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PARK CITY - Why now?
That's what American Skiing Corp. officials are asking as Wolf Mountain Resort presses to take back The Canyons ski area - nearly a decade after signing it away.
American Skiing doesn't want to give it up. The Canyons, high on the slopes of the Wasatch Back, has been one of the bright spots during difficult times for the Maine-based corporation that owns and operates seven other ski resorts.
According to court filings, American Skiing lost $60 million last year.
Kenny Griswold, Wolf Mountain's managing partner, alleges that American Skiing violated its lease agreement by cutting a back-door deal with the owner of 550 acres in the "heart" of the ski area. American Skiing's amended agreement with the Osguthorpe family has financially harmed him, Griswold asserts, and put The Canyons in default of its lease with Wolf Mountain. American Skiing maintains it is not in default.
The resort gained notoriety as home base for "The Today Show" during NBC's broadcasts of the 2002 Winter Games. Since then, the resort has enjoyed a post-Olympic boom in ski visitors - along with its neighbors, Deer Valley and Park City Mountain Resort.
This week, in Utah's 3rd District Court in Park City, attorneys for American Skiing noted that Griswold had known about the Osguthorpe agreement for years but had not objected as The Canyons proceeded with its multimillion-dollar expansion. They are seeking a preliminary injunction to halt eviction proceedings. Judge Bruce Lubeck took the case under advisement and said he would rule within several weeks.
Since inking a lease deal with Wolf Mountain in 1997, The Canyons and its parent company have injected $60 million in new ski lifts and lodges across 3,500 acres just north of Park City. The once mom-and-pop ski area, originally known as ParkWest, has been transformed into a world-class destination.
In addition, American Skiing brass say they've set the stage for millions in real estate development in the booming post-Olympic Park City housing market. They say the corporation is in its strongest position in years, thanks, in part, to successes at The Canyons.
The timing of the default notice is suspect, CEO William J. Fair said.
"Griswold said he had known about the default for two years," Fair testified. "But Mr. [Michael] Baker did not want him to move forward with it."
Baker, a Park City-based financial attorney, partnered with Griswold in the early 1990s to launch the Wolf Mountain ski resort from the ashes of the ParkWest operation that dated from the late 1960s. Griswold, who lives in Southern California but maintains a Park City home, bought out Baker this spring - about the time Wolf Mountain filed for default.
In the end, ParkWest failed because its ski terrain and base lodges were spread across acreage owned by a number of feuding landowners. Griswold succeeded in leasing more than a dozen parcels from various interests, enabling Wolf Mountain in 1992 to open to skiers and snowboarders.
But in an interview after Wednesday's testimony, Griswold said Wolf Mountain could not attract investors such as Les Otten, former American Skiing CEO, without the 550 acres owned by the Osguthorpes. That land was key for a major expansion.
In 1996, according to court documents, Griswold obtained a 28-year lease on the Osguthorpe land. The following year, he subleased about 3,000 of the accumulated acres to American Skiing.
Otten and American Skiing officials sought to change the lease deal with the Osguthorpes in 1997, 1998 and 2001, according to court documents. The Canyons raised the Osguthorpe's annual $150,000 lease payment to $200,000 a year for personal services. In exchange, the lease was amended to an "easement" across the land. Although no rationale for changing the deal was brought up in Wednesday's hearing, in earlier court documents American Skiing officials have said they needed the Osguthorpes' cooperation to make certain improvements to the resort.
The act of transforming Wolf Mountain's agreement to an easement "cuts the heart" out of Griswold's holdings by rendering his sublease to American skiing meaningless, said one of his attorneys, Jesse Trentadue.
The land in question surrounds base functions at Red Pine Lodge and is critical for the operation of a gondola and chairlifts.
According to Wolf Mountain's lease to American Skiing, The Canyons' operatives could negotiate with the Osguthorpes, but any new deal would have to be approved by Griswold. When Otten renegotiated the Osguthorpe deal, he falsely represented himself as Wolf Mountain, according to court documents.
In courtroom testimony, Griswold said he had worked during the past two years in good faith with representative of The Canyons to resolve the issue. But, he said, they have refused to "cure" the default.
The lease-violation claim was a last resort, he said.
"If I had filed a claim two years ago, they'd accuse me of not working with them," he said.
Wolf Mountain must pay "fair market value" for improvements made by The Canyons in the event he reclaims the ski resort, Griswold added.
The 1997 agreement with American Skiing provided Wolf Mountain with $11 million in cash and took over $30 million in debt. It outlined annual rent based on 4 percent of gross revenues and would pay Wolf Mountain the equivalent of 11 percent of The Canyons real-estate development.
In court, Wolf Mountain attorneys attacked American Skiing's financial viability, wondering aloud whether the parent company is bleeding The Canyons dry.
American Skiing has accumulated losses nationally of $640 million, Wolf Mountain attorneys stated in court filings. When the company went public in 1997, its shares sold for $18. Now they trade for 17 cents. American Skiing also operates ski resorts in Sunday River and Sugarloaf, Maine; Attitash, N.H.; Steamboat, Colo.; and Killington, Pico and Mount Snow, Vt.
Griswold said The Canyons has developed only one-seventh of its real-estate potential because the parent company lacks financial wherewithal. That makes his 11 percent share of development far short of what it should be during Park City's present building boom.
"We have a real problem. There has been little development in the last several years," Griswold said. "This is my life's work. It's important to me to have a legacy."
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