The pay to play business models works
Skiers in front of a yurt on Minnesota's Banadad Trail, part of the Gunflint Trail network.
After years of hard work and financial investment, two major trail systems were creating that linked lodges and resorts together. The Central Gunflint Trail consists of Golden Eagle Lodge, Bearskin Lodge and Boundary Country Trekking. The Gunflint Lake area links Gunflint Lodge, Gunflint Pines Resort, Heston’s Lodge and Moosehorn Bed & Breakfast.
Tuttle points out the difference between a Nordic centers near an urban area vs. the Gunflint Trail’s wilderness location. Compared to ski areas that make their money through day passes the Gunflint Trail is a destination resort area. Resorts primarily make their money selling beds. The ski program is just part of the package.”
Although the Minnesota Ski Pass continues to raise significant funds and contribute to grant-in-aid programs, Tuttle suggests pay for play fees are needed to cover costs. He says, “The Minnesota Trail Pass was introduced to try to help pay for maintenance and development of cross country ski trails. It was evident early on to us that proceeds of the Ski Pass just weren’t going to fund a trail system up to the level of quality that was expected by cross country skiers who expected a lot more. We worked with the Forest Service to create a trail fee. We need a more secure way to be assured the people who used them would fund our trails. I think that’s the fairest way. It took people a while to adapt from the Minnesota Ski Pass system to the user fee system. But now that’s what people expect. If you want a good trail system that is groomed regularly, designed and signed, people are more than willing to pay for that.”
Tuttle explains the administration of the user fees, “The resorts that manage the ski areas collect the fees - half day, day or season pass - and distribute funds to the group that pays for the maintenance and grooming of those trails. The resort keeps a certain portion for administration and fees are distributed proportionately to the amount of grooming done by each resort. Trail passes don’t come close to paying the amount of money it takes to maintain and groom a trail system. It does help.”
Ski trails couldn’t exist without cooperation between private landowners, municipalities, government officials and ski clubs. Jay Lucas, executive director of the Methow Valley Sport Trails Association works with officials from local towns, Okanogan County, U.S. Forest Service, Washington Department of Fish and Wildlife and Department of Transportation. According to an economic impact survey, in 2005 Methow Valley trail users spent approximately $4.5 million to the Methow Valley economy. Lucas says, “The trail has become a huge component of the local economy. The model is working very well when you are considering how many people are making a living off the trail system.”
Mayo-Kiely reinforces the benefit of public private partnerships. “ Swedetown would not be there without Calumet township. Without them we wouldn’t have a trail, chalet or Pisten Bully. We’re fortunate to have a great relationship. It’s hard to do what we do without key partners. We’ve been able to apply for grants that a municipality can apply for but a ski club can’t. If we can get a good relationship with your municipality it’s a great way to do it because you get their buy-in.”
While relationships with governmental agencies and municipalities are important, the contributions of private landowners are the foundation of every successful trail system. Perkins is adamant about their role. “Everybody considers that snow is the most important ingredient for skiing. It’s not. Land is the most important ingredient. You can have all the snow in the world but if you don’t have permission to go across the land, it’s no good to you,” he says.
Skiing at Sun Valley Lodge in the Methow Valley.
In the Methow Valley landowners were reluctant to become involved at first. Lucas recalls, “That was a leading factor in why we chose to set-up as a non-profit. We reassured the landowner we weren’t making any money on this. Anything we make is going right back into the business for the benefit for the community.” Over time landowners became aware of the ways the trail created income streams for lodges and rentals and added land value for landowners. A 2005 economic analysis conducted by MVSTA and the Methow Conservancy found that “People buying homes and real estate in the Methow Valley are on average willing to pay 11.5% more per acre for properties near trails.”
The Methow Valley trail runs through 160 pieces of private land. Lucas comments, “We can’t keep up with the number of people who want the trails. As far as ownership changing, by far the people who have purchased land with existing trails on it are doing so because they want the trails.”
Since the majority of the Swedetown trail is in township land, private ownership poses few challenges. Mayo-Kiely reports one situation that needs to be resolved; “ We are looking to reroute the trails off of private land. The landowner is accommodating but has some liability and general use questions. A ski trail has to be pretty wide for the Pisten Bully to get through. As ATV use is on the rise there are fears that ATVs will go on these trails and start to muck them up. They don’t want to have that happen to their land. Our goal is to make sure all our trails are not on private land so that we don’t have any of those issues. We’ve never had a landowner saying if you are charging money where’s my five dollars? They have been pretty accommodating.
Original handshake agreements between landowners and trail managers are increasingly being replaced by formal legal arrangements. Perkins explains,
“We have evolved the permissions we gained for use of the trails from an annual permission to multi-year agreements. We have a campaign going on to get deeded easements on the trail system. Some people don’t want to do the easements. It’s their land they can do what they wish with it. We have to operate the trail system in such a manner that they feel very comfortable with what we are doing. We have to treat their land with respect and make sure the public is educated about the limitations of what they can and cannot do on someone else’s private land. We’ve evolved over many years to make sure we pay attention to that . Obviously land ownership patterns change, but anyone who is buying land in Jackson these days is aware of the social obligation of making sure the trail system remains one of the major economic engines of the village. The trail system is fairly stable. Landowner relationships are a big part of my job.
Tuttle notes that agreements once worked out between resort owners have evolved to become more professional and legally binding. Agreement and special use permits with the Minnesota DNR and Forest Service now require that approach.
Managing the budget
The funds to operate the Methow trail system come from grants (15%), trail pass revenue (60%) and events, advertising and donations (25%). Winter day passes generate $375,000-$425,000, depending on the year, but cover the cost of maintaining trails year round. The annual cost of maintaining the winter trails is about $170,000 (fuel and groomers’ wages) but that does not include year round salaries of four office staff people and capital improvements. Lucas comments, “It’s a crapshoot. On paper some years we lose many, some years we make money. Bottom line we always have money in our bank account. We’ve carried debt for years. Private individuals who believe in us hold half of our long-term debt. Fuel is killing us right now. Our annual fuel bill used to be $12,000, now I’m spending $2,000 every two weeks.”
Perkins reports, “Our annual operating cost for the trail system is a third of a million dollars. Some years we make that, others we don’t. When we do we put the money in the bank for the years we don’t.” Jackson XC doesn’t count on grants to address the operating budget. “We try to fund the trail system based on the memberships and the capital investments we try to do through revenue overages at the end of the year. We invest in the trail system and machinery. We also use donations toward capital improvements,” he says.
When the snow falls, trails will be open and ready. Considering the enjoyment received from a day on a well-groomed trail, paying daily or annual fees seems to be an investment with incredible long-term returns.