In a sense, the Juneau Assembly is going to be told what it already knows: Eaglecrest Ski Area needs year-round operations stemming from a gondola to work out to be financially viable. Until then, it’s going to be a struggle for the resort’s aging equipment and underpaid staff.
But now that overview will be accompanied by facts and figures from weeks of in-depth scrutiny by a former general manager, along with rebuttals from Eaglecrest’s board of directors about harsh assertions that have provoked considerable pushback.
The Assembly’s Committee of the Whole is scheduled to get an overview of the city-owned ski area Jan. 27, as members begin early work for next year’s budget that will again include a request from Eaglecrest for funds to subsidize the money-losing resort. But while the Assembly has long provided such funds, the 50-year-old ski area is facing increasingly costly maintenance and other needs — and city leaders are emphasizing they don’t have extra funds for Eaglecrest as other emerging items such as protecting neighborhoods from glacial outburst floods are getting high priority.
“Eaglecrest has been proud to average around 70% cost recovery on an annual basis, however, without annual general fund support from the Assembly, Eaglecrest would cease to exist,” Eaglecrest’s board of directors states in a letter they approved Thursday night for presentation at the Jan. 27 meeting. “The Assembly has repeatedly signaled its support for Eaglecrest by providing the budget increments needed to increase our pay plan to attract and retain ski industry professionals and it has committed to our long-term future by purchasing the gondola and signing a contract with Goldbelt to provide the necessary capital to install it.”
But the resort has gone through a particularly rocky time since last spring, beginning with the forced resignation of longtime General Manager Dave Scanlan in June and continuing with setbacks such as the shutdown of one of the ski area’s two main chairlifts for this year due to mechanical problems. Concerns about Eaglecrest’s staffing, equipment and infrastructure issues resulted in the Assembly asking Kirk Duncan, the resort’s general manager for seven years beginning in 2004, to compile a financial analysis that includes short- and long-term outlooks.
The review shows Eaglecrest has operated at a loss every year dating back to at least 1997 (which is as far back as the study goes), including sums of more than $1 million three of the past four years and a nearly $1.5 million deficit projected for the current fiscal year ending June 30. The ski area currently has a negative bank balance of about $170,000, with a further deficit of about $920,000 possible by the end of the fiscal year — but can continue operating on the presumption the city will pay any necessary bills from municipal funds.
Duncan’s report also finds maintenance of lifts and other equipment hasn’t been at an acceptable standard, and may be facing millions in dollars of repairs during the next couple of years, wages aren’t at a competitive level for the industry, and raises questions about the board’s leadership. He also notes Eaglecrest’s future as a winter ski area is facing further duress as warming climates will likely mean shorter seasons.
The board’s response letter states Duncan’s report “went much further than providing an analysis of the summer business plan and spends a considerable amount of time analyzing current operating conditions and management which, as we understand it, were outside the scope of the study.” But members also agreed with many of the general findings about the resort’s current status.
“Improving the Eaglecrest pay plan is, and will continue to be, a board priority and the board and staff look forward to providing you with a plan to address it,” the letter states, adding a similar passage about the ski area’s maintenance problems.
Salvation, in the eyes of Eaglecrest and many other local officials, is the installation of a used gondola that will make large-scale tourism operations possible during the six-month cruise ship season. Goldbelt Inc., which has provided $10 million for installation costs in exchange for a share of the revenues for at least the first 25 years of operation, is forecasting 150,000 people a year will eventually take tours that include a gondola ride, according to Duncan.
His report — based on 40,000 tourists starting in 2027 and increasing to 125,000 by 2034— includes projections of when the resort could begin operating profitably based on gondola ticket prices of $85 (“aggressive”), $65 (“moderate”) and $45 (“conservative”) per passenger (which Duncan estimates would be $171.50, $145 and $118, respectively, when $35 bus transport cruise line commission fees are added). Goldbelt has stated it expects to charge $85 per ticket, according to Duncan.
If the gondola begins operating in the summer of 2027 Eaglecrest could see a net profit beginning the following year with either $85 or $65 tickets — but the resort’s bank balance would remain in debt two years at the lower price — while it would take until 2036 to operate at a profit with $45 tickets, according to the report.
The letter from the board of directors cites those figures as validation of the belief the gondola offers Eaglecrest a promising future.
“It is highly encouraging that an independent reviewer has reached the same conclusion that the staff, board, and other entities have reached in the past and completely underscores the criticality of completing the project and commencing operations as soon as possible,” the letter states.
However, the board’s letter omits a key disclaimer in Duncan’s report: He states there is insufficient marketing or other hard data about how many visitors may be interested in riding the gondola — his numbers merely forecast budget scenarios if those riders appear.
Duncan also questioned the experience and governance structure of the board of directors, stating “the Assembly should take a hard look at Eaglecrest’s governance and consider where improvements in accountability and support can be made.” The board’s response letter challenges that assertion as well.
“The current board has members who have worked in the ski industry and also has members with expertise in accounting, project management, human resources, and more,” the letter states. “While the members serve at the pleasure of the Assembly and may come and go over the years, an empowered board provides the community input and management expertise needed as we enter the next fifty years of Eaglecrest operations.”
• Contact Mark Sabbatini at mark.sabbatini@juneauempire.com or (907) 957-2306.
