Will Duluth's Spirit Mountain survive financial woes?
Story published: January 2020
In a packed, tension-filled Duluth City Council chambers last December, a handful of city residents came up to the podium to speak. They had come out to try and save Spirit Mountain ski area from possible closure.
“I’ve worked there on and off since I was 14 years old,” said Tim Miller, 36, a trail maintenance lead at Spirit Mountain. At stake was a $235,000 emergency funding request by Spirit Mountain to help the 45-year old ski area meet payroll. Wearing a baseball cap and a green plaid coat, Miller talked about the pride that he and other employees had for what Spirit Mountain does for the community. “For us to learn that our employer is in such desperate shape after the Snocross event cancellation that they may not be able to make payroll is extremely alarming. It makes us feel anxious about how we’re supposed to pay our bills as employees.”
Spirit Mountain needed a lifeline. Created by the State Legislature in 1974, Spirit Mountain, a public agency, was never designed to be completely free of city subsidy. In late 2019, it ran into cash-flow problems after the Amsoil Snocross national snowmobile competition was cancelled by adverse weather conditions. The request caught city leaders off guard.
“I heard that Spirit Mountain has these moments every once in awhile,” said Arik Forsman, Duluth City Councillor At Large. “We found out about this almost the same day, so to hear words like [Spirit Mountain] could close, that’s not something I was expecting.”
Ultimately, the council voted 8-1 to approve the funds. Those bailout funds add to the more than $1 million in subsidies that the ski area received in 2019. The money came from the city’s $12 million annual tourism tax fund, raised from tax revenue from hotel stays, and food and beverage sales in the city. The fund was set up to financially support about 20 city attractions, including Spirit Mountain. As such, Forman said the fund was an appropriate source for the request. That money can’t be spent on other city agenda items, such as affordable housing or lowering property taxes, for example.
“That doesn’t mean it's a blank checkbook,” Forsman said.
Spirit Mountain has its own board of directors and runs its own separate operations apart from the city, which serves as a backstop. Spirit Mountain's executive director since 2014, Brandy Ream says that there has been a lot of misunderstanding.
“People think [the crisis was caused by] mismanagement. I’ll be very honest - that’s hard to hear. I know the management team and the true transformation that’s happened here in the last six years,” she said.
By all accounts, she took over during troubled times. In the past six years, Ream made personnel changes focused on user experiences such as improved hill grooming, and pumped $2 million into deferred maintenance costs. Still, Spirit Mountain faced challenges that privately-held ski areas don’t. The employees at Spirit Mountain are public workers, have collective bargaining and access to government healthcare and pension benefits. And, its $1.2 million line of credit with the city had long been spent. For Ream, it’s meant having to turn around an expensive operation on thin margins.
“It’s not spinning out of control, we’re not in decline. We have seen growth in season passes. We’re seeing growth in our weddings and banquets, our mountain biking as a whole. This is not a failing organization,” she said.
But it also seems destined for a major change. Some options include increasing the subsidy Spirit Mountain receives, hiring an outside firm to take over operations or even selling the ski area outright. While Spirit Mountain staff said that revenues from ticket sales and season passes are up, the city’s annual financial report showed a downward trend in ticket sales.
“People legitimately ask, when the interest of the public change, what level of public investment is appropriate for a given facility? I would say the golf course, the zoo and Spirit Mountain is where we on the council have an obligation to think about,” said Duluth City Councilor Joel Sipress.
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