Trouble In (Ski) Paradise: Lease Dispute in Park City
Yours truly just returned from a nice, albeit short, ski vacation in Park City, Utah. Of course, I couldn’t make it through the whole trip without coming across some blog material. Anyone who has ever been skiing out west knows that it’s big business (both literally and figuratively). The ski resorts invest millions upon millions of dollars in chair lifts, grooming equipment, dinning facilities, et cetera, all in an effort to attract thousands of skiers at daily prices of around $100 per person. As such, it was a little surprising to learn that Park City Mountain Resort (PCMR), one of most popular ski resorts in the United States, doesn’t even own the land that its uber expensive equipment sits upon. It was even more surprising to discover who actually owns the land. The land is owned by Talisker Land Holdings (Talisker). Talisker is the company that runs The Canyons, which is PCMR’s next door neighbor and one of its biggest competitors. So, it was not surprising to then find out that they two were in a battle royal lease dispute.
This fight has been ongoing for some time. PCMR’s 40 year lease of the 3,000 plus acres of land that its resort sits upon expired in 2011. PCMR had pretty sweet lease deal which gave them rights to the surface land for just $155,000 per year. How sweet of a deal was it? Well, ironically, Talisker actually leases the land that The Canyons sits upon and it pays approximately $3 million per year for that lease. Even with the lease set to expire, PMCR still had an option to extend the lease for another 40 years. All it had to do was confirm the extension in writing by April 30, 2011, but PCMR allegedly failed to give timely notice. Whoops! In December of 2011, Talisker informed PCMR that the lease agreement had expired and claimed that it had the right to refuse to extend the lease until PCMR agreed to its terms.
In March of 2012, PCMR filed a lawsuit alleging that although PMCR did not enter into a formal lease extension, the parties actions demonstrated that PCMR exercised its right to extend the leases through 2051. Namely, that Talisker allowed PMCR to undertake $7 million in equipment upgrades on the land in the summer of 2011 without raising any objections. PMCR also argued that even if it failed to properly extend the lease, Talisker failed to disclose its intentions and was not negotiating a lease extension in good faith.
The battle continues. For a while, it wasn’t even clear whether PCMR would open for the 2012-2013 ski season, but a deal was reached to allow PCMR to continue operations while a resolution is sought. Regardless of the outcome of this legal battle, let’s just say Park City Mountain Resort finds itself in an unenviable position. It’s one thing to lease the land that is a vital part of your business. It’s a whole different animal to lease that land from your biggest competitor. It would be like Universal Studios from Disney.
