Who Owns Stowe Ski Resort?

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I try not to do business while on vacation, but couldn’t restrain myself from a little light investigation of who owns Stowe Ski Resort, while on a family vacation there last week. First I asked a ski instructor, while sharing a chair lift up Spruce Mountain, and was told that it was owned by the U.S. government. And that there was a stretch of time in 2009 when the U.S. was approving all of the expenditures, following the record $183 billion government bailout of AIG .  “So maybe that is why they are not doing more snow making I thought”, as I avoided the icy sections on my next downhill run, “it’s because of the federal budget crisis!”

Later, I checked with the owner of the Golden Eagle Motel (a Stowe resort property) who told me that Stowe resort had been owned by AIG, and now was owned by Chartis, an AIG subsidiary.  A little further research back home confirmed that AIG’s connection with Stowe started in 1946, when AIG founder C.V. Starr invested in the resort, that AIG has been 100% owners of Stowe since 1988, and that they did indeed transfer ownership to their 100% owned subsidiary Chartis, in late 2009.   Financial terms of the transfer were not disclosed, but in addition to the Stowe ski resort, with its 119 trails over two mountains, it included two 18-hole golf courses, and an upscale lodge.

Stowe, Vermont is a very special place – quintessential New England –  and based on what I saw and read, the Stowe ski resort is perhaps the finest on the East Coast.  Stowe’s new Spruce Mountain Lodge is breathtaking, and the gondola across route 108, connecting the two ski mountains is incredibly convenient.   Skiing is obviously part of AIG’s DNA, but it is not remotely part of its corporate mission,  which raises the question in my mind about what kind of payback AIG shareholders are getting on AIG’s $300 million, 10-year capital program to expand and upgrade Stowe.

Why Businesses go Bankrupt: CB Holding (Charlie Brown’s Restaurants)

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CB Holding, the company that owns restaurant chains Charlie Brown’s, Bugaboo Creek and The Office, filed for bankruptcy under Chapter 11 on Wednesday, November 17th.   CB Holding announced that it was closing nearly half of its restaurants, and is looking to sell its 39 remaining restaurants.  A CB spokesman told the “Newark Star Ledger” that the 29 closed restaurants were targeted for “under-performance” and that the company would work with the 2,300 displaced workers to “help them find jobs, both within and outside the company.”

The CB Holding bankruptcy petition states the company has assets of $100 – 500 million, and liabilities of $50 – $100 million, so there apparently was not an accounting insolvency (i.e., liabilities greater than assets) at the time of the filing, and it is not even clear from the reporting whether there was a technical insolvency (i.e., firm unable to meet its obligations.)   It appears likely that this was a strategic bankruptcy, planned by CB Holding’s principal owner, the private equity firm Trimaran, to enhance the restaurant chains’ value, prior to a sale.

One of the most famous strategic bankruptcies was Continental Airlines, which declared bankruptcy in 1983 so it could break its high cost union labor contracts, and more effectively compete with new non-union airlines, following the deregulation of the airline industry.   But Continental stayed in the airline business, while Trimaran is exiting from restaurants, as quietly as possible.   I agree with Fortune Magazine writer Dan Primack who recently wrote: “when you fire 2,000 workers workers without warning – in a lousy labor market to boot – then you should at least explain why it happened.”

Inside Job (the movie) is like Frontline on Steroids

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Whatever your current level of understanding of the current financial crisis, make plans to go see the movie Inside Job while it is still in the theaters, and you will be mesmerized, horrified and educated about the crisis’ root causes.

The research,  music, camerawork, editing, Matt Damon’s narration, and Charles Ferguson’s interviewing talents all make this a superb addition to the growing body of works explaining the current financial crisis.

Here are a couple of particularly compelling quotes from the film:

George Soros saying:  “[Former CitiBank CEO] Chuck Prince famously said we have to dance until the music stops.  Actually the music had stopped already when he said that.”

Director and interview Charles Ferguson asks “Why do you think there isn’t a more systematic investigation being undertaken?” and gets this answer from NYU professor Nouriel Roubini:   “Because then you would find the culprits!”

Thanks to Thomas Friedman for Keeping the Spotlight on Education

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I heard author Thomas Friedman speak at the World Affairs Forum a few years ago, and he shared what he exhorts his own children:  “do your homework, because there are kids in India and China who are hungry for your job.”   This came to mind when I saw his column“Teaching for America” in the New York Times on November 20th.  In this recent column, Friedman describes U.S. Secretary of Education Arne Duncan’s national teacher campaign to recruit new talent to the teaching profession, so we will be more like Finland and Denmark, both of which insist that teachers come from the top one-third of their graduating class.  According to Duncan, one quarter of U.S. high school students drop out or fail to graduate on time, and “other folks have passed us by, and we’re paying a huge price for that economically.”

I have had the chance to witness the impact of our inconsistent education system in my work as a consultant, and as an adjunct for a number of well known New York City institutions, where I teach business finance.   I’ve had a number of exceptional students over the years, but I also have a significant number each year who either never learned how to set up a basic algebra problem, or have long since forgotten.   The same is true of writing skills:  I have had a few really gifted students over the years, but many more whose writing is a disappointment.

The same day I read the Friedman column, I heard a disturbing report by “On the Media” about the recruitment practices of Kaplan Educational Services, which is a wholly owned subsidiary of the Washington Post.   And I also spent some time working my way through Bethany McLean and Joe Nocera’s outstanding book “All the Devils are Here, the Hidden History of the Financial Crisis,” which sheds new insight on how “greedy traders, misguided regulators, sleazy subprime companies, cowardly legislators and clueless home buyers” collectively deserve the blame for the current financial crisis.

All of which leads me to ask whether the U.S. would be in better economic shape right now if we had displayed the same ingenuity and tenacity to effectively educate our children the last 20 years as we had in gaming the system.  And to thank Thomas Friedman for continuing to keep a spotlight on the link between the effectiveness of our educational system and our competitiveness as a nation.

Italian AP Exam is Reinstated

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A week after her brother Andrew Cuomo was elected governor of New York, Dr. Margaret Cuomo was victorious in her multi-year struggle to have the College Board reinstate the Italian AP Exam, the “Wall Street Journal” reported.

In the four years that the Italian AP exam was previously offered, it fell short of the College Board’s target of 5,000 test takers per year, and as a result, it ran losses of $1.5 million per year.  Echoing their 2003 contribution of $300,000 to get the College Board to initiate the Italian AP exam in the first place,  the Italian government has once again stepped up, this time agreeing to pay the College Board half the cost to have the exam reinstated, provided the other half would be covered by Italian heritage groups, the Journal reported.

Since I blogged about the Italian AP exam back in May of this year, the College Board, which is a not-for-profit organization, has reported improved financial results. For the fiscal year ended 6/30/2009, the College Board’s revenue exceeding expenses by $53 million, with revenue of $623 million, and expenses of $570 million.  For the fiscal year ended 6/30/2008, revenue exceeded expense by $39 million.