Last Gasp for Blue Knob?
July 2, 2004
According to an Altoona Mirror article that appeared on or about April 8, the owners of Blue Knob have hired a new manager. The new manager is from England and is to market BK to Europeans as well as look for someone to buy the resort. The current owners of BK (the Gauthiers, from the DC area) claim that about $50 million would have to be invested in the resort to make it competitive. And, although they claim to have had several competitive offers, they declined to sell BK, because the new owners wouldn't have had much capital to invest in BK after buying it. The Gauthiers said that they want to see BK prosper after selling it.
My best guess is that the Gauthiers haven't really had any legitimate offers for BK. If they had received any competitive offers, I believe that they would have sold it. Also, I question how much the Gauthiers really care about the mountain, given that they logged the heck out of it without a timber management plan. If fact, their logging contractor was fined for "stream encroachment and disturbance" by the PA Fish and Boat Commission. I think that the REAL truth is...that all of the logging, resulting erosion and failure to complete the large snowmaking lake (which is located on PA State Park land) as promised has made Blue Knob next to impossible to sell. And, IF BK is ever sold, it will be to yet, another marginal operator.
Do they think that people from Europe are actually going to fly across the Atlantic just to visit Blue Knob?? What are these people smoking? If an Intrawest-type company bought BK, and invested lots and lots and lots of money, it would have potential. It's under 3 hours from Baltimore, Washington, Harrisburg, and Pittsburgh. And Altoona isn't far away and that's a great small city- and it has commercial air service!!! (always ranked high in national quality-of-life ratings for small cities). I actually looked at buying a condo at BK 1.5 years ago, lured by the low prices and reasonable drive time (170 miles all highway from my house, via 83N to the PA Turnpike).
I think that BK was one of the most desolate, depressing 'resorts' I have ever been to. And unless you have a monster truck, those gravel roads are a nightmare. Glad I didn't buy there!
I agree with you; marketing BK to Europeans simply doesn't make sense! But, I was just repeating what was stated in the recent article on BK in the Altoona Mirror. Also, according to the article, the current owners of BK met their new manager (from England) while on a ski vacation in Vail, CO. I have to wonder what they really know about this guy and how capable he is. One thing's for sure, the Gauthiers don't appear to be putting any money into BK these days. So I doubt that the new manager will be much of a help. By the way, it's a good thing that you didn't buy a condo at BK!!! Most of the condos at BK are now worth between 12K and 25K; a small fraction of their original sales price. Blue Knob is indeed a barren, desolate place. All of the logging has really taken it's toll! Unfortunately, many of the BK regulars have become VERY angry these days; they're scared that the place is going to close and prefer to blame those who have dared to criticize the management and their massive logging operation. Time will tell, but my best guess is that Blue Knob's days (as a ski area) are numbered!
The European idea is not as far-fetched as you might think. Poland, Hungary, Russia, Ukraine, and the Czech Republic, for example, have huge skiing populations but very few local resorts to accomodate them. With the weak dollar, charter companies like TUI Intl. might be able to offer them a North American ski holiday for about the same price as Austria and maybe even less. The attractive thing about the Mid-Atlantic is that the packager could throw in a cheap tour of DC--a major US tourist attraction.
Eastern Europeans are very price sensitive: they care more about the bottom line than vertical or fast lifts. They are quite accustomed to skiing smallish resorts. That's not a problem for many of them.
If BK, could bring the price down enough, they might make the place attractive to some of the European consolidators. Typically, Europeans rent equipment, so a cheap "kit" is also a plus. Also, the ability to rent condos is a plus because these folks like to cook and party in the condos to save bucks. They're more American than some Americans in this regard. Furthermore, American food just is not very appealing for Europeans.
You'll note that TUI's UK web site offers packages right now to Bulgarian and Slovenian resorts: http://www.thomson-ski.co.uk/country.asp
For anyone who reads Polish, here's their Polish site: http://www.thomson-ski.co.uk/country.asp
PS I forgot to mention ski instruction. You get many newbies on these tours, and American instruction is excellent for beginners--especially in this area. Our instructors have a lot of patience.
What shape are these 12-25k condos in? Seems like at that price the risk has been taken out of the deal.
If most Eastern Europeans are very price sensitive, would they still consider Blue Knob when the dollar gets stronger? (As it was in the not too distant past for a long period of time.)
I have to count myself in with the doubters on this one. John, you've convinced me that it's not a totally insane idea and merits some consideration; I don't think it will be practical.
The prices of the condos at Blue Knob seem to have bottomed out 5 or 6 years ago. And, have been holding steady since then. A friend of mine bought a nice, large end unit for 23K a few years ago and has been happy with it. Granted, he had to tear out all of the old, musty 1970s decor and appliances. Now his major worry is the age of the building, given that the quality of the original construction was quite poor. In some of the Blue Knob condos there has been significant water damage due to frozen pipes, so I'd watch for that.
I remember when the deal to buy BK fell through, I think that the owners of BK kicked the price up to about 7 million at the last minute and that killed the deal. Shortly thereafter, the Gauthiers went into the logging business with a vengeance! It's believed that they made well over 1 million off of their highly destructive logging operation. Frankly, I don't see anyone buying BK anytime soon, because most buyers want to "wait things out" and pick BK up for a "song" AFTER it has gone bankrupt. And even if someone were to buy BK for a song, I think that they would find it hard to make much money running BK.
How much land is left on the mountain that could be developed into houses or condos? That's a key factor for any potential buyer.
Regardless of land, however, I think that BK could make some money, even without developing a lot of residential property. It's got the vertical and terrain many of us are looking for within day commuting distance of DC Baltimore. With some modest investment in snowmaking, this mountain could draw a lot of people away from Whitetail, Liberty, and RT. In fact, I'm surprised Snowtime has not considered purchasing BK: a season pass good at all 4 resorts would be AWESOME.
I think no one is interested in Laurel right now because of 7 Springs. 7 Springs owns the Pittsburgh market, and the addition of the GREAT WESTERN territory will solidify this position even further. Every serious skier I know from Pittsburgh buys a season pass to 7 Springs.
BK is different in that it is in day striking distance of DC/Baltimore. Hence, it is looking at a much bigger market of boarders and skiers than 7 Springs/Laurel--a market that really has not been fully tapped. There are too many skiers here in DC (and I used to be in that category) who basically poo poo the local mountains. These people go to CO, UT, or VT 1 week a year but would rather not ski than try weekend skiing at a local mountain. BK could seduce these snobs if it just beefed up its infrastructure and marketing.
PS One point you make that resonates loudly is that investors in older ski resorts want to pick them up for pennies on the dollar. They'd rather buy something in foreclosure than negotiate with a greedy owner.
There's a fair amount of land left for development at Blue Knob; however the land is either not easily accessible (ie: the land at the bottom of the lifts) or is divided into small lots here and there. Also, I believe that the Commonwealth of PA has stipulated that the large, unfinished snowmaking lake, located on State Park land near the top of the mountain (just above the tubing park) must either be completed by a new owner, or they must reclaim the land.
The reason why I say that a new owner of BK probably couldn't make much money is due to the fact that a large amount of capital would need to be invested in the infastructure and, in environmental clean-up and erosion control. I've been told by reliable sources that 20 million would have to be invested in BK, and that would be just for starters. So, when you look at what the potential return would be on your 20 million (plus, the purchase price), there's NO WAY (in my opinion) that Blue Knob would be a good investment for someone looking to purchase a ski area. Perhaps, if the current owners hadn't let the place run down so much and hadn't aggressively logged the entire area, BK might have had a bright future. I sure hope that I'm wrong, believe me, but I don't things look too good for the long-term continuation of skiing at BK.
Blue Knob has been on my list of things to do for the last couple of years. Sounds like I better not wait. A bad snow year could finish them? What's their "other season" business like?
Blue Knob's "other season" is minimal at best. Although their 9 hole golf course is still open, it has been poorly maintained over the past several years. Yes, it's still playable, but don't expect much. Other than that, there's some mountain biking and mountain bike races. The resort provides weekend shuttle service for mountain bikers; however, I have found that this service isn't dependable at times. Also, the trails that they use are mostly the logging skidder (a logging bulldozer) trails; so, plan on a very MUDDY experience. A mountain biking magazine visited and rated BK several years ago; they gave BK's mountain biking trails a fair to poor rating (I found the article on the internet via Google, you still might be able to find it).
Interestingly, they're not in bad shape. They just look like the 1970's decor wise, could use some new carpet and a REAL GOOD cleaning. Basically, they looked like crap, but nonetheless, all it would take is some sweat equity to make them nice. Nothing physically/structurally wrong with them per se.
You make a good point, I've never seen a condo go to zero. I ended up buying in CV because 1) I think that the potential for appreciation is much greater- mine has already appreciated in the 6 mos. that I've owned it, and 2) It will be closer to DC than the beach resorts once some more of Corridor H is complete. But...at the current BK prices, the building materials are probably worth more than the market value of the units! Anyone have opinions on how low they can actually go??
Actually, you can't get a conventional mortgage at BK however, because Fannie/Freddie will not buy the notes on those places. That kind of scared me off. If you have the cash to spare, and are a speculator, 20k for a condo at BK can't be a worse investment than a new car, however.
I personally don't think BK is appropriate for this type of tourism because it really is not a destination resort, but Snowshoe, 7 Springs, or even the Timberline/CV area might fit the bill.
Many of these people just want to have a nice ski holiday and do not care too much about terrain or vertical. If there is snow and skiing, they will be happy. The superb snowmaking at 7 Springs and Snowshoe pretty much guarantees good skiing during the Jan-Mar timeframe.
TUI runs its own fleets of charter aircraft, so the transatlantic fare part of the package is often quite cheap. Conceivably, these planes could fly directly to Pittsburgh or maybe even Charleston, cutting airport fees and ground transport time considerably.
One fly in the ointment is the US Visa process, which is time consuming and expensive ($150 for most of these countries for a basic tourist visa). Also, not everyone gets a tourist visa who applies--another big problem.
BK was nearly sold 4-5 years ago, according to a former manager over some brews at the BK pub. As the story goes, apparantly the deal was set to close, but BK's owner incomprehensibly spiked the asking price by several million at the last minute. The buyer and his lawyers left the table in a huff. Not much has happened w/the resort since, aside from the logging and some modest snowmaking enhancements. I, too, have been curious about purchasing a BK condo in light of the supposedly low prices, but who can ever be sure the resort will operate from year to year? Too bad--BK offers some of the best terrain in the midatlantic.