Duluth taking deep dive into Spirit Mountain's finances after bailout

DULUTH – Spirit Mountain survived a tough season. Now the city wants to make it more resilient.

The mayor will soon convene a task force to get the public ski hill on firm financial footing and conduct an economic impact analysis that could help make the case for increased taxpayer investment.

A team of city and business leaders will "examine all options to achieve financial sustainability," Jim Filby Williams, Duluth's director of public administration, told Spirit Mountain's board Thursday night. That's something the city has been seeking since the mountain was bailed out with $235,000 in tourism tax dollars in December following a business-busting blizzard.

Right now, the mountain's finances are in survival mode, board member Dave Kohlhaas said.

"When you're having a hard time making payroll it's hard to start envisioning or embracing other opportunities," he said. "I do think we have an overriding strategic plan for the hill in terms of operation and the community, but I don't know there's been a financial strategy we're trying to achieve — except we're trying to pay our bills."

The mountain closed this week due to the coronavirus and will draw down its cash to about $76,000 by the end of April. Even though season pass sales exceeded expectations this year, the closure and cancellation of Snocross due to the Thanksgiving weekend blizzard was a huge loss.

At the time, Executive Director Brandy Ream told the city in an e-mail that "things do not look promising on the horizon."

An audit of last year's finances, a more typical season, shows the bills do get paid and the mountain generates enough cash to sustain its operations, but not enough to cover needed capital investments.

"There's so much deferred maintenance, the things that have to get fixed tend to drain down those moneys right away," said Jane Kaiser, the fourth finance manager the mountain has had under Ream's five-year tenure.

Spirit Mountain typically receives about $1.1 million in tourism tax support from Duluth, much of which pays down debt on mountain infrastructure.

On Thursday night, the board approved next season's $5.3 million budget, which will need to go before the City Council for approval next month. It carries the caveat that summer operations won't be affected by coronavirus closures and doesn't ask for an increase in tourism tax support.

If currently planned banquets and weddings get canceled and deposits need to be paid back, that would drain all the mountain's cash.

Getting more folks to buy season passes for next winter ­— and soon — could make up for that. Otherwise, the city may again be asked to help the mountain make it through a rough patch.

"Depending what happens these next few months, we may be hand-to-mouth trying to pay employees and vendors," Kaiser said.

Brooks Johnson • 218-491-6496