Sugar is Sweet

One story I have been following the last month or so is the attempts to bring Sugarloaf Mountain back into the ski business. Being I live West of Lake Michigan and Sugarloaf is on its East shore I am not following too closely but fellow ski writer Jason at the MI Ski Report has been following the story very closely.

Normally, one would think such a story would be rather uncontroversial, a fellow comes in and wants to buy the resort and bring it back into operation and business. That means jobs and income for people and not just at the resort but around the community. Not everyone will stay at the resort, people need gasoline and cola for the drive back home, and so on.

So what is the big controversy surrounding the possible resurrection of Sugarloaf Mountain?
It seems the man taking the point on the effort has a past. In the comments at the MI Ski Report people have come in claiming to be “Sean” Liko Smith’s former partners and the story those commentors tell is not flattering. I did some Googling on the topic and a few things are clear. Sean Smith did head up a similar effort in the past.

Here is a post talking of The Block Hotel and its demise. The Block Hotel was a past effort that Sean was a key part of. The comment stream for the most part is not generous to Sean and Sean (apparently) appears and leaves a couple of comment and Sean is not without other defenders (again apparently others).

Sean makes a couple of good points in his defense on the problems experienced at The Block:

1. the hotels were not run properly, we should’ve hired hotel people, not snowboarders, loyal [censored] but just not intersted [sic] in hotels that much 2. the reality show was a distraction from a hotel that was too small to handle it while still trying to run a business 3. there were way too many small investors who were jealous about the publicity but rightly nervous that the cash flows didn’t match and when the time came, couldn’t pony up the funds to help out 4. the communities hated us because we did not communicate well enough with them on our plans so they thought we were evil incarnate. 5. I am not nor will I ever be a true snowboarder, I love business too much and I won’t make the time, I love Golf, and I golf once a year, Ill do the rest of this shit when Im [sic] old and rich. 6. I spent over $400,000 of my own money over 3 years propping up the hotels because of my ego instead of issuing cash calls and when I did, the investors claimed i was mismanaging but nobody would step up to run the hotels, and even when I sent over the books and there was no irregularity, they apologized in private and talked shit in public as if it was some “jerry springer [sic]” show.

Live and learn they say, huh? Some of the points do address a number of the points Sean’s critics raise, especially points #1 and #2. When I started reading up on this, I thought the symptoms read of fuzzy focus and trying to do too much at once and that is what Sean’s response mainly consists of — that they tried to do too much at once. Why should a startup hotel plunge into the reality show market, right away? The focus should be on the hotel and catering to its niche which also seemed to be a whiff by the claim made in point 1 — hiring passionate snowboarders to run the hotel.

As far as the critics go and their claims, it is hard to judge the validity of those. Yes, the blog I link to does point to his arrest based on charges of financial misdeeds, but I have no clue to as to the current status of those charges and the article does not make clear if the charges have been dropped, settled, or prosecuted. Investing is such ventures is tough and the fuzzy plan probably lead to investors getting stars in their eyes. I have been close to smaller such efforts and the maze one has to navigate to get from the start to success is amazing. Navigating the maze of sound business practices is tough enough and we have taxers and regulators adding their own sets of mazes.

In another post by Jason (MI Ski Report) there is a discussion questioning Sean’s plan to focus on the hotel first and get that running, which is something learned by Sean. No doubt, without winter attractions the hotel business will be slow during the winter months, but surely all sorts of resorts are able to make enough cash during the spring, summer, and fall to deal with the slow or non-existent winter business. I know of one such business person who just opened his campground and will close it September or October and has to pay on it 12 months per year.

For the venture to succeed the first focus has to be the hotel and resort, and the resort’s location on Lake Michigan should make that part easier.

Should you trust Sean Smith? It would be more helpful to rephrase that question. Should you trust anyone asking you to invest time and money in a large project? No you should not, you need to study the plans, the background and circumstances of their pasts, you need to study your own situation, and you need to understand the project may fail.

This is an interesting story and one that is probably going to drag out for sometime yet. I wish Sean and all who join his team all success!

Good Stuff!

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