9/6/02

Lawyers question noncompete deal

By Robert Weller/Associated Press

DENVER – Legal experts say Vail’s attempt to block Intrawest’s takeover of the Winter Park ski area could be on shaky ground. Vail Resorts has threatened a lawsuit to block the plans of Intrawest, a major competitor, to develop real estate as part of a deal with the city of Denver to take over management of the city-owned Winter Park. Vail says Intrawest signed a noncompete agreement as part of its $400 million development at Vail-owned Keystone. Denver, which owns the resort, announced details of the agreement with Intrawest on Thursday. Vail says Intrawest, as part of the agreement, agreed not to develop real estate at other Colorado resorts unless it owned them. Intrawest says the agreement requires it to have only ‘‘a controlling interest,’’ and it will pay all resort costs and take all the risks. ‘‘Without seeing the contract, I’d say that Intrawest seems to have the better argument,’’ said Tom Russell, professor of law at the University of Denver. James Chalat, a ski law expert, said a noncompete agreement could raise antitrust issues. When Vail bought Keystone and Breckenridge the corporation insisted it would not hinder competition between resort companies. ‘‘Courts, like skiers, prefer competition. Judges read convenants not to compete quite narrowly. This means that vagueness works against any limits on competition,’’ said Russell. Russell said the noncompete agreement could make business sense while benefiting skiers. ‘‘Neither Vail or Intrawest are going to pour a lot money into a region if they are going to lose their investment to another,’’ he said. ‘‘From what I’ve read it appears that Intrawest is putting their capital on the line. It is not such a sweetheart deal that they are protected from loss (because the city of Denver owns Winter Park).’’ In the years since Vail’s takeover of Keystone and Breckenridge, competition for Colorado skiers has intensified. Season passes have dropped to 1970’s price levels, as low as $100 for children. Winter Park, because it is owned by Denver, hasn’t had the hundreds of millions of dollars available to private resort companies for on-mountain improvements. The city decided to seek a private partner that could fund expansions. The only feasible way to do that was to find a company like Intrawest that could develop real estate to pay for new high-speed lifts and other improvements, said Gary DeFrange, Winter Park’s CEO.