Dillon, Colorado — Back in February, ski bums were shocked to hear that the Alterra Mountain Company was planning to acquire Arapahoe Basin. The Colorado ski resort, known as one of the bastions of independence in Colorado’s ski industry, would become owned by one of the giants in North America’s ski industry. However, this acquisition may not go through.
It was reported last week that the Department of Justice (DOJ) had issued a Civil Investigative Demand to the National Ski Areas Association and RRC Associates. This means that the DOJ is investigating Alterra Mountain Company’s acquisition of Arapahoe Basin. The investigation could either result in the DOJ approving the purchase, putting conditions on the sale, or blocking the acquisition altogether.
For ski history buffs, this feels a bit like Déjà vu. After A-Basin was owned by Ralston Purina for 18 years, Arapahoe Basin, Breckenridge Resort, and Keystone were sold to Vail Resorts in 1996. If this deal were finalized, Vail Resorts would have owned/operated 43% of ski resorts in the state and accounted for 38% of ski visits in the Front Range. Due to fears that less competition would lead to higher costs to Front Range skiers and riders, the DOJ investigated the merger and filed a civil lawsuit against it.
On January 3rd, 1997, the Department of Justice announced conditional approval for the acquisition by Vail Resorts. The $310 million sale to Vail Resorts was approved, but the new owners had to sell Arapahoe Basin to a third party. Their reasoning was that less competition would lead to higher lift ticket rates. Here’s what Joel I. Klein, who was the Acting Assistant Attorney General in charge of the Department’s Antitrust Division back in 1997, said about the acquisition:
“Competition among ski resorts has meant discounts for Colorado Front Range skiers. Without selling off the Arapahoe Basin resort, this deal would have resulted in fewer and smaller discounts on lift tickets.”
After analyzing more than 60 potential buyers, Vail Resorts sold Arapahoe Basin to Dundee Resort Development of Canada (now known as DREAM), which has remained the owner of the Colorado ski resort to this day.
After selling to DREAM, A-Basin employees signed their own declaration of independence, starting its trajectory as an Independent gem in a corporatized Colorado ski industry. Part of the statement read:
“We hold these truths to be self-evident, that all ski areas are created common and equal, except, of course, Arapahoe Basin – ‘cause we have the Pali Chair! – whose loyal friends are endowed by Dundee Realty with certain unalienable rights, that among these are: A Fair Deal, Liberty, and the Pursuit of Fresh Tracks.”
Going back to Alterra’s planned acquisition of Arapahoe Basin, a few things stand out that make this different than 1996. For one, they’re only trying to acquire one ski resort here, which is much different than acquiring three ski resorts that are pretty close to each other.
Based on the name notoriety, it may come as a surprise that this would be only the third Colorado ski resort that they own/operate. The others are Steamboat and Winter Park Resort. This is only one more than POWDR’s portfolio and two less than Vail Resorts in the state. However, you have to wonder if their Ikon Pass affiliations with other Colorado mountains, like Aspen Snowmass (four ski resorts overall), Copper Mountain, and Eldora, will influence the DOJ’s decision.
The Biden Department’s DOJ has blocked acquisitions in the past, most notably the JetBlue-Spirit Airlines merger. They also are attempting to break up LiveNation and Ticketmaster because both of them suck.
However, this DOESN’T mean that they’re going to block the acquisition, as a Civil Investigative Demand is part of the review process. An example is the recent merger between amusement park chains Cedar Fair and Six Flags. The DOJ did its due diligence with this merger, requesting information from the two brands, along with competitors in states like Connecticut. They decided to green-light the merger, and Cedar Fair and Six Flags officially finalized it this week. The merger gives the new Six Flags Entertainment Corporation 51 properties, including 27 amusement parks and 15 water parks, some of which are in regions lacking alternatives.
Ultimately, I think it’s likely that this acquisition still goes through. The fact that this will only be Alterra’s third mountain in the state, along with the increasing likelihood that this DOJ could be replaced by a less regulatory Trump administration in January if this case drags on, makes it likely that Alterra will eventually buy A-Basin. However, we’ll have to see if Alterra’s Ikon Pass affiliations, growing prices, and corporate consolidation across the ski industry will factor into the decision.
Update 7/9: A-Basin informed us that this DOJ review is a routing process that’s typically down with deals like this, and they believe that the acquisition by Alterra will close within the next few months.
Image Credits: Arapahoe Basin, Alterra Mountain Company
