The Great Debate

from Breakingviews:

Rob Cox: Flurry of ski M&A aims to control weather

By Rob Cox

The author is a Reuters Breakingviews columnist. The opinions expressed are his own. 

The ski business is amid a flurry – not of snow, but of deals. At the center of the action is Vail Resorts, a $3 billion publicly traded operator in an industry traditionally dominated by family and local owners. The company is upending winter-sports convention in a variety of ways. Chief among them is trying to prove that it can control the weather with some corporate finance.

Control may be an extreme interpretation, but Vail Resorts is pursuing a model designed to mitigate Mother Nature’s volatility, which has spelled doom for many a ski area. The extent to which it succeeds will determine the future shape of the North American skiing and snowboarding complex.

It’s instructive to understand why Vail Resorts, led by Rob Katz, is battling the elements. Though there has been consolidation – last month his company bought Park City, Mammoth acquired Big Bear and Ontario’s Blue Mountain was taken over – North America counts around 700 ski areas, ranging from sprawling resorts like Squaw Valley and Killington to dozens of suburban bunny slopes.

Most mountains are privately held. Vail Resorts is the big exception, owning a dozen top leisure spots including Vail, Breckenridge, Heavenly and Kirkwood near Lake Tahoe and Park City and Canyons in Utah. Whistler Blackcomb Holdings is a $630 million company traded in Canada. Intrawest Resorts went public last year and owns seven peaks, including Steamboat and Winter Park.

The NBA has America’s model migrant worker program

If you’ve watched the NBA playoffs, you’ve seen the Oklahoma City Thunders’ rangy Swiss guard, Thabo Sefolosha, and his courtmate, human basketball swatter, and Spanish national, Serge Ibaka. To get to the finals, Sefolosha and Ibaka beat Tony Parker and Manu Ginobli, two international anchors for the very American San Antonio Spurs. In the finals, Sefolosha and Ibaka are facing off against Ronny Turiaf, the Miami Heat’s erstwhile benchwarmer, who hails from France, to see who gets to take the NBA Finals trophy away from German forward Dirk Nowitzki, the MVP of last year’s championship.

This seems like common sense – the best in their field want to come ply their trade in America, so why wouldn’t we let them? The increased competition has improved revenue for teams and created a better product for fans. But other sectors of the economy can’t follow the example of professional sport leagues. The government won’t let them.

The NBA is not alone in investing in importing the best human capital from around the world to maintain its edge. The Stanley Cup-winning Los Angeles Kings were powered by the goal scoring of Yugoslavian center Anze Kopitar; Ichiro’s arrival in Seattle to play for the Mariners was accompanied by a crush of Japanese advertising.