Unless the city of Duluth agrees to provide Spirit Mountain with a $235,000 subsidy, the ski hill will have only about enough money left in its coffers to meet payroll next Friday, said Brandy Ream, the ski hill's executive director.
She said the requested funds are essential to Spirit Mountain's continued operation, in the wake of being forced to cancel most of the 2019 Amsoil Duluth National Snocross race weekend due to heavy snow, of all ironies.
"If that's not available, that means we are locking the doors. And that means we have $1.2 million in season pass revenue that will need to be paid back. That means we have hundreds of thousands of dollars in vacation our employees have earned that's going to have to be paid out. And we have payables that are currently on the books that we're responsible for," Ream said.
If unaddressed, Spirit Mountain's financial hardships threaten to knock it out of commission just as it's heading into what's typically its most profitable days of operation, surrounding the holidays.
The amount of the requested subsidy represents Spirit Mountain's loss of revenue from ticket sales for the professional snowmobile races, plus food and beverage sales, Ream said, noting that the operation also had to bear the cost of a $50,000 sanctioning fee it pays to ISOC (International Series Of Champions) to put on the event.
The Duluth City Council will take up Spirit Mountain's request Monday. If approved, the money would come out of undesignated tourism tax funds. Wayne Parson, the city's chief financial officer, said the fund carried forward a reserve of about $500,000 from 2018, and collections for the current year are running more than $330,000 ahead of projections.
At Large Councilor Arik Forsman told Ream: "I appreciate your candidness with us about getting to the holiday week. But do we feel like this amount gets you through the year? Do we feel like it gets you to Christmas? I'm wondering if there's a chance that we will see you again."
Ream said the $235,000 should carry Spirit Mountain into the holidays.
"I will state though, there is a very small margin for error," she said. "At this point in time, I'm feeling very good and strong about what we're looking at going into the Christmas week."
Yet she wouldn't rule out the prospect that Spirit Mountain may need more help in the future.
"When our weather dictates our business volume and how things unfold, there is always going to be the possibility that I am going to be back here needing to ask for assistance," Ream said.
Noah Schuchman, Duluth's chief administrative officer, told councilors: "This item is being brought forward out of recognition of the value that Spirit Mountain has to the city of Duluth and to the community. It is important to the (city) administration that Spirit is healthy."
Going forward, Ream commented that Spirit Mountain will need to take a hard look at its participation in the Snocross race.
She said the event annually brings an estimated $6 million into the city of Duluth, while Spirit Mountain is fortunate to break even.
Councilor Joel Sipress told Ream: "Clearly there's a lot of risk on Spirit Mountain for an event that does not provide much direct reward to the organization, and I'm wondering, from your point of view: Is it time to reconsider how we're doing Snocross and reconsider the role that Spirit Mountain is playing in Snocross to minimize the chances of something like this happening again?"
"We have a tremendous amount of risk. We have a tremendous amount of expenses. And it all falls on us, along with a hefty sanction fee," Ream said.
She said 2019 marked the end of Spirit Mountain's latest three-year contract with ISOC to host Snocross.
"So, we have a lot of work to do moving forward to determine what's going to happen and how we're going to handle that," she said.
Ream suggested ISOC may need to step up.
"I would like to see ISOC play a greater role in generating attendance. So, if we could perhaps eliminate that sanction fee and split that gate profit. We need to align something so we're not absorbing all the risk. The weather is enough of a risk. We don't need to have all these expenses," she said.
"We need to figure out how we're going to make this event successful for Spirit Mountain and continue to be successful for the community," Ream said.