PHOTO: Steve Ogle
Jason Davies always dreamed of owning a ski hill. But as a small business owner the investment was always out of reach, until August 23 when BC's Red Mountain Resort launched the first equity crowdfunding campaign (also called crowd investing) in ski industry history. Now Davies, and you too, can own a piece of a ski hill for as little as $1,000 USD—or less than a high-end pair of planks.
"This is an opportunity for me to live my dream at an entry level," says Davies. "The best part is, I love Red."
The crowdfunding campaign was launched just two weeks after the biggest ski resort conglomerate, Vail Resorts, gobbled up the biggest resort, Whistler Blackcomb. The $1.4 billion deal is part of a consolidation trend in the industry. Red's campaign notes that nearly 40 resorts are owned by three companies and about 75 percent of those acquisitions happened in the last 14 years. Howard Katkov, the owner of Red, thinks crowdfunding may be a way for independent resorts to resist the homogenization of skiing and continue to improve while retaining independence from big shareholders and institutions.
"Independent ski areas are an endangered species, but they're super important to the ski industry," says Katkov. "They're the soul of skiing. If you suck the soul out of the industry you lose a big part of what makes skiing special."
Red's community-centered character is a big reason Davies loves the resort. He moved to North Vancouver in 1998 and was a Whistler devotee for a decade before the crowds started to bother him and his wife. In 2008 he visited Red on his yearly ski trip with his mates from his native England. "I immediately fell in love with the place," he says. Later that spring he bought a home in Rossland, the town at the base of Red. The couple has barely skied Whistler since, preferring to drive six hours to Rossland every weekend.
"It's the holy grail, but a shitty place to get to," he says. "I like that there are no lift lines and the snow is awesome, but the community is why I love it so much. It's like an old style English village. Everyone is friendly. I learned the mountain from skiing with people I met on the lift."
It's the same thing that sold Katkov when he bought Red in 2004. He's steadily invested in the resort every year. The biggest expansion was the addition of Grey Mountain in 2013, adding almost 1,000 acres and bumping the inbounds area to 2,877 acres, which is larger than Jackson Hole. To fund the improvements, Katkov borrowed from banks or raised money with investors, which along with using cash flow, is how most resorts pay for capital improvement projects. But last winter, as Katkov and his team discussed future plans, including cutting more runs for cat skiing, building a new restaurant, clubhouse, and overnight cabins on Grey and extending the Silverlode chair, they came up with a different idea—crowdfunding.
"It seemed like a good way to raise capital and reach out to our community to see if they are emotionally connected to the brand enough to open their pocket book," says Katkov. He says traditional avenues for raising money are available, but he thinks crowdfunding is a better way to maintain the mountain's independence.
Like supporting an indie band's new album or the latest gadget on Kickstarter, the StartEngine.com campaign includes different perks for various investments. The minimum $1,000 tier 1 perk is five lift tickets and access to a new clubhouse. The max tier 6 investment, $25,000, includes a family pass for five years, two pairs of custom skis, and 10 additional lift tickets per year. The investments all include shares in the ski hill. There's no dividend, profit sharing, or seat on the board, but the shares are a real equity stake in the mountain. They can't be traded on the stock market (Red is not publicly traded), but they can be sold privately and could be paid out if the resort was ever sold.
Davies invested in Red Mountain on the first day of the campaign.
"I want Howard to get the money locally," Davies says. "I know what can happen when big banks or investors looking for a return on investment get involved in small places. If he gets the money from the community that loves Red it won't turn into a Big White, Whistler, or Sun Peaks."
At this point the campaign is only an expression of interest; no money is changing hands just yet. The campaign will run for 90 days with the goal of raising $10 million. Three weeks in, nearly 1,000 backers had pledged $3.9 million. After it ends Katkov will decide whether the commitments are enough to fund the planned projects. He says that magic number is about $5 million. If it’s a go, Red will work through the legal and accounting paperwork required for issuing shares by the SEC and Canadian regulators over the winter. Then they'll present the finalized proposal, including the value of the stocks, to everyone who made a pledge. Only then will people like Davies need to smash their piggybank and pay up. Katkov estimates that should happen next spring, allowing enough time for backers to enjoy the perks next ski season.
"I feel confident we're going to make it," says Katkov. "But even if it doesn't succeed that's OK. It will have let the world know that Red is different and that independent resorts matter."