Magic Mountain Changes Ownership…Again

The real story behind the co-op that never was

It's always sunny at Magic Mountain. PHOTO: Derek Taylor

It’s always sunny at Magic Mountain. PHOTO: Derek Taylor

Magic Mountain, Vermont, is famous for steep, technical terrain, myriad tree lines, and a down-home, community vibe. One thing it has never been known for is a clear and stable ownership situation.

The saga continues for this Southern Vermont gem that keeps fighting an uphill battle. Magic lost two lifts and much of its snowmaking when Bromley abandoned it in 1991. Since reopening in 1998, the ski area has endured several management and ownership changes. It seemed to finally find solid footing under Jim Sullivan and his company JSL Magic, which had run the ski area since 2006. Then, just prior to the 4th of July holiday, an email was sent out to pass holders and members of the Magic Faithful Club that Sullivan would no longer be operating the resort. A new company called Magic Mountain Resort, formed by Tom Barker, a retired IBM and Lockheed Martin engineer who has had a business stake in Magic for more than a decade, would be taking over resort operations.

In order to fully understand the situation, we’ll need to delve more into Magic’s somewhat murky ownership situation. The immediate implications, however, are that the ski area plans to operate as usual this winter. Season passes that were bought from the former owner at early season prices will still be honored. The Magic Faithful Club—a collection of supporters who put up $3,000 each, initially to form a cooperative ownership group—would have no further role with the resort.

After Bromley abandoned Magic in 1991, this East Coast gem reopened in 1998 and has since fought an uphill battle to stay open. PHOTO: Derek Taylor

After Bromley abandoned Magic in 1991, this East Coast gem reopened in 1998 and has since fought an uphill battle to stay open. PHOTO: Derek Taylor

Barker also said that Sullivan was cooperating with the Vermont Securities Division to account for how the roughly $600,000 of club money was spent. Considering the infrastructure and maintenance projects completed by Sullivan’s company, Barker says he has little doubt that the money was spent at Magic Mountain. “I don’t see any reason to believe there’s something nefarious,” Barker says. Sullivan plans to stay on through the summer, at least, to help with the transition.

Don’t Call It a Co-Op

There are two entities that own Magic Mountain. The land and most of the infrastructure is owned by Magic Mountain Management, which has three partners: The family of Larry Nelson, now deceased, who bought the property at auction in 2002; Rob Lyszczarz, a New Jersey-based Realtor, and Barker, who owns a minority voting share (all are longtime Magic skiers). MMM then leases the ski area to an operating company. Most recently this was JSL Magic and Sullivan, but it has included other entities over the years.

“The operating company is actually where the real money can be made and lost,” says Barker. “There’s a lease fee to the ownership company, but quite truthfully, it’s very small. The owners basically are interested in the mountain succeeding and running well.”

In 2009, Magic Mountain became a media darling when the operating company—Sullivan’s company—announced plans to sell partial ownership to a skier-owned co-op. The sale was successful. According to reports, 333 shares were eventually pledged, breaking the 300 limit needed to legally become a co-op. The co-op partnership, however, never materialized.

333 shares were sold to the Magic Mountain co-op in good faith. But the cooperative agreement was never backed by real property, and the agreement fell through. PHOTO: Derek Taylor

333 shares were sold to the Magic Mountain co-op in good faith. But the cooperative agreement fell through. PHOTO: Derek Taylor

When Mad River Glen sold to a co-op for $2.5 million in 1995, Betsy Pratt sold the entire ski area, real property included. Magic’s situation, however, is much more convoluted. Sullivan’s operating company did not own the land or infrastructure, and neither Sullivan nor the owners of the property were willing to give up 100 percent of their investments to go to a full co-op. “It’s harder to put that kind of an asset program together for the operating company without having it backed up by the property,” says Barker.

Barker also says the plan encountered legal issues. Once a board was established and did due diligence, Barker says, it learned that the co-op partnership not only needed permission from the State of Vermont, but from every state in which an investor lived—six or seven more states—and to pay fees, and likely fines, in each. “This was a fundraiser for the states, apparently,” Barker quips.

Instead, Sullivan offered to return the money to the co-op investors, or they could leave it with the mountain and become part of the Magic Faithful Club. Many left, but most stayed. In February 2014, Sullivan said there were 218 club members. MFC members get 20-percent-off season passes, and a child’s pass for half price. (They were also supposed to get a voting say in how the money was used, which is the center of the controversy surrounding Sullivan and the Securities Division). Mostly, though, they get to keep skiing Magic.

“I don’t need a plaque on my wall that says I’m a shareholder, or a Faithful member,” Greg Williams, a Magic regular from Connecticut who has been skiing here since 1978, told me in February. “I don’t care. I just want to come here, click my skis on, and go take runs—and continue to do what I’m doing for many years to come. That’s the only reward I need.”

The Tax Man

Sullivan’s eight-year tenure at the helm of Magic Mountain came to a head in June, when a notice was posted that the area was delinquent on its taxes.

“Under the terms of the lease, JLS Magic was supposed to pay the taxes,” says Barker. “The owners were not at all happy that they had to suddenly kick in money for that.” Magic Mountain Management also requested an accounting of the Magic Faithful Club funds, Barker says, but got no response. “It left us in doubt that the money was there to get the mountain open this year,” Barker says. A decision was then made to terminate JSL Magic’s lease to operate.

Under Sullivan's watch, lifts at Magic Mountain under went major overhaul and repairs. PHOTO: Derek Taylor

Under Sullivan’s watch, lifts at Magic Mountain under went major overhaul and repairs. PHOTO: Derek Taylor

Barker, however, was unprompted in his praise for what Sullivan did well during his tenure. “Jim was very successful in growing revenue, and he’s been very successful in getting high quality snowmaking and grooming out on the mountain,” Barker says. “Unfortunately, he didn’t manage the costs of doing that to keep them in proportion to revenue. He had no net gain coming from the mountain. He just ran out of money.”

In an interview with Sullivan in February 2014, he said Magic had seen growth every year since he took over, excluding the horrendous winter of 2011-12. Both Barker and sources with JSL Magic say the area broke even the past two seasons. Barker says the plan going forward is to maintain the same product the ski area has been putting out while cutting costs by about 20 percent—no easy task in an industry as fickle as skiing. Barker has an advantage, however, in that he’s taking over the operation relatively debt free.

There’s also little doubt that Sullivan is leaving the place in better shape than he picked it up. Under his watch both lifts under went major overhauls and repairs, the mountain bought a new groomer, and the snowmaking system was repaired. The ski area also weathered a catastrophically low snow year, and Hurricane Irene, which filled the snowmaking pond with silt—both of which hit the resort financially.

As for the club, Barker says he’s still contemplating what benefits the new ownership company will extend to the Faithful moving forward. “I’m thinking it through at this point,” he says. “I’ll probably do something in their favor, but it probably won’t be as lucrative as what they originally had.”

To many of the Magic Faithful, the benefits appear to be the least of their worries. Geoff Hathaway, a Magic Faithful member who also was V.P. of marketing under Sullivan, calls the transition yet another example of someone from the community stepping up to make sure Magic continues to operate. Just as the community did when the Red Chair needed a paint job, when the snowmaking lines needed welding, and when the resort needed an influx of capital.

“The people who seem to be the least concerned [about the ownership change],” says Williams, “are the ones who put money in.”

Add a comment

  • WitchToRedline

    Jim’s got a cloudy history, but I believe he meant well and am pretty confident that the vast majority – if not all – of the funds were directly used to keep the mountain open and functioning. Numbers have improved and with the last two seasons being break even, I’m fairly confident that a business savvy management team could start turning a modest profit in year 1. Hopefully after 3-4 years of profitability and smart investment, the capital will be available for major improvments (like a magic carpet in the beginner area) that will drive additional revenue. While it is certainly nice to have an uncrowded mountain – even on holiday weekends – missing out on a large percentage of families and almost 100% of the first time and once a year crowd isn’t smart. Those demos spend a lot of money on day tickets, rentals, lessons, food & drink, etc.
    Long live Magic!

    • Ttruck

      I for one know mr. Sullivan gave it his all in best interest of the mountain. I will forever love magic and am thankful to Jim for all he has done. The ski industry is always unsure even for those with multi million dollar backers. So thank you Magic for all that you are to those you love you. And I say job well done to Sully, my self and many others would never be where we are today with out you both ( Jim and the mt.) I will always wish magic the best?

      • David Williamson

        That same guy you admire borrowed $25,000 from my wife to blow snow on the mountain last year… and has not paid her back. He doesn’t return phone calls… he has said he can’t pay. We loaned him the money against the snow groomer, which it turns out already has liens against it, so how nice of a guy is he really? He’s a lawyer, so he knew damn well he couldn’t borrow money against collateral he had already borrowed against. That’s law school 101… yet he did it anyway… So how nice of a guy is he? How many more like my family are out there knowing we’ve been had and our money is gone? You want to thank someone for last season? Thank my wife. She paid for everyone to have snow to ski on. That’s your nice guy Jim Sullivan. As far as I’m concerned, he’s nothing more than a con artist. He knew better. He knew damn well what he was doing when he took my wife’s money.

        • Frank

          That sounds like good ole Jim, he is a snake in the grass.

    • David Williamson

      You want to know how to develop Magic Mountain ask me. I am the unknown Vice President of Strategic Planning for Magic Mountain, who Jim kept secret from everyone. Still, I spent the last 9 months working for JLS Magic, LLC drafting a comprehensive, 10 year, plan for the mountain. It only failed to take flight when Jim could not demonstrate clear title to the property. I’m interested in speaking with anyone who wants to learn what I spent the last year working on.

      • artie

        Do tell.

  • GtNar

    I mean, its incredible that Magic is still operating. Talk about fighting a losing battle with more ski areas calling it quits every year, its incredible to think that the mountain broke even over the past two years!

  • proud independent

    Ski Areas like Magic are few and far between in the hyper-corporate resort business these days. But more people are realizing and seeking the joys of a simpler, purer ski experience. Jim did a great job of realizing that vision. It’s a tough business for sure, especially when confronted with the disaster that was the 2011-12 snowless winter, but every one at Magic pulled together to keep Magic going–and Jim deserves credit for building on that natural community environment here. Besides some of the East’s best skiing, it’s the skiers at Magic who make the place special–and make it quite the opportunity for someone out there who “gets it”.

    • David Williamson

      Read above if you want to know what kind of a guy Jim really is.

      • Ttruck

        It’s up to you where and when you want to loan money out. And considering the state magic has always been in… well enough said there. And further more many people have put money into magic not to receive it back, but have the understanding that their favorite ski mountain will supply them with another wonderules season with a great magic community ( I applaud and thank these magic faithful) it ducks to feel had , but I don’t feel that anyone is a con-man.

        • David Williamson

          You’re right that it’s up to me where and when I want to loan money out, but, when the person you’re lending money to gives guarantee against property that he is not legally allowed to use as collateral, that is a whole different matter. If I come to you and tell you that I need to borrow money, and convince you that I’m a good guy, and write a promissory note that promises to pay, and if I don’t your money is guaranteed against, say, a Porsche, and I tell you that I own the car outright with no liens against it. I go so far as to write into the promissory note that the car is “Free and Unencumbered.” I pull out my corporate financial statements and show you where I paid off loans against the car the year before.. I engage in a process of convincing you that everything is above board. Then, later you learn that I lied and that the car has three separate loans against it… That according to the laws of the State of Vermont I was not allowed to enter into such an agreement with you… That indeed such an action is a felony… What if I was a lawyer and, as such, knew damn well what I was doing when I defrauded you of your money by tricking you into engaging in a financial transaction under false pretenses? Do you think that is OK? Just because you like Magic Mountain does not make it alright that this man took advantage of my me and my wife.

          You mention these other people who put money into Magic Mountain with no intention of getting anything back. That’s great. They’re really nice people. My wife was not one of those people. She doesn’t ski. This wasn’t $1,000. This was $25,000, from her retirement savings. She did this because the mountain wouldn’t open without the money to blow snow. She also did it because she was promised she would be paid back. She was falsely assured that the money was guaranteed against property.

          Further more, we don’t feel “had,” we were taken advantage of. You may not feel that anyone is a con-man, but the facts simply say otherwise. We’re not the Magic Faithful. We are people who believed Jim when he told us lies, and still our money is gone, and now Jim is gone from the mountain.

          • Guest 2

            Guest: You pose the question, “You want to know how to develop Magic Mountain ask me.”. So, I’m asking, as I’m interested in your opinion about how to run Magic. I’m not interested in trade secrets or details that might be taken and used by another owner/ownership group. But again, you asked.
            I’m also aware of various people who’ve committed time, ideas and made the offers of money (in hindsight, glad to see he didn’t take them up on the offer) only to have these ideas incorporated into the Mountain Ops with no credit to the origin.

  • David Williamson

    I’ll tell you one thing: it pisses me off in ways I don’t have words for when people spend their time talking about how Jim is such a great guy. He’s a guy who borrowed $25,000 from my wife to blow snow on the mountain to get opened last season and hasn’t paid her back. His company owes me back wages of $6,000 which I’m sure I’ll never see. Also, just FYI, that’s bullshit that the mountain broke even for the past two years. Utter crap. I’ve got the complete P&Ls for the last eight years, and the mountain lost money every year except one, and it wasn’t in the last two years. Just more lies from Magic Mountain.

  • Paladin

    Derek, that was a pretty douschie one sided article.

    Every unscuccessful business venture has lopsided benefits for those involved meaning that some folks benefited and some folks lost – and it is always the entrepreneur who gave the most and lost the most.

  • Chuck Allison

    This was sounding like a place to check out this season, after the comments, I’m not so sure……

  • Frank

    Love Magic, Jim not so much!

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