Not-so-Private Anymore

The Yellowstone Club, the world’s only private ski and golf resort, sought bankruptcy protection from its creditors this week, citing a slump in real estate prices. Located twenty miles north of Yellowstone National Park near Montana’s big sky area, the club spans 13,000 acres and most of the club’s revenue came from property sales. In the past, lots sold for $2 million and higher, but sales reflect the slowing market. Additionally, only the extremely wealthy can afford the club’s exorbitant membership fees, and even the richest of the rich might be scaled back at a time like this. Amongst the club’s members are listed Bill Gates, News Corp. President Peter Chernin, hotelier Barry Sternlicht, and former Citigroup private banker Todd Thomson.

This past summer, the club had an appraised value of $778 million, not including unsold memberships, worth another $336 million. However it does owe $307 million, according to bankruptcy filing, and its financial troubles were a long time coming.  The Club borrowed heavily when credit markets were good; in 2005 it borrowed $375 million. There was also trouble when the co-founders, Edra and Tim Blixseth, were reported to have pocketed $209 million of the club’s loan “as a return of capital to early investors” (other early investors were not happy).  Also, the co-founders went through a bitter divorce in recent years that hurt sales by raising questions about who would own and operate the club. It is now operated by Edra Blixseth, who lives in a 30,000-square-foot mansion in California, making it slightly difficult to feel sorry for her.

Yellowstone Club members can rest assured that the ski area will be open this winter ski season, thanks to a $4.5 million loan from Credit Suisse.

Via Bloomberg