MAD RIVER GLEN COOPERATIVE
Minutes of Board of Trustees Held May 8, 1999
After due notice, a meeting of the Board of Trustees of Mad River Glen Cooperative was convened at 9:05 a.m. on May 8, 1999, at the Basebox, at Mad River Glen Ski Area in Fayston, Vermont. Trustees Bleier, Curtis, Eaton, Kirkpatrick, Meier, Michl, and Russell were present and voting throughout. Trustees Schultz and Singer were absent. The president, Mr. Meier, presided. The minutes were kept by Ms. Kirkpatrick, the secretary, with the assistance of Cooperative’s counsel, Peter Monte.
Minutes of Prior Meetings
After discussion and upon motion duly made and seconded, it was unanimously
VOTED: To approve as corrected the minutes of the April 3, 1999, meeting of the Owners.
VOTED: To approve as corrected the minutes of the April 10, 1999, meeting of the Board of Trustees.
The trustees discussed the committee nominations made at the April 10, 1999, meeting. After discussion, the trustees decided that the personnel committee, as nominated in April, was too large. The trustees decided that the personnel committee should be comprised of the president (serving as chair), the vice president and past president of the Cooperative. Otherwise, the trustees made final designations of the committees as nominated in April. Accordingly, the committees of the Board of Trustees are comprised as follows:
Finance Committee: Michl (chair), Curtis and Russell
Personnel: Meier (chair), Eaton, and Kirkpatrick.
Facilities: Bleier (chair) and Russell.
Single Chair: Kirkpatrick (chair), Bleier and Schultz.
Board Development: Eaton (Chair), Kirkpatrick, Meier
Update On Old Business
Mr. Mudget, the Cooperative’s auditor, has replied to Mr. Singer’s comments regarding the patronage rebate. Mr. Mudget confirms the correctness of the auditors’ original calculation of the rebate. The President has requested that a copy of Mr. Mudget’s letter be appended to the minutes of this meeting. The president informed the trustees that the Cooperatives 1997 tax return has now been filed with the patronage rebate stated as originally approved by the Board of trustees
There are rumors that the Cooperative has an interest in purchasing chalet #10, which is located near the Mad River Glen parking lot. Neither staff nor the trustees were aware of any plan to purchase this property.
The president reported on the status of discussions between the Cooperative and the Mad River homeowners regarding maintenance of private roads around the ski area. Those conversations are bogged down because the Cooperative has requested that the homeowners create a formal, legal organization which has the capacity to enter into a binding contract. The Cooperative awaits word from the homeowners on the status of this effort.
General Manager’s Report
Robert Mazza, the general manager, reported to the trustees. He stated that the outside work crew was beginning routine summer maintenance work. The general manager has received numerous applications to fill the vacant position of ski school director. He is encouraged by the quality and number of applicants.
Summer events scheduled for the Cooperative include July 3 barbecue with live music and participation in the Warren 4th of July festivities with a float in the parade and a booth at Brooks Field. An August 21 barbecue championship, with live music, is also scheduled at the ski area.
Staff has been attempting to arrange an "extreme golf" event on August 21. It is doubtful that this event will occur however, because of lack of sponsorship. Mr. Russell encouraged organization of an extreme golf event because of it’s promotional value. Mr. Friedman replied in the absence of additional sponsorship, cost of the event this year would amount to approximately $14,000. It was the sense of the board that if the cost to the Cooperative could be confined to the $2,000 to $5,000 area, staff should continue this event.
The general manager reported that three weddings are scheduled to be held at the ski area and more are possible.
The general manager reported that grips on all lifts had passed inspection. The chairs have not yet been inspected.
Eric Friedman, marketing director, made his budget presentation to the board. Mr. Friedman reported that last years objectives were to (1) increase skier traffic, and (2) enhance the skiers’ experience. Last year Mad River experienced a 1% growth in skier visits apparently due to increased season pass sales (day ticket sales were significantly lower than in the prior ski season because of poor weather conditions). Mr. Friedman also reported that there was last season a good "buzz" about Mad River Glen.
Mr. Friedman stated that special events held at the ski area last year have been generally successful and have a high promotional value.
Mr. Friedman’s goals for next year are: (1) 100,000 skier visits (2) Growth of the Mad River Glen community (3) Enhancement of the positive image of the Mad River Glen Ski Area (4) To assist in the marketing of each department to maximize department revenue.
The steps Mr. Freidman proposes to accomplish these objectives are to : (1) increase season pass sales, (2) enhance youth programs, (3) coordinate with department heads the appearance of the ski area and entertainment activities, (4) sell space for appropriate advertising displays at the ski area, (5) create special promotions for operating departments.
Mr. Meier questioned the proposed marketing emphasis on pass sales and suggested that marketing efforts should directed towards increasing day ticket sales. Mr. Friedman explained that (excluding college passes) 78% of pass holders are shareholders or members of a shareholder’s family -- so increased season pass sales should lead to more share sales.
Changes proposed in the marketing budget include: increased expenditures for data base development, direct mail efforts and Internet promotion. He proposes a budget of $140,000 for promotion which represents a 24% increase from last year’s. He noted, however, that approximately 40% of that increase does not represent additional spending by the Cooperative but is a shift in expenses in postage and payroll taxes from the office administration budget to the marketing budget.
Actual cost increases would fund increased direct mailings, a pilot plan for a guest booking organization, support of the valley transport service and increased payroll.
The pilot guest booking plan proposed by Mr. Friedman would be an effort to cooperate with local lodging to book guest visits to Mad River Valley and Mad River Glen Ski Area.
Fayston Education Fund
Paul Sipple appeared before the trustees as a representative of the Fayston Education Fund. Mr. Sipple summarized the financial Impact on the Town of Fayston budget has been caused by Vermont’s recent changes in the manner in which local education costs are funded ( so called "Act 60").
A private charity, the Freeman Foundation, has offered Fayston and other municipalities in Vermont a total of $25 million to support local education efforts and, therefore reduce taxes. Fayston hopes to raise $200,000 in two years which would be matched dollar for dollar by the Freeman Foundation. To date, the Fayston Education Fund has received pledges for approximately $160,000, including $40,000 in individual pledges, $20,000 from the Sugarbush Ski Area and $100,000 derived from local government sources.
Before Act 60, Fayston’s tax rate was $1.10 per $100 of valuation. Following Act 60 its projected tax rate was $1.79. If the $200,000 fund rasing succeeds, Fayston’s tax rate will be reduced to about $1.45.
The Fayston’s education fund seeks a $6,500 pledge from Mad River Glen Cooperative for each of the next 2 years.
After discussion on motion duly made by Mr. Eaton and seconded by Mr. Meier it was unanimously
VOTED: To table further discussion of the Fayston education fund until the June meeting.
David DePetina addressed the trustees. He is the manager of the Alpine Options, the ski shop at Mad River Glen. He informed the trustees that the Cooperative derived $17,382 in revenue from Alpine Options for the 1998 - 99 ski season. Alpine Options seeks a 3 - 5 year commitment from the Cooperative to support the shop’s effort to increase sales.
The general manager has reported that staff have polled other ski areas for their experience in operating a ski-area-run shop. The feedback from these areas has been negative.
Mr. DePetina stated that he is a member of the Cooperative. He believes that shareholders would strongly support a ski shop and this support would increase sales over what Alpine Options can generate. The Mad River Glen Ski Area’s shop should not be a t-shirt and souvenir shop but a full range operation. He also opined that Cooperative ownership of the shop would assist in share marketing because of increased opportunities for customer contact. He suggested that the committee form a study group and defer a decision on this matter until the committee completes its analysis. Mr. Bleier stated that he believes the risk of running a ski shop are over stated. The strength of likely shareholder support and the opportunity for year-end clearance sales will keep the risks manageable.
Mr. Curtis stated that there was insufficient data before the board regarding cash flows for a ski shop.
The general manager informed the trustees that staff’s recommendation is to grant a three year lease to Alpine Options, for the Cooperative to retain the right to operate the gear page and to negotiate an option for the Cooperative to take ov________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ on inventory purchases.
In favor: Eaton, Kirkpatrick, Meier, and Michl.
Opposed: Curtis and Bleier
Upon further discussion and a motion made by Mr. Bleier and seconded by Ms. Kirkpatrick it was
VOTED: To retain the Cooperative shareholders’ 10% discount at Alpine Options and allow the use of Mad Money at Alpine Options.
In favor: Bleier, Curtis, Eaton, Kirkpatrick, Meier, and Michl
Ticket and Pass Pricing
Ms. Kirkpatrick stated that her initial inclination was to support an increase in ticket prices to match an increase in costs in the ski area. Mr. Curtis countered that a price increase has a minimal revenue effect (a one dollar increase generates an additional $12,000 in revenue). Mr. Curtis observed that another increase would undermine shareholder enthusiasm and questioned whether an increase was necessary after the Cooperative realized a profit last year in "bad snow" conditions. Mr. Eaton stated that the Cooperative has increased prices in each of the last four years and the time has arrived to hold the price line.
After further discussion and upon motion duly made by Mr. Curtis and second by Mr. Eaton it was
VOTED: To leave unchanged the prices for day tickets on weekends($36) and holidays ($38)
Voting Results :
In favor: Bleier, Curtis, Eaton, Meier, and Michl.
Opposed: Kirkpatrick and Russell.
The trustees then discussed the mid-week day ticket price which is now $29. Mr. Meier then observed that a $1 increase seemed reasonable and price flexibility is available given the pricing at nearby ski areas. Mr. Curtis disagreed -- he observed that mid-week tickets are sold to bargain hunters and are therefore price sensitive. He also suggested that mid-week skiers are a valuable source for Cooperative share sales. After further discus and a motion duly made by Mr. Bleier and seconded by Mr. Michl it was voted
VOTED: To leave unchanged the mid-week day ticket price ($29)
In Favor: Bleier, Curtis, Eaton, and Michl.
Opposed: Kirkpatrick, Meier, and Russell
The trustees next discussed the mid-week pass price for shareholders ($150) and for the general public ($180). Mr. Curtis observed that the price of a pass is less than half of the price of a six-day pass. Mr. Russell observed that given the quality of skiing at Mad River Glen,$150 is far too little to charge for any season pass. After further discussion and upon motion duly made by Mr. Meier and second by Mr. Michl it was unanimously voted
VOTED: To increase the mid-week season pass price to $199 non-shareholders but to retain the $150 dollar price for shareholders.
In Favor: Bleier, Curtis, Eaton, Meier, and Michl
Opposed: Kirkpatrick and Russell
Free Skiing for Youths Age 12 and Under
Dan Bauerman presented to the trustees a proposal which would allow youths ages 12 and under to ski for free at Mad River Glen if they enroll before October 15. The purpose of this proposal is to build the ski area’s long-term customer base, especially with families.
Mr. Bauerman has calculated that the $25,750 revenue loss that this program would cause is only 1.5% of total Cooperative revenues, or stated differently, about 6.67% of ticket and pass revenues. Mr. Bauerman stated that a significant portion of this lost revenue would be replaced by sales of tickets to parents accompanying free-skiing youths and by increased overall service revenues at the ski area.
The general manager reported that the Cooperative’s staff all support Mr. Bauerman’s proposal for free skiing for youth. Mr. Bauerman has reversed the staff’s past attitude in opposition to free skiing for youths. The staff recognizes that Mad River Glen must attract more youth to succeed over the long term.
The trustees posed questions and concerns to Mr. Bauerman and the free skiing proposal was tabled for later discussion at the next meeting.
The board entered executive session at 12:25 to discuss legal matters. The general manager and legal counsel attended the portion of the meeting that dealt with legal matters. The trustees met alone for a discussion of personnel issue. The board resumed open session at p.m.
There being no further business to come before the meeting, after discussion and upon motion duly made and seconded it was unanimously
VOTED: To adjourn.
Adjourned accordingly at p.m.
A true record.
Mary Kirkpatrick, Secretary