Yellowstone Club Files for Bankruptcy

North American skiers should prepare themselves for the greatest poaching opportunity of this short century: The Yellowstone Club, the high-end Montana snow stash where membership requires $250,000 down, $18,000 in annual fees, and around $3 million in net worth, filed for bankruptcy in November. Court documents obtained by Skiing suggest that the private resort may scrape enough dough together to keep the lifts turning this winter, but it won’t be able to pay for much else (read: security). Powder bandits, it figures, will go unchallenged. Think of it as skinning into the backcountry, minus the danger and the skinning.

Feel free to discuss the resort’s financial pratfalls with members Bill Gates and Dan Quayle as you ascend the Lake Lift chair, and then laugh with Billy about Windows Vista all the way down runs like Prim Place and Lear Jet. Be sure to express your gratitude to Tim and Edra Blixseth, the now divorced couple who spawned this 13,400-acre behemoth in the Gallatin range in 1999. The pair somehow figured out how to blow the $88 million they collected from members plus another $375 million they borrowed from Credit Suisse. Now they’re operating in Chapter 11 with $340 million of debt on the books.
Earlier this year, Edra won control of the Club, having wrested it away from Tim during a litigious divorce circus. But Tim may be laughing harder than you or even Mr. Gates, as he surrendered this elephant to Edra just as the Club’s bread-and-butter clients, upper-level Wall Street financiers, were getting canned by the thousands this past fall. But that doesn’t worry Yellowstone’s management. “The current plan is to be open for skiing this winter,” says Bill Keegan, a Yellowstone spokesman.

Edra has secured $4.5 million in bankruptcy financing from Credit Suisse, which effectively owns this baby now, to keep the resort operating as ski season gets rolling. Some members of the Yellowstone Club have registered their displeasure with Edra’s management choices in a court filing. The members’ brief also wonders what the couple might have done with the nearly half a billion dollars that’s passed through their coffers. In a detour from standard legalese, the members’ objection filing asks simply, “Where did all that money go?”

Silly rich people. The Blixseths only wanted to emulate their clientele, reportedly buying a $44 million Gulfstream jet and a $400,000 Rolls Royce to go along with additional properties in Scotland (near the golf courses at St. Andrews) and France (a pimped-out chateau outside of Paris). Note to ski bums: Skip the hostel the next time you’re in the French capital and go for squatter’s rights at the chateau.

Surely these dire developments have shaken Florida resort baron Bobby Ginn’s plans for a private playground on the back side of Vail near Minturn, Colorado. Word is he’s in no rush to file his final development plans. And Utah’s Mt. Holly Club, a private ski and golf resort on a mission similar to Yellowstone’s, hasn’t put any lots up for sale yet but opened a sales office in Newport Beach in December. “The market is hammered, obviously, but we’re finding there are people out there that are still comfortable with real estate—they feel it’s safer than stocks,” says Steve Jenson, Mt. Holly’s manager.

But some think the whole model of a private ski club is flawed. “There is a social element of skiing that these places miss,” says Ford Frick, an industry analyst at Denver’s BBC Research and Consulting. “We all like that powder run in the trees by ourselves, but a whole day in the trees by yourself can get creepy. And who wants to go to a bar at the end of the day that has two people in it?”

You heard him: bring some buddies. But you may find some Yellowstone friends beyond the former vice prez and Billy Windows. The Club owes a lot of people a lot of money, and they’re going to want some free lift rides. What’s a poor liftie going to do when the guys from Dependable Paint & Drywall in Bozeman show up with their Blixseth I.O.U. for $77,340.46? He’s gonna let ’em on the lift, that’s what. Or what about the chaps from Central Plumbing & Heating in Great Falls? They’re owed $289,412.65. They’ll want more than a few rides on the American Spirit chair for that. Or the people at Montana Tile & Stone—Blixseth is into them for $58,904.96. That will get them a few bowls of chili.

Luckily, the jet-setting Club members and these local craftsmen will have something to talk about on their long, frigid lift rides: how they all got hosed by the Blixseths.

– SKIING MAGAZINE, FEBRUARY/MARCH 2009