New director has high hopes for Spirit Mountain’s future
Brandy Ream knew she was stepping into a challenging situation when she accepted the job as Spirit Mountain’s new executive director.
The ski hill and recreation area has lost money in recent years. Spirit Mountain would have been unable to meet payroll this summer if not for a $1.2 million line of credit the city of Duluth recently stepped forward to provide.
Several Duluth city councilors have expressed grave concerns.
“I think the council is at a point where we want some answers. It looks like they’ve been having one heck of a party up there,” said 4th District Councilor Howie Hanson, who has proposed an independent audit of the ski hill’s finances.
The depth of Spirit Mountain’s financial straits came as a shock to 1st District Councilor Jennifer Julsrud, but she said the city had little choice other than to help, given the circumstances.
“I felt wedged into a corner,” she said.
But Julsrud said she won’t support extending any more than $1.2 million in credit to Spirit Mountain.
“It’s the end of the line for me,” she said. “Having to provide that much credit is not healthy for our organization as a city, and it’s not healthy for Spirit Mountain, either.”
Yet the city can scarcely afford to let Spirit Mountain fail, according to David Montgomery, Duluth’s chief administrative officer, who would not rule out the possibility that Spirit Mountain may need more financial assistance from the city before it regains its footing.
“We’re going to look at the situation and evaluate it as needs come up. We’re not making hard commitments like ‘no more than X.’ Nor are we making any hard commitments that money will forever flow,” he said.
“We are looking at this pragmatically in concert with Brandy, and we’re going to determine what makes sense for the mountain, what makes sense for the operation, and we’ll do what’s right for that.”
He called the $1.2 million credit line “a commitment that the city and the whole community are making to Spirit Mountain, which is a significant community asset” and noted that the hill brings visitors to Duluth at a time of year when many other types of tourism have waned.
Spirit Mountain has had lines of credit in the past, which it was expected to repay at the end of each year. But it has been unable to pay off its debt to the city since 2012. Its last payment to the city was more than a year ago, when it cut a check for $30,259. At present, the ski hill owes Duluth $1.082 million, and counting.
In addition to the credit line, Duluth also will provide Spirit Mountain with $725,700 in tourism tax collections this year. The annual allocation has been growing steadily since 2009, when the hill received $225,000. The money has been used to pay for capital improvements, both new and old.
Montgomery said the board of the Spirit Mountain Authority conducted a nationwide search for just the right person to serve as the operation’s new director after Renee Mattson announced she would be leaving the post.
“In Brandy, I think that’s who they’ve found,” he said. “They found someone who knows ski operations, knows how to run a mountain and knows how to run it not only efficiently but effectively. We have high expectations, and so far everything we’ve seen has been encouraging.”
Ream has been on the job for a little more than a month, and Montgomery said the full benefits of a change in leadership will take time to emerge.
“We’ve got a hurdle here that may take a year or two to get over, but because of all the foundation work that Renee and the board have laid down, we have a really good array of assets to work with,” Montgomery said. “Now, we need someone who can come in and really operate this facility very creatively and effectively. I think the future is really bright.”
Ream, who has 22 years of experience working with ski hills, expressed confidence that she can put Spirit Mountain’s books back in the black.
“The foundation is definitely there,” she said. “It’s a tremendous venue with everything we have to offer, but it’s time to take a very serious and detailed look at operations and that revolves around efficiency.”
Cory Salmela, who serves on the board of the Spirit Mountain Authority, called Ream “an industry pro” who can help improve local operations.
“We expect her to implement a lot of industry best practices,” he said.
Salmela noted that Ream has engineered turnarounds before. He said that under her management the Boston Mills and Brandywine ski areas in the Cleveland area boosted their annual revenue by more than 80 percent from 2007-2011. He described the feat as even more remarkable considering that it was accomplished in the midst of a recession.
“She has a playbook she wants to employ here, as well,” he said.
Most recently, Ream had served as director of Ski Bluewood in Dayton, Wash., where she also reportedly took a money-losing operation and made it profitable.
Hanson remains skeptical, however, that a turnaround is in the works and contends the city should seriously consider extricating itself from the operation.
“Should the city of Duluth continue in the ski business and summer camping business?” he asked, answering his own question: “Maybe not. Maybe we should get back to the basics of public safety and street and sewer repair.”
Spirit Mountain’s recent struggles have been attributed in part to uncooperative weather.
“Spirit Mountain has had a couple of real rugged winter seasons, and it was really adversely impacted,” Montgomery said. “Even though Renee and the board have significantly expanded their off-season offerings — the mountain biking, the zip line and things like that — which is starting to level out the revenue a little bit, they are heavily dependent on the winter season.”
But Julsrud said an outdoor operation such as Spirit Mountain has to plan for weather extremes such as the polar vortex that beset the Northland last winter, and then adjust. She’s hoping Ream brings the operational expertise to make Spirit Mountain more resilient in future seasons.
Salmela agreed that Spirit Mountain sometimes has been slow to respond to adverse developments, sometimes resulting in overstaffing. He noted that since Ream’s arrival, two senior management positions have been eliminated. Salmela said Ream has also been working to rewrite job descriptions with the aim of having staff cross-trained to handle multiple duties as needed.
“Overall, my goal at Spirit Mountain is to see that it is a sustainable entity for the city,” Ream said. “With this I bring a focus on overall operations and a concentrated effort to improve the experience people have when they visit us. Customer service is key, and I learned a long time ago that I could never take a customer for granted.”
Ream said she will aim to improve operating margins.
“I think we have to take an educated look at what our pricing is and predominantly what our yield is, per skier and also per pass-holder,” she said. “I do believe there is a way that we can cut operational expenses by looking at the hours that we’re open and making adjustments without jeopardizing the skier days that we’re open or the amount of hours we’re able to give our pass-holders on snow.
“Absolutely, we will continue to be an affordable option for families and youth and people of the community. But I also feel like there are adjustments we need to look at.”
Ream also stressed the importance of focusing on the future.
“Another area I’m taking a very hard look at right now is reaching back out to our beginners and what we are doing to attract new life into our sports,” she said.
With the help of $3.4 million in state bonding dollars, Spirit Mountain is in line to receive a new $6.2 million system that will allow it to draw water from the St. Louis Bay for snowmaking operations. The facility no longer will rely solely on city water and will be able to produce snow more quickly.
The city of Duluth plans to use money from a recently reauthorized half-percent sales tax on local hotels, restaurants and bars to cover the remainder of the tab for the project.
With the new snowmaking system in place, officials expect to save about $200,000 per year.
But Ream said she has no other immediate plans for large capital investments at Spirit Mountain.
“I feel like we need to exercise a bit of control,” she said. “At Spirit Mountain, we have grown very quickly over the course of the last several years. And I feel like we need to focus on what we have.