Monday, October 31, 2011

Commentary: ORDA Privatization Not The Answer

In a recent editorial, the Glens Falls Post-Star stated “it’s time for officials to re-think the financial and ownership model” underlying the New York State-owned winter sports facilities managed by the Olympic Regional Development Authority (ORDA), including the Gore and Whiteface Mountain ski centers.

The Post-Star argues that declining taxpayer support for these facilities (the state currently contributes $4.6 million dollars to ORDA’s $30 million annual budget, down from a $7 million contribution in 2008-09), jeopardizes their future viability. “For the sake of the Adirondack economy and for the towns and counties that thrive on the successful operation of these venues” the Post Star’s editorial staff suggests “a different approach is needed.”
I couldn’t agree more: the continued operation of these facilities is indeed vital to the Adirondack economy. The economic impact of ORDA’s operations has been estimated at $271 million and 1,283 jobs regionally (Clinton, Essex, Franklin and Warren Counties), and at nearly $350 million and 1,400 jobs statewide. This economic impact alone ought to be sufficient justification for the state’s contribution to ORDA’s budget. For their $4.6 million (or $7 million) investment, taxpayers are getting an excellent return.

But it’s still reasonable for taxpayers and lawmakers to expect ORDA to operate a balanced budget. After all, competing ski areas in New York, Vermont and elsewhere operate successfully without state subsidy. Some, including the Post-Star, have suggested that privatization – the sale or leasing of some or all of ORDA’s venues to a private operator – would “ensure that these facilities remain viable without having to rely on a dwindling pool of taxpayer money.” Privatization, however, is not the answer.

First, there’s the matter of Article XIV of the New York State Constitution, which states that lands constituting the forest preserve “shall not be leased, sold or exchanged, or be taken by any corporation, public or private.” Although the State Constitution could in theory be amended, most observers agree that passage of such an amendment is extremely unlikely.

Second, privatization would almost certainly involve real estate development associated with the ski areas. This development potential would likely be the most attractive part of the deal for a prospective purchaser, yet the most troubling aspect to opponents of privatization. Removing the development rights from the privatization would significantly reduce the net proceeds to the state, if not kill the deal altogether. Just look to the proposed ACR / Big Tupper development for an example of how contentious and prolonged the debate could become.

Lastly, the state’s Olympic venues are, as the Post-Star described, “a unique animal.” Facilities like the bobsled and luge tracks, the ski jumps and the Olympic Arena are crucial to Lake Placid’s success in attracting visitors. It’s an example of the whole representing more than just the sum of its parts. Privatization puts individual facilities at risk of closure should a facility be deemed no longer “profitable.” And it’s hard to envision a successful, coordinated approach to tourism under mixed ownership: conflicts would be inevitable if, for example, the ski areas were privately operated while the other Olympic venues continued under ORDA.

What’s needed instead are some creative initiatives that build upon the strength of ORDA’s assets within the existing framework. Here are a few:

1. Last winter, Whiteface increased its skier visits and revenue by more than 10% (ORDA 2010-2011 annual report and audited financial statements), adding more than $1 million to the bottom line. A snowy winter and favorable Canadian exchange rate played a role, but “off the wall” marketing was a major factor. Gore’s visitation and revenue were essentially flat. Clearly there is an opportunity for Gore to add to its bottom line with creative marketing.

2. Opportunities for organizational efficiencies, belt-tightening and shared resources need to be exploited. For this reason, Belleayre (currently managed by DEC) needs to be incorporated into ORDA, as the Governor’s Task Force on Spending and Government Efficiency recommended. If the state is going to be in the ski business, it should do so in a coordinated, efficient manner.

3. ORDA needs to stop managing Gore as a weekend business. Imagine a mid-week vacationer at Gore who discovers that a third of the mountain – including the brand new Burnt Ridge and Ski Bowl terrain pods – is closed. Such mid-week terrain closures are unheard of at competing ski vacation destinations. Obviously there is a chicken-versus-the-egg issue here: skiers don’t show up mid-week due to the terrain closures, and management doesn’t open terrain due to low demand. ORDA needs to provide the impetus to break that self-perpetuating cycle.

4. Highlight and build upon Gore’s existing strengths: a “real” town at the foot of the Ski Bowl rather than look-alike condominiums and faux European villages that typify competing ski destinations, the newly revived (and by all accounts successful) passenger rail operation between North Creek and Saratoga Springs, and proximity to downstate and NY/NJ metropolitan markets. The ski train packages being newly offered for this winter are an excellent initiative, Gore should also consider offering a reduced price Ski Bowl-only lift ticket.

5. ORDA needs to step up its development and support of summer operations at Gore. ORDA’s mission is to use the state’s winter sports facilities to leverage economic activity in the region, including North Creek. That economic activity shouldn’t end when the snow melts.

6. Focus future improvements on snowmaking and improving the interconnectedness of Gore’s terrain pods. Those are the weaknesses most often cited by skiers across all ability levels.

If these ideas seem overly Gore-focused, it’s simply because there are more untapped opportunities at Gore than at Whiteface, and Gore is the individual ORDA asset most frequently proposed for privatization. It’s also the area I’m most familiar with, having logged hundreds of ski days there over the past 25 years.

Admittedly, some of these ideas will require additional investment and time before a return is realized, and there is risk that the political climate may not allow for patience. The ORDA board should undertake a multi-year plan to implement these or other initiatives and eliminate reliance on state subsidy within no more than 5 years. The ORDA board has at times been criticized for being too Lake Placid focused, and any conflicts of interest – real or perceived – that prevent the board from objectively implementing a plan for eliminating the state’s subsidy need to be addressed.

Above all, taxpayers and lawmakers need to be mindful of the positive economic impact ORDA’s facilities have on the region. There is too much at stake to run the risk of their underlying financial support breaking down.

Jeff Farbaniec is an avid telemark skier and a 46er who writes The Saratoga Skier & Hiker, a blog of his primarily Adirondack outdoor adventures.

Jeff Farbaniec

Jeff Farbaniec

Jeff Farbaniec, of Saratoga County, is an avid telemark skier and a 46er who writes The Saratoga Skier and Hiker, a blog of his primarily Adirondack outdoor adventures.

Jeff's emphasis at the Almanack is on the ski sports - everything and anything related to Adirondack skiing. Jeff lives in Wilton, just south of the Blue Line, with his wife and their two young children.


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