MAD RIVER GLEN COOPERATIVE
MINUTES OF MEETING
MAY 17, 2003
After due notice, a meeting of the board of trustees of the Mad River Glen Cooperative was convened at 8:00 AM on May 17, 2003, on the 3rd floor of the Basebox at Mad River Glen Ski Area in Fayston, Vermont.
Trustees Alan Moats, Deb Steines, Leigh Michl, Jito Coleman, Lu Putnam, Jay Appleton, Paul Finnerty, Ken Eaton, and Rick Moulton were present. Also present were General Manager Jamey Wimble as well as Eric Friedman, Andrew Snow, Sharon Crawford and, keeping minutes, Eric Scharnberg. Several shareholders were present as well.
CALL TO ORDER: President Alan Moats called the meeting to order at 8:05 AM.
APPROVAL OF PRIOR MINUTES
Upon motion duly made by Mr. Moats and seconded by Mr. Michl, it was unanimously
VOTED: To accept the April 5 and 12, 2003 Board of Trustees meeting minutes.
MANAGEMENT REPORT
Mr. Wimble asked if there were questions regarding the previously circulated May Management Report (copy attached).
Share Sales (questions):
Mr. Michl commented that, earlier in the Co-op’s history, share sales had been around 100 per year with redemptions at about 10 per year. With share sales ahead of budget but steadily declining and a roughly constant level of redemptions, the Co-op was now taking in much less cash from share sales. Mr. Michl suggested that the board revisit its present practice of honoring redemption requests at the earlier of (1) 10 new shares sold or (2) six months following the date of the redemption request. Mr. Michl suggested, and the board agreed, that this practice would be reviewed at a later date. Mr. Wimble commented that there are now 8 shareholders on the waiting list to be redeemed.
Ms. Steines requested that the share sales/redemption figures be added to the financial report.
Operations (questions):
In response to a question about the leaking gas tank, Mr. Wimble assured that it will be dug up and repaired. There was no environmental impact.
In response to Ms. Putnam’s question about the review of the forestry plan, Mr. Wimble replied that they would visit with the forester in one or two weeks to make sure that all current policies are sound. Ms. Steines added that the Stark Mountain Foundation is willing to make grants to the Cooperative for tree planting.
In response to a question about the power system, Mr. Wimble replied that the old transformers need to be replaced and reinstalled. This is an $80,000 project. GreenMountain power (GMP) will replace the units, which is $10,000; but putting the new transformers underground is a $70,000 job, not covered by GMP.
Financials (questions):
Mr. Wimble opened the floor for comments on April financials.
In response to a question from Ms. Steines, Jamey replied that the Cooperative is indeed still on track for $267,000.
Ms. Steines asked whether the gas tank expense should be considered an expense or capital item. It will be capital.
Opening and Closing Guidelines:
In response to several shareholder questions and as part of a regular review of the policy by management, Mr. Wimble prepared a revised policy for opening and closing the mountain, a copy of which is attached.
Mr. Wimble summarized key elements of the revised policy. He stated that the staff is still shooting for a 110-day schedule beginning on or around December 18; conditions permitting. Mr. Wimble said that using this baseline; any time after Thanksgiving, if the mountain is skiable it will be open, even if it loses money. We can lose money mid-week, but some good ski days can bring in a lot of revenue. Running the mountain at a reduced service level can and is done early- and late-season, but once in the main season, it is important to run at a full service level to avoid a negative experience by infrequent or new skiers, among other reasons. It’s acceptable to alternate lift running, but we must keep all base operations, ski patrol, and ski school at full. An important late season issue is that it’s historically difficult to depend on a closure much later that April 1st, much of the staff generally leaves by then but some will stay on. Up until now, the mountain has been scheduled to remain open through the weekend of the Annual Meeting (1st weekend in April). Ms. Putnam said that shooting for the 2nd weekend of April as a goal gives customers a tendency to plan for a later weekend trip, and thus it would serve as a good marketing ploy.
Mr. Moats said that this agenda shouldn’t drive operations – weather/conditions are most important. Ms. Steines (and others) pushed to remain with the “Mid-December – Mid-April” theme, with the justification that it keeps people in “ski mode” in April.
Mr. Moats opened the discussion to shareholders.
Shareholder Wendy Bridgewater commented that this “Mid-December – Mid-April” theme is a good policy and a good idea, but there seems to be no effort to make it really happen. In addition, we need to make an effort to groom carefully. Mr. Wimble and Ms. Putnam said that this does happen. Ms. Putnam restated that the Mid-April goal is an important one.
Mr. Moats summarized that the publicized schedule of “Mid-December-Annual Meeting” should be changed to “Mid-December-Mid-April”, but that the budget should remain the same, because the mountain is ordinarily not open that late.
A shareholder commented that, with respect to the 50% breakeven calculation, whether there was a way to include a monetary value for passholders. Mr. Wimble commented that the MadRiver passholder enjoys an excellent value already, with a breakeven of only about 14 days skied per season.
Ms. Bridgewater said that she has seen a dismissive attitude on the part of the Co-op towards midweek passholders. Mr. Moats said that this was not the case this season – MRG has shut down the mountain because of bad weather, but pulled it back online because of surprise good conditions. It’s tough to pull things back online once they are closed. Wendy pointed out that in previous years, the mountain has been closed midweek even when good skiing conditions prevailed.
Another shareholder commended Andrew Snow for his excellent publicity of conditions, as well as keeping skiers posted on reasons behind opening/closing decisions. This kind of personal attention keeps people coming to the mountain.
Mr. Moats recognized the shareholders’ suggestions that MRG should strive to be more reality-based rather than schedule-based, and said that comments would be duly noted. He also added that, in his personal opinion, it’s good to be flexible. MRG reopened this year because of good conditions, but like at Sugarbush, no one was coming to ski late season. Mr. Moats pointed out that the Co-op cannot base operations strictly on emotions and sentiment alone. A balance needs to be found between sentiment, business and skier safety.
Mr. Michl asked about the revenue recognition policy with respect to seasons pass sales. He also pointed out that, early in the past season, MadRiver had been below budget in profitability because the mountain was open and utilized almost entirely by passholders. Mr. Finnerty pointed out that the implication that passholders were causing a loss early season was inaccurate. Ms. Steines asked that this issue be saved for future discussion.
Mr. Finnerty said that regarding early/late season, MRG used to honor all passholders on weekends when closed midweek. Now it’s not done as much. Mr. Moats and Mr. Wimble pointed out that all passes were honored on the first weekend in April, but not early season. Mr. Wimble said that they have to give passholders what they pay for. Wendy said that opening day has historically honored all passes, but not this year. Mr. Moats said that the comment was noted.
The board reiterated that the Opening/Closing Policy was a management, rather than board decision and no action was necessary by the board.
PATRICIA FLOYD, POTENTIAL MANAGEMENT/BOARD RETREAT
Ms. Steines introduced Ms. Floyd, who was the Co-op’s strategic plan facilitator and is the prospective retreat facilitator for the August 9th executive retreat. Ms. Floyd gave an overhead presentation detailing the goals of the retreat:
1.) Continue to develop a chart which facilitates strategic planning for the coop.
2.) Illustrate and determine relations between boards/committees, staff, etc. What are performance/job expectations for each level of MRG? How are they held accountable? How are they rewarded? Feedback mechanisms? Tools needed for the job?
Ms. Floyd said that information gathered at the retreat would be confidential and would be processed in such a way as to be presented in a proactive, goal-oriented manner, without putting individuals “on the spot”.
Former trustee Rocky Bleier asked if Ms. Floyd would interview past board members in her preliminary fact finding. She replied that she would if money allowed. Ms. Steines said that it isn’t necessary to fund interviews back to the beginning of the Coop – it’s expensive. Mr. Michl said that it was pertinent to go back at least 3 years. Mr. Moats offered a counterpoint that it could be valuable to interview one or two key historical staff/board members for historic perspective.
Ms. Bridgewater asked if it would be good to open the retreat up to committees.
Mr. Moats said the intention is not to have a closed-door session, but that the primary goal was to understand and facilitate interaction and co-operation between management and the board.
PRICING
Mr. Moats opened, Mr. Wimble presented.
Day tickets:/span> The proposal is to move from a $42 ticket price to a $45 ticket price – still in the very low range in the state of Vermont.
Passes: There would also be a 5% increase in most pass prices and a 10% increase in Value Passes.
Mad Card: Mad Card prices would be unchanged and management would publicize the value that they represent, even to shareholders.
Rationale: The rationale for these increases is that MRG needs to achieve a level of “operating profit” between $170,000 and $200,000 annually to fund its capital requirements and achieve “steady state”, sustainable operations. The Co-op had a significant increase in insurance costs, necessitating the increase in ticket prices.
2002-3 BUDGET
Mr. Wimble reviewed the projected 03-04 budget (see attachment). Ticket sales figures were extrapolated from the 8-year average of actual ticket sales according to the “regression sales model”. In his opinion, the budget is attainable.
Basebox: In response to Mr. Coleman’s question about the Basebox, Mr. Wimble replied that the Base box did exceptionally well during the 02-03 season, mainly due to the exceptionally cold temperatures.
Insurance: Mr. Wimble pointed out that by joining VSAA (VT Ski Areas Assn.) we have helped with our coverage on employees. MRG went to a higher deductible on catastrophic health insurance, but will fund this increase in the deductible so that the net effect on employees is unchanged.
Marketing: Marketing expenses for the 03-04 season are budgeted at a cut of nearly $20,000 from the prior year. The focus is now on retention rather than building skier visits. These were not easy cuts to make. Marketing was the one area that they felt could be cut, because it has been so successful.
Shuttle: The shuttle has been cut because it was not very successful. There has been negative feedback about its performance.
Cooperative Expenses: Co-op expenses are budgeted at $48,855 vs. $28,230 in the prior year. This is the result of more accurate categorization of expenses, rather than an increase.
Mr. Finnerty asked if there is a way to quantify/itemize the free passes given to kids under 12? Is the increase in Mad Cards because of the fact that with a Mad Card you can get a free kid pass? Will raising prices on midweek passes make people get value passes? Mr. Friedman replied that nearly half of all Mad Card holders have kids with free passes. MRG’s biggest growth area in terms of passes is in teens. No other ski area has that. This is remarkable because we do not allow snowboarding. MRG’s 12 and under ski free program has been so successful that MRG has received an award from the National Ski Area’s Association.
A lengthy discussion ensued regarding the strategy of relatively high rates of day ticket prices relative to seasons pass prices. The board discussed several ticket pricing issues, including the possibility of raising day ticket prices even more.
Mr. Michl commented that further increases in day ticket prices could reduce skier days and lift lines, but be revenue neutral.
Mr. Coleman summarized that the board needed to have a pricing philosophy that would be consistent with the two important goals of building our community and lowering the lift lines. These are high priority issues that need to be tested, rather than guessed at each year.
Mr. Finnerty asked about a surcharge on day tickets that would go into a special reserve (i.e. Single Chair fund, etc.) Ms. Steines said that that is essentially already in place through the annual allocation to the “Single Chair Reserve”.
Ms. Steines recapped that what we have seen is a long-term financial plan that needs to be implemented. Mr. Michl added that we have agreed on community and sustainability, but need to work on the lift lines to maintain the MRG experience.
Mr. Wimble said that one way to increase revenues is to shift the main double to a triple chair. This would put more people on the mountain and make on- and off-loading less intimidating to beginners. There was general concern about this idea.
LONGRANGE FINANCIAL PLAN– see attachment
Ms. Steines presented the long range financial model prepared by the Finance Committee. The model indicates that annual operating profit of $167K (plus 40 net share sales) to $200K (plus a net 20 share sales) is necessary to reach financial sustainability.
Mr. Finnerty and Ms. Putnam expressed his discomfort with the idea that more share sales are not necessary, but still felt that we should strive for growth in our shareholder base. Ms. Steines said that we only have capacity for 300 more shareholders (currently have 1700). More shareholders would require a change in the Bylaws. She further commented that, in her opinion, the mountain needed to be sustainable from operations, rather than share sales because share sales will certainly ebb and flow and generally decline in future years because of a limited market.
Ms. Putnam agreed with Mr. Finnerty, and said that we should continue to push for share sales, as it will take years to sell 300 shares to separate individuals as we are redeeming 10 plus shares per year.
Mr. Moulton asked whether we want to have a philosophy based on ticket sales or share sales to provide amenities for shareholders. Mr. Wimble said that we don’t want to solicit too many share sales because that implies that we can’t sustain operations without them. We need to reserve that appeal for when we need it. A shareholder commented that it’s important to solicit shares because it never hurts to invest money or to build and support community.
Upon motion made by Ms. Steines, and seconded by Mr. Michl, it was unanimously
VOTED: to accept the 2003-4 budget.
ELECTION OF COMMITTEE CHAIRS
2003-4 Candidates Shareholder Relations – Rick Moulton
Facilities – Jito Coleman
Finance – Deb Steines
Personnel, 20th – Alan Moats
Board Development – Leigh Michl
Also, the Election Committee will be chaired by Deb Steines.
Upon motion made by Ms. Steines, and seconded by Mr. Eaton, it was unanimously
VOTED: to accept the 2003-4 committee candidates.
In light of the fact that the meeting was running considerably behind schedule, Ms. Steines suggested that the Committee Reports be tabled. Mr. Moats asked for a quick review of each committee to address any critical issues.
Finance: Ms. Steines indicated that their work had already been summarized.
Facilities: Mr. Coleman said that these had already been addressed.
Personnel: none
Board development: none
Shareholder relations: Mr. Moulton said that they would put the discussion regarding the parade float out to the listserve. There will be a 5th of July barbeque, and volunteers are needed for both efforts.
Shareholder Bleier asked if board packets could be made available online before meetings. Mr. Appleton replied that board packets are extremely difficult to put out prior to meetings, and that agendas are circulated ahead of meetings.
Other shareholder comments praised the recent work on the Basebox, and suggested that perhaps health benefits could be offered to more part-time staff.
Another shareholder pointed out that employees were not included in the decision to select the retreat facilitator. Mr. Moats replied that he believed that Mr. Wimble was acting as the representative of the employees, and that there had been no intent to make this a “back-room” process. Mr. Moats said that the board appreciated this feedback and said that the selection of the facilitator was a proposal and not set in stone.
In keeping with the practice of holding executive sessions (with only trustees present) to discuss negotiations or personnel matters, the board entered a closed session at approximately 11:55am. The purpose of this executive session was to discuss General Manager compensation.
The board came out of executive session at 12:15pm.
Upon motion made by Mr. Moats, and seconded by Mr. Michl, it was unanimously
VOTED: to approve a salary increase for the General Manager.
There being no further business to come before the board, the meeting adjourned at 12:20pm
Respectfully submitted, Eric Scharnberg
A true record.
ATTEST: __________________________________________
Leigh Michl, Secretary
Attachments:
Operations:
Capital projects and summer maintenance are in full swing. There is a lot to do this summer with all the projects being done in-house.
We have detected a leak in our underground gasoline tank. The leak was contained in the “interstitial space” There was no leak to the environment. We will most likely have to replace the tank. This is an expense we were not counting on. Do not know the amount at this time.
Mad River won the NSAA marketing award this year for “Skier Retention” with our 12 and under program. This is a very prestigious award and we are very proud of it. Eric and I will be accepting the award at the NSAA convention in San Diego next month.
I received a letter from David Dillon, president of VSAA congratulating us on our season. Mad River produced some of the best numbers in the state this season.
Summer Adventure Camp will be 3 days this summer instead of 2 per week starting in mid June.
We will be doing an assessment of our forest management program with Joe Nelson from Upland Forestry on May 22. This will be a walk through to see how our management practices are working on the mountain.
Share sales:
We sold 3 share for the month of April against a budget of 3. 38 shares have been sold YTD against a budget of 33.
We have redeemed about $9,000 of our bond debt due in 2008. Our intent is to redeem $20,000 per year, so the debt will be paid off in 2008.
Financials:
Total cash at the end of April was at $610,000. $150,000 of the $610,000 is in the single reserve.
After insurance premium increases and bonus payoffs, we are still looking at a projected $267,000 net op income for the year.
April P&L looks good, see financials.
Mad River Glen Coop
Opening and Closing Guidelines
Revised April 2003
Background:
Since the Coop purchased the ski area, there has been some confusion as to what are the decision making factors in deciding to open or close the mountain. The following are the guidelines that management will use to make these important decisions.
These guidelines will primarily apply to periods outside the 110-day ski season planned for in the budget, from mid-December to the weekend of the Shareholder Annual Meeting (first weekend in April).During the budgeted season, the mountain will remain open as long as weather and snow cover allow.The guidelines below will apply before mid-December and after the Annual Meeting.
This document is a guideline for management to use. Management needs flexibility to make sound business decisions when deemed necessary for the well being of the mountain.
Factors to Consider:
1. Skier Safety
Skier safety is not well defined; management and some skiers might have very different opinions as to what constitutes skier safety.Management considers the mountain safe for skiing when there is adequate snow cover to ski top to bottom without risking skier’s safety.Safety concerns include water bars and large stumps or rocks and that adequate turns can be made on a trail in order to maintain skier control. It is also important to remember that Vermont Tramway code requires that anytime a lift is operating there has to be enough staff to evacuate a lift in two hours if the lift becomes inoperable. Mountain transportation is a critical part of this.
2. The well being of the mountain terrain
The well being of the mountain relates to what damage the mountain may suffer from ski or equipment traffic on the terrain.Trail surfaces should be frozen so tracks do not tear up the ground.Snow depth has relevance in this category; 8” is significantly different then 3”.
Another aspect of the well being of terrain criteria is whether the trail system support multi-day skiing with the snow cover in place and forecasted weather.This relates to opening more than closing but is a criterion which has to be evaluated.
3. SeasonPass Holders
An important criterion is the season pass holder who has paid in advance for a season of skiing.The mountain wishes to give pass holders the highest number of ski days for their loyalty and commitment.This is much easier to address in early season as there is pent-up demand.In the late season, the same level of demand may not exist and management will monitor pass holders’ usage of the ski area.
b style=’mso-bidi-font-weight:normal’>4. Financial
Financial is a straightforward criterion – Will enough revenue be generated to cover the cost of operations?
The cost to ski the main mountain per day is:
Wages$1,428
Fuel$300
Maintenance$260
Total$1,988
Number of tickets required to break-even @ $35.00 (Early & Late season rate) = 57
This does not account for any losses that may be being encored in the ancillary departments.The figure also does not account for variance in ticket yield, which would likely be less due to junior and senior tickets, half day tickets and other discounts.
5. Staffing
Staffing relates to the availability of staff and the ability to give staff proper notice so they can plan their work schedules not only at Mad River Glen but the jobs they are leaving or going too.
It should be remembered that in early season the mountain operations staff could be on split shift for snowmaking, meaning some of the staff might be working 12-hour night shifts, unavailable for lift duty.
Early and late season, all services would run with the exception of Ski School
How the Decision Will Be Made:
Management states that the factors of skier safety, well being of terrain and staffing be left to their judgment in accessing early season opening or late season closing with the following guidelines:
If management believes skiing is sustainable, it will open the mountain anytime after Thanksgiving.It will keep the mountain open in the spring as long as there is demand to meet half the cost of operating.
Notification of Decision:
Being that the decision to open or close will be made almost on a moment’s notice, the following avenues will be used to notify skiers of the mountain’s opening and closing:
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Budget |
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Prepared 4-28-03 |
Purposed 03-04 |
Oct ’02 – Sep 03 |
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Ordinary Income/Expense | |||||
