More detail on MMSA layoffs and finances

mmsaMany are still heart sick over last Wednesday’s layoff of 75 permanent employees at Mammoth Mountain.  Observers struggle to understand why a Mountain that brings in more than 100 million every year could not support its workers.  CEO Rusty Gregory has tried to explain that the money is just not there.  Most people find the realities of big business  hard to figure out.  Criticisms continue in online comments, letters and calls.  In a post on the Mammoth Mountain Forum and in a letter to laid off employees, Gregory tried to explain. He also answered some of our questions.

In regard to finances, Gregory said that the Mountain has a reserve credit line for “a significant downturn like the drought of 2006-07 and the financial meltdown of 2008-09.”  He said each of those seasons’ revenue was down by around $20 million.  This year’s nation wide drought, he said, has affected demand much more severely.  The Mountain projects a drop in revenue of $40 million.  Said Gregory, “That’s two times the drop we have seen in previous years.”

In the Mammoth Mountain Forum post, he revealed that “by March 15, we will be in breach of our loan covenants, which means that the bank will make us cut expenses aggressively. I decided to cut year round jobs. I believe that if I didn’t act yesterday that I would be causing many more job losses later this year.”

Gregory said he learned this painful lesson in the “slow response to the circumstances that led to Black Monday and the layoff of 150 employees.”  That was in 1991. Gregory repeated that this year the layoffs were his decision. He said in the Forum post that “Barry Sternlicht didn’t tell me to do this. Neither he nor any of our other partners has told me to do anything. They remain supportive, solid partners and friends.”

The post goes on to say that monthly revenue is running $10 million less than last year. The CEO said he had 5 days of meetings with his top managers to figure out which year round jobs to eliminate in order to save $500,000 per month. He said, “We did our best to cut jobs that would not directly impact the day to day operations of the mountain or guest services.”

Gregory said that management and higher paid jobs in administration, IT, accounting, and maintenance took the biggest hit. 2 VP’s were let go. He said he delivered the news personally to the 10 employees with the longest tenure with the company, from 28 to 44 years. Gregory said, “I am still crying. But my pain is nothing compared to the pain and hardship I have burdened 75 top performing, long time employees and their families with.”

Gregory’s post said that the majority of the 150 employees who were let go on Black Monday in 1991 were rehired by the company within 1 year. He said, “I hope and pray that this will be the case again.”  Others have asked how can people live in today’s economic climate until they get rehired?

In his letter to laid off workers, Gregory gives them the dreadful news that their jobs are gone without two weeks notice.  The letter says, “Simply put, the company is not bringing in enough money to pay the wages for the number of people we currently employ.”  The letter, dated February 29, said flatly, “It is with deep regret and overwhelming sadness that I inform you that your position has been eliminated and that your employment with the company will end upon receipt of this letter.”

The letter goes on to say, “Nothing I can say will change today’s harsh reality and the action I am compelled to take.  You have performed your job well and contributed significantly to the mission of Mammoth Mountain. I am so very sorry to let you go.”  Gregory also says his words will do little to lift the burden of the layoff, but he says he plans to do what he can to “lighten the load.”

The letter then goes on to say that the laid off workers are entitled to receive the insurance benefits that they and their families currently receive.  Gregory says the company will pay for up to 18 months depending on how long the employee has worked for the Mountain.  He also says the company will rehire the workers in a seasonal position if they’re interested and able.

The laid off workers, Gregory says, are leaving in good standing and will receive recommendations, help with resumes, and help with filing for unemployment benefits.  Gregory also makes himself personally available for anyone who wants to talk to him. Gregory’s Forum Post and a link to the letter to employees are both available on our website, sierrawave.net.

Others have asked why spend millions on air service subsidizes at this time.  Gregory responded that “We guarantee that each of this year’s 7 flights will break even.  Our budget for this year’s combined subsidy,” he said, “is $1.3 million.”  Gregory said at this point it’s hard to tell how much more this year’s combined guarantee will be from what’s budgeted.  He said the current estimate is $1 million to $2 million more than budget.  Gregory concluded that he thinks year round air service is fundamental to the community’s future and the Mountain will continue to guarantee the program.

Meanwhile, Gregory plans to speak to the Mammoth Town Council Wednesday night.  His item is listed on the agenda as a “Business Update”.  And, emails were circulating from a Paul Ramirez, who is apparently a second homeowner.  He has created a Facebook page called 30,000 to Save Mammoth Jobs.  He’s encouraging all to help get 30,000 visitors to Mammoth by March 31. He believes that would generate $2 million in revenue.  He also encourages businesses to go to the Facebook page and post, free of charge, any specials they have. Find his page at https://www.facebook.com/SaveMammothJobs.

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32 Responses to More detail on MMSA layoffs and finances

  1. jose chavez March 6, 2012 at 9:57 pm #

    oh, and i would also bring back the “spectacular night of lights” to te main lodge!!!!! with the lazer show and everything!!!!!

     
    • Ken Warner March 7, 2012 at 3:23 pm #

      Maybe that idea and all the rest of the “Events” MMSA puts on gives people the feeling that they’ve come to a theme park — an amusement park and not a ski area and what people really want is to feel like skiers and not somebody who paid to get into DisneyLand.

      Just a thought…

       
  2. George W. Bush March 6, 2012 at 5:58 pm #

    Clear this is all my fault.

     
  3. Jon March 6, 2012 at 5:56 pm #

    Not buying Rusty’s line that a lack of snow affected the entire ski industry, not just Mammoth. Vail Associates, with ski areas in Tahoe, Colorado, and Wyoming, made money, just not as much as during last year’s banner year. Check out the small drops, relative to Mammoth’s, in skier visits, income and room occupancy.

    Warm weather shrinks Vail Resorts 2nd-qtr profit
    Associated Press

    BROOMFIELD, Colo. (AP) — Vail Resorts Inc.’s fiscal second-quarter net income dropped 15 percent as the mild winter kept customers away from the ski slopes. But the company was able to offset some of that by raising ticket prices and room rates.

    “This has been one of the most, if not the most, challenging winters for the U.S. ski industry,” CEO Rob Katz said in a statement Tuesday. Its Tahoe resorts had almost no snow during the November-January quarter, while Colorado resorts only got significant snow starting in mid-January.

    The operator of ski resorts, hotels and condominiums also expects weaker results from its resorts division and cut its net income guidance for the year ending in July.

    Vail reported on Tuesday that it EARNED $46.4 million, or $1.27 per share, for the November-January quarter. That’s down from $54.6 million, or $1.48 per share, during the same period the year before.

    Revenue for the three months ended Jan. 31 fell 5.5 percent to $373.3 million from $395.1 million. Analysts expected $369.5 million.

    The mountain division’s revenue fell 1 percent to $315.9 million as skier visits dropped nearly 15 percent.

    Revenue in the company’s lodging division fell 6.5 percent to $48.3 million because fewer skiers stayed at Vail Resort’s hotels and condos, even as the company raised its average daily room rate almost 14 percent.

     
  4. BigPinEr March 6, 2012 at 12:17 pm #

    Clearly there is a lack of quality leadership from all parties. MMSA has also clearly dropped the ball as far as adapting to a down market and snow year with a very late strategy to attempt and salvage performance. The lack of action ultimately and sadly has cost many their jobs. Lets face it how many people from down south have enough money and desire to spend it in this economy, combined with this years poor snow conditions. The expenses of a 300 mile trip with lodging and astronomical lift ticket prices of almost $100 with long lines and subpar conditions is more than enough in this economy to hurt demand. This could have easily been avoided if action was taken earlier to lower tickets and increase sales. Sometimes in business you have to weather the storm instead of living on a prayer

     
    • Dave March 6, 2012 at 7:12 pm #

      I’m not excusing anything MMSA did, management wise, to mitigate their losses this season. However, I think it is important to mention that if the mountain got snow – business would be A LOT better right now and i doubt we would be having this conversation.

      We had a fantastic season last year and we certainly DID NOT need THAT much snow to have a great season this year. Remember how many storm days there were last season… mountain on wind hold, etc? Especially, since most of these storms fell over the weekends when So-Cal tourists were in town. Too much of a good thing can be too much, when 70% of the average skiers out there just fine cruising the groomers. Just an average winter – and things would be so much better. It’s not all high lift ticket prices etc being the cause of MMSA demise… although I would love to see a return of the good old days like any of you – where ski and snowboarding PASSION is contagious and it’s not all real estate speculation.

      The point I want to make is MMSA dropped the ball when it came to squirreling away $$ reserves to weather a bad winter. Greed leveraged the resort beyond their means and unfortunately, the hard workers who provide the service and everything that goes w/ got shown the door!

      If we get snow next year I think things will improve substantially. I believe in this town, it’s workforce, locals, and what we have to offer skiers, snowboarders, and other mountain lovers.

       
  5. tahoeite March 6, 2012 at 6:52 am #

    Maybe Vail will come to the rescue and buy Mammoth. They recently bought Heavenly, Northstar, then a few weeks ago announced Kirkwood..

     
    • enoughalready March 6, 2012 at 1:02 pm #

      That would be nice. A ski area company that know how to run a ski area.

      Rusty, are you paying attention?

       
  6. jose chavez March 5, 2012 at 10:57 pm #

    there is no clear solotion, obviously, but what i would do is go back to the basics, keep things as simple as possible and re build from there. keep ticket prices as reasonable as possible, not outrageous like they normally are, invest on a good marketing strategy, mammoth is not kirkwood or aspen so dont make it just another ski resort. keep it mammoth, oh and as for the town, i would gather all the voters in mammoth and vote out all the people who drove the town to the brink of bankrupcy out! of curse, its easier said than done.

     
    • Big AL March 5, 2012 at 11:40 pm #

      Good post Jose

       
  7. Wilfred S. March 5, 2012 at 1:20 pm #

    The Facebook page is a joke, right? Like we’re all supposed to volunteer to do our part to drive more business to Mammoth Mountain, a huge corporation that’s running itself into the ground? Maybe if the employees or the town actually OWNED the Mountain. But it’s run by a bunch of corporate goons making millions in salary a year, who, if suddenly there was a spike in business, wouldn’t hire those poor folks back anyway. Profits would be fed back to the hungry stockholders and over-paid CEOs.

    MMSA is underwater in it’s loans just like many homeowners because they put all their eggs in the real estate basket a while back. In another year they’ll be filing chapter 11, and Rusty will retire a wealthy man.

     
    • upthecreek March 5, 2012 at 3:35 pm #

      I will volunteer to drive a ski area bus down to the OC and LA area on Fridays and Force people onto the bus with Full wallets.

      Where can I sign up?

       
      • Worker Bee March 5, 2012 at 10:39 pm #

        I still have my Class B…..let’s do it! LOL…..

         
    • Sierra Skier March 7, 2012 at 1:52 pm #

      I read the Facebook page and it’s not set up as a lifeline to the Mountain, it’s dedicated to getting more visitors into Mammoth to support the local economy. Restaurants, stores, etc. I think it’s a great idea.

      Why would anyone “poo-poo” such an idea? Hmmm…

       
  8. inyoindian March 5, 2012 at 1:12 pm #

    this is my last post. you guys just want to ass kiss one another and not come up with some real solutions. inyoindian thinks this website is a for a small circle of people to play grab ass, and will be verbal about how lame the management of this website is!!!

    Just my opinion.

     
    • Harry March 5, 2012 at 9:10 pm #

      Good by!!!

       
    • Big AL March 5, 2012 at 11:00 pm #

      That’s cool inyoindian, if you can’t bring something positive, other than sling mud at others, then I think you just need to move on .. otherwise be part of the solution.

       
  9. Jake March 5, 2012 at 8:00 am #

    A Facebook page with 61 likes is hardly going to help….

     
  10. Trouble March 5, 2012 at 7:29 am #

    I would like to know what the mountain plans to do when the times get bette?. Like last year. Are they going to hire these people back or hire people at less money to increase their profits more. Never mind I already know the answer.

     
  11. jose chavez March 4, 2012 at 1:04 pm #

    why does it take an every day citizen to try anything to generate business and income for the town?…….TOML and MMSA, get ti together before you go bankrupt, just like stockton, and they are not e resort town…….

     
    • upthecreek March 5, 2012 at 2:30 pm #

      Sorry Jose..

      It may already be too LATE.
      The ski area and the town has been run by Banksters for Years.

      GGW

       
      • truthbtold March 5, 2012 at 4:32 pm #

        So what’s your solution?

         
        • upthecreek March 5, 2012 at 10:31 pm #

          Banruptcy…is the only way out for the town.

          As for the ski area. Mamma bear has deep pockets.

          GGW & MGW

           
          • truthbtold March 6, 2012 at 8:53 pm #

            How original UTC…. how about some specifics rather than your blessing us with your on-going quips about the world going wild…

            How about we set term limits on Council members so we avoid two decades worth of mind-numbing and irrational/out of touch decisions (thanks Mr. Eastman) in the community’s future? Mr. Eastman has his fingerprints on just about everything that has gone south in our community and should be recalled based on performance alone.

            How about we get some honest, genuine, and smart community members to run for Council instead of retreads like Mr. Wood or do-nothings like Ms. Bacon (a legend in her own mind). Can you imagine if we had honest and smart folks like the Bill Taylor’s of our community on Council to support and collaborate with our lone excellent Council Member (thanks for your efforts Skip). What do we expect when we elect someone who is clueless like Mr. Lehman as one of our political leaders. The community must get smart in who we elect.

            How about the community insist that Council members are not eligible for full health, vision, dental insurance packages exactly the same as employees (go ahead and add up the costs for the five Council members – it will shock you not to mention the sum would take a bit out of the airport debt payments).

            How about the community ensure that a bankruptcy administrator rather than our Town Council run the Town during bankruptcy. Its the only way that the tough decisions in service cuts could possibly be made rather than Messers Wood and Bacon pandering to MLTPA.

            How about we stop this nonsense and waste of time and energy regarding moving the 4th of July fireworks to the Village – huh?

            How about the community recognize the excellence of our school system and the good work by Mr. Boccia in administering our school district. In emphasizing the good in our community, in addition to recognizing the bad, perhaps we can achieve some balanced perspective in why this is still a great community and have some pride.

            As far as Rusty running the Mountain, all though my heart goes out to the employees who lost their jobs, he is running the Mtn. as a business in order for it to survive and support the Town for years to come. Anyone who thinks it could be run like “the old days” is simply not in touch with reality.

             
      • Dave March 5, 2012 at 7:33 pm #

        Yeah I would like to hear your solution, too. Besides the usual rhetoric about public pensions and GGW! How about serving up some real (not teabaggery) solutions to our issues. Maybe a run on the Town Council??

         
        • upthecreek March 6, 2012 at 8:02 am #

          Upthecreek (equals) teabager…….LOL

           
        • johndoeml March 6, 2012 at 9:54 am #

          upthecreek–What’s the GGW? All I can think of is Girls Gone Wild.

           
          • Rob March 6, 2012 at 11:33 am #

            Girls Gone Wild is more fun to watch then Government Gone Wild

             
  12. steve March 4, 2012 at 12:55 pm #

    Rusty, as far as I’m concerned you/Barry have leveraged the mountain to the hill like a subprime borrower and now there is no room for business to go down. You have also said that you don’t want a bank to “run a ski resort” as far as I know the bank is already running the resort. Rusty the main question I have is did any of your highly paid inner circle (SMG) get the boot? From what I have heard, the answer is no.

    TO ALL FORMER MMSA EMPLOYEES, ITS TIME TO LET YOUR BEST STORIES COME OUT ABOUT THE COMPANY.

     
    • read March 6, 2012 at 12:45 am #

      read the other articles…2 VPs were let go.. damn townies always running the lips without using the eyes.

       
      • Bemused March 6, 2012 at 2:41 pm #

        One was a low-level “VP” who’s an ineffective and unlikable pile by reputation, and the other was very near or at retirement age…and took “early retirement.”

        Steve’s underlying point that over-paid top-tier do-nothing managers (some with no “seniority”) were kept, while 20+ year reasonably-paid highly-effective employees were let go, is DEAD ON.

         
        • VP is a SNG is a VP is a SMG March 6, 2012 at 3:58 pm #

          He wasn’t that old, there are other VP’s that are older, and your opinion on the other is your opinion. I’m sure you didn’t know either, like most of the people flapping away. You asked how many VPs/SMG’s were let go I answered sorry if it wasn’t that one of your choosing. Please give me a second to grab some popcorn and then tell me who these “over-paid top-tier do-nothing managers with no “seniority” are. I’m sure you have the inside scoop and know it all?

           

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