Airport Executive Plaza #5
P.O. Box 5494
West Lebanon, New Hampshire 03784
Fax: (603) 298-1144
Incorporated: 1956 as Sherburne Corporation
Revenues: $114 million (1995)
Stock Exchange: NASDAQ
SICs: 6719 Holding Companies, Not Elsewhere Classified; 7011 Hotels & Motels; 7999 Amusement & Recreation, Not Elsewhere Classified
A holding company of several ski resorts, S-K-I Limited is best known for founding the Killington ski area, located in the Green Mountains of Vermont. Killington is the most popular ski resort in the eastern United States. Other ski resorts owned by S-K-I include Mount Snow (Vermont), Haystack (Vermont), Sugarloaf (Maine), and Waterville Valley (New Hampshire). The resorts also provide summer recreation, including tennis, hiking, mountain biking, and golf. S-K-Fs corporate address is in New Hampshire, where it handles accounting, auditing, and payroll for all its resorts. S-K-I also maintains corporate offices at the Killington resort.
Vermont was an area of early ski development in the United States. The first known rope tow in the United States was installed in 1934 at Gilbert’s Hill, near Woodstock, Vermont. Six years later, in 1940, the country’s first T-bar lift opened at Pico Ski Area, also in Vermont and close to the future Killington resort. Downhill ski areas would sprout up in great numbers after World War II, in part because the postwar economic boom provided Americans with more disposable income for recreation. Also helpful was government support. Access roads, for example, were built with government funds, and the U.S. military, which provided skis and ski equipment for its ski troopers, flooded the market after the war with inexpensive skis.
S-K-I’s founder, Preston Leete Smith, was himself caught up in the new sport. Born in New York in 1930, Smith grew up in Connecticut and attended Earlham College, a Quaker school in Indiana. After graduating in 1952, he returned to Connecticut, settling in Guilford, where he became the manager of a silk-screen shop. At this point Smith could hardly ski, but he joined the New Haven and Waterbury ski clubs, which sponsored trips to Vermont ski resorts, including Mount Snow, which S-K-I would eventually own. Smith recalled, “I had a terrible time skiing every weekend because I didn’t earn very much money. I used to drive 12 hours in a snowstorm in an old convertible, wearing a moth-eaten raccoon coat and eating peanut butter and crackers.”
After marrying Susanne Hahn in 1954, Smith began to look for a career. He considered setting up a ski lodge at Stowe, an existing resort in Vermont, but only briefly. He explained, “I had no money and few people would be interested in financing a ski lodge. But there were a lot of people interested in a ski area, and I thought the financial support would be there.”
Another man, Perry Merrill, Vermont’s commissioner of forests and parks, also had an interest in establishing ski resorts. As early as 1941 he had tried to encourage someone to develop Killington Peak, which at 4,241 feet was the second-highest in the state, but there were a number of drawbacks, such as the lack of a suitable access road. Killington had been used for recreation as far back as 1859, when there were organized horseback excursions. The Killington Summit House, moreover, open from about 1880 to 1915, attracted numerous visitors, including Oscar Wilde.
Smith initially considered purchasing Mount Ascutney, a small, existing ski area. He decided to approach Merrill with his idea. Reportedly, Merrill said, “Come back and see me after you’ve seen Killington.” Smith did. but “It wasn’t until I got into a methodological review of potentialities of various locations that I began to understand the value of Killington, with [the towns of] Rutland and Woodstock already built up on either side and roads coming in to Sherburne from several directions.”
Though he had no experience in the ski industry, Smith began contacting New York and Boston investors, providing them with a plan to develop the Killington area. These early attempts came to nothing. A friend, Tom Bodine, set up a meeting with insurance executives in Hartford, Connecticut. That effort also failed to raise money, but it was there that Smith met Joseph Sargent, who was representing Conning and Company, an investment research firm that advised insurance companies. Sargent, himself just 26 and a long-time skier, found Smith’s plan for a “million dollar ski area” that would have spread across three mountain peaks interesting but too extravagant. At the meeting he told Smith only a scaled-down version would be possible.
In October 1955 Smith and Sargent again met, and several months later the two men, along with fellow Yale graduate Joseph Van Vleck, traveled to Killington to survey the area. Sargent and Van Vleck were impressed with Killington, and the short distance to metropolitan areas was seen as especially important. Sargent also felt a kindred spirit with Smith. They soon decided to form a corporation of stockholders to raise money. The first five investors were Preston and Susanne Smith, Sargent and his wife, Mary, and Van Vleck, each of whom put up $250 for a total capital of $1,250. Called Sherburne Corporation (Sherburne was the nearest town to Killington), the company was registered in Vermont on April 6, 1956.
Although the new corporation would be successful in raising money ($127,500 by 1958), the project was heavily dependent upon cooperation with the state government, which owned the Killington area. Before constructing buildings, cutting trees, or installing lifts, the company needed approval from the state. Most important, perhaps, the resort needed a new access road, which the state agreed to build at a cost of $254,512 (though delays on building the road would put the Killington project behind schedule).
The first trails were cut in 1957, and work on the access road began the following April. Two “poma” surface lifts were installed in late 1958. Smith and Sargent oversaw the construction themselves and took part in the physical work, putting together lift poles, for example, and cutting trees. Sargent explained, “We could simply not afford to take the risk of someone else doing it wrong with what little stockholder capital we had.”
Initially called Killington Basin Ski Area, the resort opened for business on December 13, 1958. Although there was significant coverage in the local press, no special events were held at the beginning. Tickets were sold from a converted chicken coop. Two more poma lifts were installed in January, making Killington the first U.S. resort to have as many as four lifts in its first season. Sales were slow at first; $113.35 in gross receipts in the first week, and in January monthly receipts reached only $2,860.15. But Sargent remembers waking up one February morning to the sound “zoom, zoom, zoom,” as cars flew by on the way to the resort. Killington had been discovered, and in February monthly lift receipts jumped to more than $10,000. The season ended with gross receipts of $42,847. Although Sherburne Corporation lost $21,045 its first year, it proved to its stockholders that Killington would likely be a profitable operation. In fact, from 1958 to 1995, that would be its only year without a profit.
In the 1960s Sherburne would oversee a growing Killington that was destined to become Vermont’s largest ski resort. “Skier visits” reached 118,000 in the 1961-1962 year. More trails were cut, additional lifts were installed (the first chair lift came in 1960), and the state again supported the resort by constructing a large day lodge and expanding the parking lot. The company’s success was attributable to many factors, including a growing population of skiers throughout the United States. But it also had the advantage of being run by two men with complimentary strengths; Smith had a remarkable ability to guess what skiers wanted, and Sargent possessed financial and business expertise.
One of Smith’s most significant early decisions, in 1963, was to install a snowmaking system, which was unheard of in Vermont, where there was much natural snow. But conditions varied, bringing occasional warm weather and rain, and Sherburne wanted to extend the ski season as long as possible to boost revenues. Instead of running from mid-December to mid-April, as was customary for resorts, Killington would eventually be able to open in October and close in early June. Smith also decided to develop an all-novice area, Snowshed, complete with its own chair lift, which was looked upon with suspicion by competing resorts. It was a huge success.
Other Killington innovations included the “ticket wicket,” developed in 1963, which was a piece of shaped wire threaded through a zipper talon; a lift ticket was stapled over it (adhesive would later be used). This not only prevented skiers from sharing tickets but allowed them to attach the ticket to a jacket without damaging the material. The wicket was patented and sold to resorts around the country. It was also at Killington that the famous GLM (Graduated Length Method) of ski instruction was started. Beginners were given lessons on short skis, which were easy to turn, and as they improved they were given increasingly longer skis (longer skis were optimal because they provided more stability). The GLM technique spread across the country, becoming for a while a dominant method of instruction. Beginning in the 1967-68 season, skiers could also ski the first hour at Killington without a charge, allowing them to test conditions before buying a ticket.
By 1968 the resort was recording more than 300,000 annual skier visits, providing $2 million in revenue. 30 trails, nine lifts, and three base lodges spilled off Killington Peak and three other mountain areas. That year Killington also began to install a gondola. Stretching three-and-a-half miles up the mountain, the gondola was the world’s longest ski lift. The gondola brought prestige and increased publicity to Killington, and its great length boosted the vertical drop (the difference in elevation between the resort’s top and bottom) to 3,000 feet, making Killington, in that respect comparable to famous Western ski areas.
In the early 1970s the state of Vermont passed new environmental laws, a reaction in part to reckless resort development (near Willington, Vermont, for example, developers built vacation homes without proper sewage disposal). The new laws made all development, including the construction of trails, lifts, and buildings, more difficult. For Killington, which hoped to build a resort village (as many Western resorts had already done), it meant delays in and an eventual scaling back of its plans. Rather than grow Killington, Sherburne began looking for an existing resort to buy. In 1972 the company purchased a 52 percent share of Sunday River, a ski resort in western Maine, which had many weaknesses, including a poor marketing program and a shortage of indoor space. Sherburne immediately built a new base lodge, revamped the marketing program, and improved the snowmaking system, and by the next season Sunday River recorded a 13 percent increase in revenues.
Sherburne raised its share of ownership in Sunday River to 67 percent in 1973. Although the resort continued to improve, growth was less than hoped for, and in 1980 Sherburne sold its interest in Sunday River to the resort’s general manager, Les Otten (who would go on to found LBO Holdings, a ski resort holding company in the East and a major competitor to Sherburne). More successful would be Sherburne’s 1977 acquisition of Mount Snow, a resort in southern Vermont. Though suffering from poor management, outmoded equipment, and declining skier visits, Mount Snow had the advantage of being near the Massachusetts border and thus close to major day markets. Over the next decade Sherburne would dump some $26 million in Mount Snow, making it the second most popular ski area in the East (second only to Killington).
By 1980 Sherburne, with its two successful resorts, had revenues of $17.8 million (684,000 skier visits). That figure rose to $31.8 million (1.1 million visits) in 1982 and $43.3 million (1.3 million visits) in 1984. Despite this growth, its shares were available only on the “pink sheets” (a service for stocks not listed on an exchange), which made it difficult to raise capital. Partly as a way to get its stock on an exchange, the company decided to undergo a major restructuring. In November 1984 it formed a new holding company, S-K-I Limited, in the state of Delaware; the initials S-K-I stood for “Sherburne-Killington-Investments.” Delaware was chosen, Smith said, because “its business laws were as good or better than anywhere else and known to be more progressive in regard to corporate law.” Sherburne Corporation (renamed Killington Limited in 1985) subsequently became a subsidiary of S-K-I, and management of Mount Snow was reorganized in 1986 into its own subsidiary, Mount Snow Limited. S-K-I’s stock was listed on the NASDAQ system.
By the late 1980s S-K-I was one of the largest and most profitable ski companies in the United States. In 1987 it recorded some 1.6 million skier visits, bringing in revenues of $66.1 million. The company also continued to make large investments, including the installation of “high-speed quads” (introduced at Killington in 1988), which were faster, four-person chair lifts. At a cost of more than $1 million, a high-speed quad had the advantages of moving skiers quickly up the mountain and providing exceptionally easy loading and unloading. The Killington village, too, was growing, though at a slow pace because of environmental concerns about new development.
S-K-I also continued to buy existing ski areas. In 1986 Mount Snow acquired adjacent Carinthia Ski Area, giving it an additional 18 trails, three lifts, and a lodge (compared to Mount Snow, which in 1988 had 75 trails, 16 lifts, and four base lodges). Next, in 1988, S-K-I purchased Goldmine Ski Area in California for $10 million and invested another $12 million in better snowmaking, more trails, a new lodge, and other improvements. Renamed Bear Mountain, the resort would increase its revenues, though not as much as anticipated. S-K-I sold the resort in 1995. This sale, however, came just a year after S-K-I had acquired three other resorts: Waterville Valley in New Hampshire; Sugarloaf (51 percent share) in Maine; and Haystack (adjacent to Mount Snow) in Vermont. With these resorts S-K-I raised revenues to $114 million in 1995 and total skier visits to more than 2 million. By this time its Killington resort had grown to 165 trails, seven base lodges, and 20 lifts, including an eight-passenger lift with heated cabins.
By the mid-1990s a new corporate age of ski resorts had emerged. Small and midsize resorts were struggling to stay in business, and large corporations were buying up existing ski areas. In the East, S-K-I’s largest competitor was LBO Holdings, controlled by Les Otten, which owned not only Sunday River but also Attitash (New Hampshire) and Sugarbush (Vermont). Purchasing nearby resorts had many advantages— notably savings in management costs, public relations, and purchasing—that freed up money for additional improvements, such as high-speed quads. Acquisitions also allowed companies to sell multi-area season passes and ticket books, giving skiers more choices. In 1994-95, for example, S-K-I sold a $990 season pass good at Killington, Sugarloaf, Waterville, Haystack, and Mount Snow. Perhaps most impressive, however, was S-K-I’s ability to run a profit in the face of seemingly any obstacle, from recessions and years of poor snowfall to environmental challenges. In 1995 it completed its 36th year of consecutive profitability. By February of the following year, plans were underway for S-K-I to be acquired by rival American Skiing Co., headed by Leslie Otten, for an estimated $105 million. The move was reportedly part of a general shakeout in the ski industry, in which players in a flat resort market faced either downsizing or aligning themselves with large hotel and entertainment companies. S-K-I appeared positioned to benefit from the deep pockets of Otten’s ski empire.
Killington Limited; Mount Snow Limited; Sugarloaf Mountain Corporation (51%); Waterville Valley Ski Area Limited; Ski Insurance Company
Carlson, Lee, “Resorts Enter New, Corporate Age,” Skiing Trade News, November 1994, p. 22.
Kanter, Evelyn, “Eastern Areas in Buying Frenzy, Skiing Trade News, October 1993, p. 14.
Lane, Randall, “Shakeout in Skiing,” Forbes, May 6, 1996, pp. 56, 58.
Lorenz, Karen D., Killington: A Story of Mountains and Men, Shrewsbury, Vt.: Mountain Publishing, Inc, 1990.
Sneyd, Ross, “Killington’s Mogul Smith Drives SKI Ltd. Expansion,” Burlington Free Press, September 18, 1994. pp. 1E, 3E.
_____, “Rival Companies Fight for New England Skiers, Burlington Free Press, September 18, 1994, p. 1E.