This story has been updated with additional details from former Eaglecrest General Manager Kirk Duncan in response to comments made about his report during the ski area’s board meeting Jan. 2.
Eaglecrest Ski Area’s future may well be determined by how many tens of thousands of cruise ship passengers are willing to pay $171.50 to ride the gondola starting in a couple of years — and how the resort copes in the meantime with its maintenance and employment issues until it can overcome its overdrawn bank account some years from now.
Those findings are part of an updated assessment of the ski area by a former general manager scheduled to be presented to the Juneau Assembly this month. The revised report tones down some of the harshest criticism about Eaglecrest’s board of directors being the cause of many ongoing woes, but members said at a meeting Thursday they still consider the report overly critical and lacking a full vision of future opportunities.
The financial assessment comes as Eaglecrest is facing a range of economic and operational challenges, due in large part to aging equipment and infrastructure that in many instances hasn’t been properly maintained. The Assembly is being asked to provide additional funds to help keep the city-owned ski area going for at least a couple more lean years until the installation of a used gondola hopefully allows an expansion into profitable year-round operations.
“This report endeavors to present the range of issues affecting Eaglecrest, projections for future revenue, and options for ‘bridging the gap’ between today and such time as winter operations at Eaglecrest are subsidized by summer revenue,” Kirk Duncan, the resort’s general manager for seven years beginning in 2004, wrote in an executive summary of the report discussed by the board Thursday night.
A graph shows Eaglecrest Ski Area’s revenue, expenses and financial support from the Juneau Assembly for the fiscal years 2015 to 2025. (City and Borough of Juneau)
A budget review by Duncan dating back to 1997 shows Eaglecrest has operated at a loss every year, 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 Assembly provides support funds each year, but a period of net-positive years between 2007 and 2017 has been followed by five of seven years (including the current one) with a deficit even with city funding.
Eaglecrest currently has a negative fund balance of about $170,000, with a further deficit of about $920,000 possible by the end of the fiscal year, according to Duncan. He has noted Eaglecrest can continue to operate legally even though the ski area’s bank account is empty since the city can keep paying bills that are due from its bank account.
The long-term outlook 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).
Duncan, in an interview Monday, said the high-end ticket price is the current plan under an agreement Eaglecrest has with Goldbelt Inc., which is getting up to 25% of the gondola’s revenue during at least the first 25 years due to the urban Alaska Native corporation providing the city $10 million for installation costs. The company is also estimating the number of potential visitors based on how many currently ride the Goldbelt Tram downtown.
“There is an agreement that Goldbelt is going to pay Eaglecrest $85 per rider,” he said. “And they believe that the (Goldbelt Tram) is doing 300,000 riders a year. They believe ultimately that this project will do 150,000 riders a year.”
Duncan said his report makes a more conservative peak estimate of 125,000 annual riders since he questions if the higher figure, as well as the $85 ticket price, is realistic.
“That’s actually one of the biggest comments I’m making in this report, is that there was no market research done on the gondola,” he said. “I was part of the team that built the tram way back when and the McDowell Group was hired, and they talked to passengers getting off the cruise ship and said ‘If you could take a tram up there would you and how much would you pay?’ And there was a lot of research done before the tram was built and that’s a step that was missed here.”
Duncan said upgrades at the tram are part of the reason Goldbelt believes the gondola pricing is realistic.
“They’re going to drastically redo the top terminal of the tram and within three years they will probably be at $110 a ticket for the tram,” he said. “So that’s why they believe that people on the ship will be willing to pay $171 to ride the gondola at Eaglecrest, because the price point of the tram will be going up.”
Goldbelt CEO McHugh Pierre declined to comment Monday about Duncan’s observation, and the company’s plans for the gondola and tram.
Duncan said the $65 and $45 gondola ticket scenarios are meant to show outcomes if the $85 ticket price is indeed deemed too high. His report assumes the same number of passengers will ride the gondola regardless of price, beginning with about 40,000 during the first summer in 2027 and rising gradually to 125,000 by 2034.
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.
“It is possible to see the summer operations supporting the winter operation if cruise ship visitation stays at or above current levels and if the Assembly and ultimately the community support substantial summer cruise ship passenger visitation to the ski area,” Duncan writes in the report’s conclusion. “Given that (Assembly) general fund support could end in 2032, based on revenue and expense figures, Eaglecrest could have somewhere between $10 and $61 million to reinvest in the mountain between 2026 and 2043 while keeping the ski area financially viable.”
A chart shows Eaglecrest Ski Area’s financial forecast through 2043 under scenarios where per-passenger tickets to a gondola cost $85, $65 and $45. (City and Borough of Juneau)
Duncan was hired as an advisor for Eaglecrest by the City and Borough of Juneau following the forced resignation of former General Manager Dave Scanlan in June. The report details a list of operational deficiencies such as a primary chairlift that’s closed due to maintenance failures as well as employee wages that aren’t competitive, while offering guardedly optimistic projections about the gondola generating enough income to make Eaglecrest sustainable on a long-term basis.
Among the updated report’s other observations:
• “Three of the five senior management positions are held by newly hired individuals who are qualified to do the job but face steep learning curves.”
• “As made apparent by the loss of the Black Bear Chairlift for the 2024-2025 ski season, Eaglecrest has not maintained its lifts to an acceptable standard and at present does not have adequately trained lift mechanics.”
• “Eaglecrest has not kept up with paying competitive wages to its employees…and lacks a coherent long term pricing structure.”
Omitted from the updated report is a passage from the first draft presented to the board in early December that largely blamed them for Eaglecrest’s problem.
“(Board members) lack the industry knowledge needed to provide supervisory overview of the area,” the now-deleted passage states. “As a city department, some of the past and current issues at the ski area would not have been allowed to grow to the point that the board had to take drastic action.”
Instead, the revised assessment notes “while board members are very dedicated to the ski area and its success, the governance structure of an empowered board directing a general manager with broad authority creates a sense of separation between Eaglecrest and the rest of CBJ…the Assembly should take a hard look at Eaglecrest’s governance and consider where improvements in accountability and support can be made.”
Duncan — who attended Thursday’s board meeting remotely, but did not make any comments — said Monday the change was based on feedback from some people reviewing the initial document, but his concern about the experience of board members remains.
“I’m not trying to be negative about the board, I’m just concerned,” he said. “The ski area is a very complex business and it’s just difficult when you have seven volunteers trying to manage something that they don’t necessarily have extensive experience doing. There are skiers and snowboarders, but that doesn’t mean that they understand the importance of biweekly financial reports and where are the key performance indicators. And I just haven’t heard any anything from the board that really makes me feel that they’ve got incredibly strong financial understanding of the ski area.”
Duncan was hired to help Eaglecrest during its leadership transition this year because, among other things, “he’s the last general manager to actually build major infrastructure” at the ski area, including the Black Bear chairlift that is currently closed and the Porcupine Lodge at the base, said CBJ Tourism Manager Alexandra Pierce, in explaining the report’s intended purpose to the board. She said while Assembly members requested Duncan draft a business plan for Eaglecrest, “the report goes beyond the scope of a strict business plan and provides a full analysis of the situation.”
The Assembly is scheduled to review the plan — which is subject to further revisions — on Jan. 27. Eaglecrest’s board decided last Thursday they will meet at least once more before then, in a special meeting this Thursday, to consider changes.
“I think there’s a lot of places where we need to provide some context to this report because I think when read in a vacuum there are some concerns there,” said Michael Satre, the board’s chairman.
Brandon Cullum, said Duncan’t report reads more like “an observation of the moment” than a comprehensive plan.
“It’s not a comprehensive observation of all the opportunities that are available,” Cullum said. “And so I think there’s a lot that’s left unsaid with Kirk’s observations and with regard to the different paths forward that are available to us. And so I think spending some time identifying the choices and opportunities that aren’t presented, and kind of broadening the perspective provided by the report might be very helpful.”
Some board members also said they are already working on problems highlighted by Duncan in his report.
“I applied for the board two and a half years ago (after) reading in the Empire that there were people being paid under minimum wage,” said Hannah Shively, noting wages have risen since and further increases are being evaluated. “So the understaffing and the neglect of the pay plan over the past decade is not new. And we need to provide that context of this is where we are, is Eaglecrest as an organization deserves to request that support given this history of making do with less and less and less (to do) more and more.”
Some residents attending Thursday’s meeting also expressed concerns about Duncan’s report.
“It takes into no consideration the efforts the board has made to raise money (to) improve the infrastructure up there,” said Bruce Garrison, a former Eaglecrest board member. “It takes no credit to the Assembly who has given us money to improve snowmaking and do things up there positively. It’s just really frustrating to read it and the term ‘a data dump’ is what it amounts to. I’m really disappointed. It’s not a business plan and this board is going to have to come up with something to counter it with the Assembly.”
Duncan also shares some blame for Eaglecrest’s current problems, Garrison said.
“Under Kirk Duncan the decision was made to build Porcupine Lodge rather than replace a chairlift — and that would have been the time to do it,” he said. “I think Kirk Duncan made some real mistakes as a general manager and he’s just carrying them forward.”
Deborah Craig, a former fundraiser on behalf of the ski area, was among those arguing Duncan’s report shows the board’s error in judgement when it forced Scanlan out after seven years as general manager.
“Hindsight is 20-20 and over the last seven months it’s been evident that the former general manager lacked the support needed to do his job adequately,” she said. “It’s noteworthy that Mr. Duncan’s report states that there’s been inadequate funding for maintenance for the last 10 years. So retrospectively Mr. Scanlan is looking even more competent than many of us realized.”
• Contact Mark Sabbatini at mark.sabbatini@juneauempire.com or (907) 957-2306.
