Restructuring Public Lands for Public Good

Ask many skiers today who is ski enemy #1, and the most common answer you’ll probably get is “Big Ski” – national corporations like Vail and Alterra. There are abundant videos about how Vail destroyed skiing, petitions, and endless forums deriding Big Ski. While the introduction of mega passes certainly has brought some consumer benefits for those seeking to travel between popular resorts, the prevailing sentiment is that these companies have had overwhelmingly negative impacts on the sport of skiing and its local communities.

We all know the narrative: that Big Ski is a classic example of rampant capitalism, inevitably making skiing less accessible and more elitist.

I don’t doubt the end result. However, I believe that the mechanism that created these circumstances is actually not traditional, free market capitalism, but rather a government sponsored monopoly. And the outcome was not inevitable, but rather the result of outdated policies that do not protect the best interest of the public.

Mountainous Barriers to Entry

Imagine there was a local coffee shop you loved. But then it changes ownership and the food and service begins to decline. What would you do? Take your business elsewhere. And if there were no other options, maybe an entrepreneurial individual would set up a new, better coffee shop across the street. In a rational market, this threat of competition would incentivize the coffee shop to improve its business, or else lose its business.

One recent Dirtbag Diaries episode told the story of Mt. Bachelor Ski Area and a local community’s huge effort to reclaim local control over the ski area. After many decades of local ownership, a national corporation bought Mt. Bachelor, and the quality of the operation declined substantially. However, Bend area skiers had no real alternatives, other than to stop skiing altogether. Many of them chose to move to Bend because of Mt. Bachelor. So they reluctantly continued to support a business that did not prioritize its customers.

Even if there was another 9,000 ft stratovolcano right across the road, starting a new competing ski area is much harder than it sounds. The last major ski area to open in Washington State, Alpental, first opened in 1967. Since 1967, the state’s population has grown from 3.2 million to 7.8 million today. During that period, we have seen some terrain expansion for existing resorts, but no net new ski areas. Meanwhile, some smaller ski areas, like Yodelin and Mt. Pilchuck, have closed. Decreasing supply (ski resorts) and increasing demand (population) drives up prices, which in theory should introduce new competitors, right? Unfortunately, the reality is that it is near impossible for new ski areas to be developed in the PNW, for political, geographical, and logistical reasons.

The result is that most ski areas, big or small, are functionally geographic monopolies. Land is a finite resource. And appropriate ski terrain is even more scarce. Especially in the PNW, where high elevation, avalanche safe terrain is particularly hard to come by, the most valuable asset for ski areas is their unique terrain. Even if you could open a ski area on Tumalo across the road from Bachelor, even if its service and price was much better than Bachelor, it would struggle to compete because the terrain it occupies would be so much more limited.

A surprising example of ski area monopoly power comes up north, and through trail running. In 2023, there was controversy when Whistler, owned by Vail, partnered with UTMB, owned by Ironman, to put on a world class trail race that suspiciously replaced a traditional locally organized race that previously occurred at the same time of year, on the same venue. While accounts vary depending on who you listen to, it smells like a classic situation of two large international companies squeezing out a local player. Sure, the local organizers could pivot to a new race venue, but there is simply no equivalent to Whistler’s world class scenery and infrastructure.

Government Sponsorship

Given the incredible value of the unique land ski areas operate on, we would expect those that lease public land to pay a hefty price for it, right?

Most ski area leases on National Forest land, the common arrangement in the PNW, have similar language. They require the ski area to pay a portion of their revenue as a fee. The formula is as follows:

SAPF = (.015  x AGR in bracket 1) +
       (.025  x AGR in bracket 2) +
       (.0275 x AGR in bracket 3) +
       (.04   x AGR in bracket 4)

AGR = adjusted gross revenue

Year	Bracket 1 (1.5%)	Bracket 2 (2.5%)	Bracket 3 (2.75%)	Bracket 4 (4%)
2025	<$6.3M	$6.3M – $31.6M	$31.6M – $105.3M	>$105.3M

For example, Stevens Pass (owned by Vail) has an estimated annual revenue of $68.4 million. So its total permit fee would be:

(6.3 * .015) + ((31.6 – 6.3) * .025) + ((68.4-31.6) * .0275) = $1.739 M

This represents approximately 2.5% of their total revenue.

The functional result of this arrangement is that ski areas pay a very small amount of their revenue as a leasing fee, approximately 1.5-3% in total. In contrast, a typical coffee shop will typically spend about 10% of its revenue on rent, about 4x more. The fact that a ski area, which is far more dependent on its real estate location (what is a ski area without its terrain?) than a coffee shop, pays such a relatively small fee to get exclusive rights to a unique, scarce public resource is… interesting. Furthermore, these leases last on the order of 50 years (Stevens and Snoqualmie have their current leases through 2058), so there is little opportunity for public input.

Note that obtaining these ski area leases requires filing a FOIA (Freedom of Information Act) Request with the Forest Service, and waiting many months for a document to be emailed to you. Ski areas aren’t purposefully making these details difficult to discover, but they’re certainly happy to let government bureaucracy be a roadblock to transparency.

Ski areas create externalities for non-ski area users. They typically occupy the most desirable terrain for backcountry users. The lease often grants control of majority or all nearby parking, giving ski areas the opportunity to restrict public access for other uses like snow play, snowshoeing, and more. So we would hope at least that the revenue generated from ski area leases goes to the local Forest Service to invest in the non-skiing public? Nope, ski area permit fees go straight to the General Fund of the US Treasury (as dictated by 16 U.S. Code § 497c).

This is also where the common argument that “ski area customers are doing more to support public lands” than non ski area customers, and thus deserve to be prioritized over other users, falls flat. A mere 2.5% of that lift ticket goes to the federal government (sales tax goes to the state, which does not manage National Forest Lands), and it supports public lands in the same way that income taxes do – extremely indirectly. Is someone who pays more income tax more deserving of access to public lands?

While the exclusive rights granted to ski areas represents a geographic monopoly, there are also government subsidies for ski areas – plowing. While many ski areas are located at passes where the government plows the roads primarily for pass-through traffic, and ski areas are just a natural beneficiary, there are some locations, such as Highway 542 to Mt. Baker Ski Area, where the road is a dead end. WSDOT, funded by state taxpayer dollars, spends hundreds of thousands, if not millions, of dollars plowing 542 each winter. Nearly all of the winter access from this road is up at White Salmon and Heather Meadows, which is largely controlled by Baker Ski Area. This represents a substantial public subsidy to the ski area.

I know what you’re going to say – that non ski area users are “freeloaders”, not paying their fair share. In the past, someone who parked for free in a lot controlled and plowed by the ski area was “freeloading” off the resort (although most resorts now charge for parking). Ski areas are empowered to charge for usage of the parking they control. And as non ski area users, we need to get used to paying for our winter access – either through programs like the Sno-Park program, or directly to ski areas. But zoom back one more level – non ski area users are only trying to park at ski areas because there is often no real alternative (e.g. Baker and the entire Artist Point area). Again, ski areas are just taking advantage of the favorable terms they have been given. But is it right for the federal government to grant such monopolies, especially on public land?

Now we could rationalize the generous lease terms and public subsidies as simply general subsidy for the skiing public, which tends to be disproportionately middle to upper class (although not as bad as subsidizing the grazing of cattle owned by billionaire ranchers). However, the distribution of demand for winter access has changed dramatically in the last few decades. Increasingly, people want to access snowy locations to sled, photograph, or snowshoe. Between 2017 and 2022, Washington State’s RCO Survey shows 12x growth in backcountry skiing, 4x growth in snowshoeing, and just 2.5x growth in downhill skiing. As the distribution of recreation changes, we need to realize that the market is still optimized for a past where basically everyone driving up to the mountains in the winter were intending to lift ski.

Restructuring Public Lands for Public Good

I recently read The Captured Economy by Steven Teles and Brink Lindsey. The book focuses on the damaging effects of regulatory capture in finance, medicine, and more. I couldn’t help but think of the analogies to ski areas and the management of public lands at large. I’m not opposed to allowing for-profit entities on public lands – for example, guides increase the accessibility of the outdoors, do not (generally) harm the experience of others, and have to provide great service, lest they get outcompeted by other guides. I strongly believe in the power of capitalism to benefit the world, but so many important industries have lost the dynamism of competition (like Congress restricting the supply of medical residency spots, driving up the cost of healthcare, and leading to overworked doctors). Instead of competition, we get cartels.

The local ski landscape is defined by a static market where each ski area has a government sponsored geographic monopoly. New entrants are effectively blocked by the political and very real environmental consequences that would come with new development. I don’t blame ski areas for all the problems of modern day skiing – they are just acting in their rational self interest. Some ski areas actually buck the incentives and prioritize community, but there’s no denying that they operate with immense local power and minimal accountability. The problem is structural.

Allowing the development of new ski areas would increase competition and supply, shifting market power towards skiers, away from ski areas. However, we have not seen a new ski area in Washington in over 50 years. Restructuring leases to prioritize wider public benefit could help, but most ski area leases have decades left. So given the near impossibility of increasing competition or revising the leases, what can be done?

A major improvement would be to ensure that at least some portion of ski area lease fees are reinvested in the local Forest Service district for the explicit purpose of non-ski area winter recreation. There was a recent proposal, the SHRED Act, that proposed returning ski area fees to the local district, but it may have been more of a Trojan horse act to subsidize more ski area improvements, allowing the fees to essentially be paid back to the ski area. For non ski area users, ski areas create negative externalities – loss of access and public parking options. Ski areas will claim they provide the public benefit of plowed parking lots, which is true to some degree, but the problem is that ski areas have claimed so many of the available parking lots. In many cases, like the Alpental Valley, there are no parking lots even left for the public (e.g. WA state Sno-Park program) to consider plowing for themselves.

Reinvestment of ski area lease fees could be a game changer for local recreation. Going back to Stevens Pass, the $1.74 million in lease fees is comparable to nearly the entirety of the WA State Non-motorized Sno-Park’s $1.94 million annual budget (which, by the way, is completely funded by user fees). Ski area leases could go a long ways to fund the local Forest Service, support local recreation initiatives like subsidized transit, and fund local conservation. Based on a King Country Metro estimate of $254 per operating hour, if we operated 4 buses 10 hours per day for the busiest 30 days of the winter, that would cost $305,000 for one winter.

Additionally, land managers should support nearby recreation opportunities for the non skiing public. As I’ve made the case before, people wanting to recreate are not the problem. Land managers have granted a geographic monopoly to the ski areas, so I believe land managers have an obligation to support other access opportunities for the non skiing public. The parent trying to take their kid sledding doesn’t need 1,000 ft of vertical – they just want a plowed parking lot next to reliable snow. In areas where it is not possible to create more public parking without new parking infrastructure (e.g. Alpental Valley), creative solutions will be necessary. Of course, land managers are underfunded, but returning ski are lease fees back to the local district would help massively with this problem.

As for the ski area experience itself, could we see different business models?

After Mt. Bachelor went for sale, an enterprising group of Bend locals sourced $100 million in community capital from high net worth individuals to buy the resort, with the future idea of allowing anyone to buy fractional ownership in the entity. Such an arrangement would ensure that the resort was operated in the best interest of its stakeholders, winter recreators, rather than the interest of some private equity firm on Wall Street. While it would still have to turn a profit, those profits would be reinvested back in the local community. Furthermore, I think that local ownership would result in better operations and, if nothing else, a sense of regained control. Currently, their outcome is still undetermined, but I am pulling for them.

Meanwhile, a local group purchased Killington, the largest ski area on the East Coast of North America. And in Colorado, the small town of Eldora, population 1,500, is financing the purchase of their local ski hill through municipal bonds. Community ownership isn’t a new idea. Selling shares in a ski area is how many ski areas used to raise capital to get started, including the Crystal Mountain Founders Club.

In other cases, we won’t be able to force ski areas to sell to local groups (unless the Department of Justice wanted to make an anti-trust case, but they have bigger fish to fry). Given the favorable terms of existing leases to ski areas, it is challenging to envision a way to improve the incentives without fundamentally restructuring the leases. Technically, the Forest Service can revise lease terms outside of renewal periods (see “Permit Revocation” in this article), but that would probably require an immense amount of pressure. But ideally, there would be more oversight and public input in the management of ski areas, since after all, this is a government granted monopoly on public lands. Government also grants monopolies to other private entities, like utility companies (e.g. Puget Sound Energy), but these companies are highly regulated, unlike ski areas.

I know a lot of resort skiers are going to hate this article. But I believe that you can still love your local resort, while acknowledging that it operates in a captured, monopolistic landscape that does not optimize for public benefit.

I love skiing. I don’t want to see ski areas go away. I’ve been a pass holder in the past. Hopefully someday, I’ll share the experience of skiing with my kids. But I do think that the ski economy is structured in a way (profit maximization by geographic monopolies) that is fundamentally misaligned with the intent of public lands (maximizing public good). And things won’t get much better unless there is a structural change.

Skiing on our public lands is a special experience. It is time Big Ski operates a little more for the public good.

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If you are a legislator, here is what you can do:

Propose a “SHRED ACT V2” that directs at least some portion of National Forest ski area lease fees back to the local Forest Service district for the explicit purpose of funding the Forest Service to support non ski area public recreation and the broader winter recreation community.