysteries of the kingdom of heaven, but to them it is not given,” Christ declared (Matt. 13:11 KJV).

The Parable of the Generous Landowner and the Laborers in the Vineyard:

The parable is part of Jesus’ reply to Peter, which begins in Matthew chapter 19, verse 28. The message of the parable can be summarized in this statement: The operative principle in the kingdom of heaven is not merit but grace. 

The Apostle Paul’s words reiterate: “For by grace you have been saved through faith. …not as a result of works, so that no one may boast” (Eph. 2:8–9); however, many assume that we earn God’s blessings by our works — apart from God’s grace.

The parable of the laborers in the vineyard teaches that not only our salvation, but also our entire Christian lives are to be lived on the basis of God’s grace. Also the parable teaches about two amazing qualities of grace: the abundant generosity of God’s grace, and His sovereignty in dispensing it. But its that tricky verse, what does it mean?

“The last will be first, and the first will be last”

What does that verse mean to you?

Examples:

Modern Advertising: tells us that it’s all about me and that attitude is everything.

Could it imply that some people connect right away with new information that may take others longer, depending on their relative experience? No, the slow are not to become first. The last are to become first.

Does it enforce the concept that God is the one before whom all accounts will be settled?

The workers who came later were not hired because they were lazy. They were ready to work but none would hire them. These workers were economically and socially disadvantaged. Is this parable a lesson on social/political status?

Mary said, “He has cast down the mighty from their thrones but lifted up the lowly.” (Luke 1). Many see the socio-economic ramifications of the parable. Those with low rank in the present, rise to the top in heaven.

The "day" in the parable can be seen as a typical “lifetime” of the person, if we read it chronologically. Each can be called to work for the Kingdom at any time. God is in charge of the timing of our Kingdom work.

Many believe the vineyard was an analogy for the people of Israel (see Isaiah 5 or Psalm 80). The vineyard was a symbol of Israel and its promised prosperity.  With this knowledge the message of the parable seems clearer.  The workers who come late still get to take part in the reward of the vineyard and its owner. Is Jesus communicating a radical message to the leaders and the people of Israel that says, “The Kingdom of God has been opened up to the Gentiles (called) too.”  Further, “the nation of Israel may have been first (chosen), but that doesn’t mean that others cannot receive the blessing.” Does Jesus suggest that the ones who show up later, the Gentiles, have just as prominent a place in the kingdom of God as the Jews? That would have been culturally outrageous to the Jews at the time! Jews thought dirty dogs were better than Gentiles.

Argued another way, the context implies the 12 disciples correspond to the workers hired at the beginning of the day, akin to the beginning of Jesus’ public ministry. Those hired later correspond to other people who became Jesus’ disciples later in His ministry. The timing there is in question for the earliest and heartiest of the disciples.

What a great reversal was what Christ did on the cross:

Have among yourselves the same attitude that is also yours in Christ Jesus, who, though he was in the form of God, did not regard equality with God something to be grasped. Rather, he emptied himself, taking the form of a slave, coming in human likeness; and found human in appearance, he humbled himself, becoming obedient to death, even death on a cross. (Paul quoted in Philippians). Jesus was the god-man who had to become last, so that we would be first. That is why it is called a great reversal.

Some questions for my readers:

1. Where do you see yourself in this parable of the laborers in the vineyard? What does it mean, “the last will be first, and the first will be last.” 

2. Isn’t it like an egotistical human to question who serves best? who serves most? who then gets the greatest reward?

3. What is your attitude toward the owner of the vineyard? Do you expect the Lord to do what’s right? Is this a story that makes you uncomfortable?

What two attitudes are shown here?:

Generosity—by the landowner in how he pays the laborers, and 

Jealousy—people who worked there all day and got paid the same; there is no room in the kingdom of heaven for those with either "a mercenary spirit" or "an envious spirit."

The system of law is easy to figure out: you get what you deserve!

The system of grace is foreign to us: God deals with us according to who He is, not according to who we are.

Isn’t this parable about servants. And how a servant/leader views the “day’s wage” we get for our service? Could it be all about who gets the credit?

• All our service is already due to God; it belongs to Him anyway.
• The ability to serve God is the gift of His grace.
• The call to serve God is the gift of His grace.
• Every opportunity to serve is a gift of His grace.
• Being in the right state of mind to do the Lord’s work is a gift of grace.
• Success in serving God is the gift of His grace.

©Mark H. Pillsbury