by Michael Damiano | January 15, 2017 6:06 am
Like many dreamers, Les Otten has a tendency to see opportunity where others see nothing but ruin. The first time I met him, this past fall, we were in northern New Hampshire on the decaying grounds of the Balsams Resort, which Otten intends to resurrect. Tall and athletic, with a head of white hair, the 67-year-old was wearing the same thing he wears almost every day: head-to-toe denim and sneakers. Trailed by his golden retriever, he talked fast, in a way that suggested he was thinking out loud. In the first few minutes, he introduced both himself and his dog, Sophie, twice.
From the time it opened, in 1866, until it went belly up, in 2011, the Balsams was one of New England’s grandest hotels, drawing aristocrats and celebrities from New York, Boston, and even Europe. Guests arrived by stagecoach at first and, later, by motorcar to escape city pollution and enjoy the salubrious effects of mountain air. Babe Ruth and Frank Sinatra were among the many visitors. During Prohibition, the Balsams’ golf clubhouse doubled as a bordello and a gambling den. On this day, though, the crumbling property felt more like a living time capsule—and looked like the site of a bomb blast.
Although parts of the towering hotel appeared to be in solid shape, the rear of the building was destroyed. There was a gaping hole in the roof, the clapboard walls were charred and rotting, and a tangle of wood scraps and rusted metal covered the ground. Outside was a football field–size hole filled with rubble. It seemed clear to me we were looking at a trash heap. Otten, however, stood with his hands on his hips and surveyed the chaos. When it comes to mountain resorts, he pronounced, this “may be the last, best opportunity in the United States.”
Otten’s ambitions are not small. In addition to restoring the Balsams to its former glory, he also intends to build—right next to it—a behemoth of a ski mountain that could eclipse Vermont’s Killington as the largest in the East. Plans also call for restoring a historical golf course designed by the legendary Donald Ross. The Balsams currently sits on 11,000 acres of mostly untouched land, including three lakes and 60 miles of trails. When—if—it’s completed, the new Balsams will also have a spa with outdoor hot baths, a vast market selling local goods, a culinary institute, a refurbished antique movie theater, and a modern revival of the Balsams’ famed white-glove dining service. It’s estimated the project will cost at least $159 million, coming largely from private investors and banks. Otten, for his part, is betting at least $5 million of his own money on the development. The state of New Hampshire is all in as well, poised to guarantee a $28 million loan to jump-start the project. All of this comes, of course, at a time when the East Coast ski industry is struggling to survive in the face of last winter’s paltry snowfall and, in the long run, the graying of the baby boomers.
As an aging recluse who lives in a lakeside log cabin of his own design in a tiny Maine town most people have never heard of, Otten seems like an unlikely candidate to take on one of the most ambitious economic development projects in New England. He wears either jeans or snow pants nearly 365 days a year. He’s a doting father of three and is given to nattering on, at length, to Sophie. Yet there is another side to Otten that makes him far more qualified to summit this latest challenge.
Otten made his name decades ago as the founder and CEO of American Skiing Company, a ski resort empire once worth $600 million and included Killington, Maine’s Sunday River, and Canyons in Park City, Utah. Throughout his 40-plus-year career, Otten earned a reputation as a brash, hard-charging leader who fearlessly battled his competitors in the press and made himself the face of his brand, putting his picture on his company’s brochures. Otten also worked with billionaire John Henry to buy the Red Sox, saving Fenway Park from demolition at a time when most people, including then-Mayor Tom Menino, believed it had outlived its usefulness. Not all of his ventures, though, have ended in success.
Following his rise in the ski industry, Otten crashed. He grew American Skiing too quickly, lost battles against nature (winters continued to get warmer) and the banks (they stopped lending him money), and had to resign from the company he’d created. American Skiing’s stock price eventually plummeted from $18 a share to zero.
Now, with the Balsams, Otten has his work cut out for him. He’s willing to assume the risk again because he believes the property can be the Platonic ideal of a mountain retreat. Even if he gets it fixed up, though, he’ll still need to convince people to come—not an easy sell considering the Balsams is in the northern New Hampshire wilderness, in one of the most economically depressed parts of the state. In what may be his wildest gamble yet, Otten is out to see whether he can remake his fortune and help revive the region’s ski industry, or if he’s destined for another wipeout.
It wasn’t long after earning a degree in business administration from Ithaca College in 1971 that Otten decided to hit the slopes. He joined Killington’s management training program after graduation, and within two years—at the age of 23—began running the day-to-day operations at Sunday River, owned by Killington’s parent company, the Sherburne Corporation. Some of his favorite stories are from the early, hardscrabble days when he and his small team did everything from pouring concrete floors to climbing the mountain to turn on snowmaking machines by hand.
At the time, Sunday River was the neglected little brother to Maine’s other nearby ski mountain, Sugarloaf, and received little attention or financial backing. Otten, though, saw its potential. Although the mountain was tiny, other peaks ripe for development and expansion surrounded it. He’d run the mountain on a shoestring for several years, but now wanted full control. Armed with a hefty loan, Otten bought Sunday River in 1980 and set out to realize his expansive vision.
Risk-taking was in Otten’s blood. His father, Albert Otten, was born in 1886 (he was 63 when Les was born), and had been a self-made Jewish steel magnate in Germany. Jailed and intimidated by the Nazis in the 1930s, he fled—leaving almost all of his fortune behind. After a journey through Switzerland, Holland, Mexico, and Canada, he settled down in New Jersey and started all over again with a new steel business. While he never realized the same wealth and stature he’d had in Germany, Albert was an undeniable success in his adopted homeland. Otten still speaks of his father, who died in 1985, with awe. “I’m one of those kids,” he says, “who will always live in the shadow of my father’s accomplishments.”
Otten also inherited his father’s talent for building a business from the ground up. When Otten started running Sunday River in the 1970s, it was a molehill with a single chairlift and three measly T-bars. But he reinvested profits aggressively, built new chairlifts nearly every season, and carried out a marketing blitz that helped drive revenue and distance him from his competitors. Among his always-provocative publicity stunts, Otten and his team mocked the snow conditions and travel times of other resorts, dumped truckloads of snow on Boston Common to remind city dwellers to go skiing, and, at least once, hired a plane pulling a Sunday River ad to fly over Killington. At the same time, he built affordable condos to draw additional skiers to the mountain.
The marketing ploys and expansion worked. By 2000, Sunday River spanned eight peaks and drew half a million skiers a year. The kicker was that all of that growth had occurred while the ski industry as a whole was virtually flat. “It’s the most incredible growth story in at least four decades,” says Tim Cohee, who worked for Otten in the early 1990s and now runs the China Peak ski resort in California. The business press agreed. In 1989, Inc. magazine named Otten its turnaround entrepreneur of the year.
Otten was busy with other ventures, too. He’d cofounded a charity to help people with disabilities ski, as well as a construction company, among other endeavors and investments. It seemed that every venture he touched flourished, so his dreams kept getting bigger. In the 1990s, Otten bought up several other ski resorts in New England, including Killington, and combined them into a conglomerate dubbed American Skiing Company. Over time, Otten looked west, envisioning a bicoastal ski empire. He developed Canyons, in Utah, and eyed Steamboat, in Colorado. Then, Otten says, the problems began. “A bunch of Wall Street guys rented a private plane and came up to see me,” he tells me. “Goldman Sachs, DLJ, Furman Selz, Merrill Lynch.” Their goal? Convince Otten to take his business public. “It was my decision,” Otten says. “But when these guys are sitting there telling you what they think will work, you believe ’em.”
At the time, Otten was all ears. Since he owned virtually all of American Skiing Company’s equity, no one stood to make more from the deal than him. The day the company went public, in 1997, selling shares at $18 a pop, Otten’s stake was worth almost $300 million. But it wouldn’t last. “It was too much, too fast, too big,” he says. A pair of bad winters, frenetic construction at many of Otten’s resorts, and a downturn in the real estate market—all while the company continued to acquire new properties—left American Skiing’s finances in tatters. The stock price plummeted. Desperate for cash, Otten cut a deal with a private equity firm. Oak Hill Capital Partners saved American Skiing from potential bankruptcy with a $150 million injection, but the side effects were devastating.
Following the deal, Oak Hill gained control of the board—and the company. Within two years, it decided to sell off American Skiing’s resorts one by one. The stock price crashed again when Oak Hill broke the company up, wiping out shareholders. Otten himself lost virtually his entire stake—about 50 percent—in a company that had once been worth close to $600 million. “It was unpleasant,” he says. “But it didn’t sour me.” Even as American Skiing, his life’s work, was coming undone, Otten had already started chasing his next big dream.
Around Christmas of 2000, television producer Tom Werner, who had made a fortune with such hits as Roseanne and The Cosby Show, took his then-girlfriend, Katie Couric, to visit Otten at Sunday River. At the time, American Skiing’s stock was tanking and Oak Hill had taken control of the company. Within a few months, Otten would resign.
Still, Otten’s spirits seemed higher than ever as he joyously played the role of backwoods magnate. He put up Werner and Couric in one of his hotels and invited them to his lake house to chat near the fire under a vaulted wood-beam ceiling. Otten had big news: For his next act, he wanted to buy the Red Sox.
Throughout his career, Otten had rarely jump-started his ventures with more than a few million of his own. Other than when American Skiing’s stock was at its peak, he’s never really had enough cash to pull it off. Instead, he seeks out those with deeper pockets and charms them into backing him. “There aren’t many people on the planet that are more talented at convincing people that he’s right and that he can get the job done,” says Brian Fairbank, a ski industry veteran who co-owns Jiminy Peak and Cranmore. “He’s a master, and that’s a big talent.”
Which perhaps explains why Werner didn’t laugh Otten out of the room when he announced his latest big idea. Instead, Werner replied, “Did you know I used to own the San Diego Padres?” And with that, Werner had the distinction of becoming Otten’s first investor.
By all accounts, Otten’s desire to buy the Red Sox centered on a single idea: save Fenway Park. During the late 1990s, many city officials believed Fenway was too old and decrepit to keep. Bidders vying to buy the team were expected to present plans—and a location—for a new ballpark. Fenway would be torn down, which Otten viewed as a disgrace.
It’s hard to look at Otten’s current woodsy lifestyle and his desire to preserve Fenway and the Balsams without sensing a yearning for the past. “Through my father’s eyes,” he told me one day, “I saw the entire Industrial Revolution.” It seems fitting that his second love, after skiing, is baseball, the sport of nostalgists. Otten also wanted to keep Fenway for economic reasons. There was too much brand equity tied up in the ballpark to consign it to demolition, he says. “We projected that the value of a seat in Fenway Park was going to be significantly greater than in some new cookie-cutter ballpark.”
In November 2001, John Henry joined Otten’s team, bringing mountains of cash and additional baseball ownership experience. Suddenly, the group was a serious contender. The very next month, the Otten-Werner-Henry group was chosen as the winner of the auction. Their bid of $660 million was double the previous highest price paid for a baseball team.
The addition of Henry to the group brought another consequence: Otten’s demotion. Originally, Otten had envisioned a prominent role for himself in the Red Sox organization. But Henry, an aggressive billionaire commodities trader, wanted to be the top dog and had the money to assert himself. And after all, Henry’s contribution was by far the largest. Otten wound up in a somewhat marginal consultant’s role, with a relatively small ownership stake in the team. He contributed marketing ideas and collected two World Series rings. In the end, though, his lasting contribution would always be his first: helping to save the team’s park. In 2007, he sold his shares back to his partners—at a significant profit—and moved on.
Otten’s Red Sox foray had certain parallels to his American Skiing Company project: It worked because he paired an audacious plan with a keen sense for what consumers wanted, but, ultimately, he lost control. “That’s okay,” he says now. “I saved Fenway Park. My kids know it. Everybody inside baseball knows it, and the most important thing is Fenway is still there. And it could be for another hundred years.”
To reach the Balsams, drive I-93 north from Boston—past Manchester, through the White Mountains, and between the cliffs of Franconia Notch—until cell service becomes spotty and the granite landscape jagged. Turn onto the backwoods roads and continue toward the Canadian border. For the rest of the trip, you won’t see a building higher than three stories, a town of more than 5,000 people, or, for that matter, a stoplight.
When I made the drive last September, lumber trucks rumbled down roads lined with political signs, including blue Donald Trump banners, a “Hillary for Prison” poster, and a handpainted billboard—“Northern Pass Kiss My Ass”—decrying a local infrastructure project. This is the North Country, a nearly forgotten region devastated in recent years by one economic blow after another. First the paper mills closed, then the Ethan Allen factory, and, finally, the Balsams. Thousands lost their jobs. Since then, opioid addiction has surged and the area has experienced a mass exodus of the unemployed. Carol Sandhammer-Pires, owner of the Moose Muck Coffee House, in Colebrook—population: 2,301—likens the post-2008 economic recovery to a slow-moving wave. “Way up here,” she says, “it takes even longer for it to reach you.”
From Colebrook, follow the mountain road out of town until the Balsams comes into view. Across a still blue lake, tucked between steep, pine-covered mountainsides, are two hulking buildings. One had been a sprawling, white clapboard hotel. The other looks more like a castle with gray stucco walls, turrets, and a clay-tiled roof. Pristine, unmoving, and unlike anything for hundreds of miles, the scene is like a portal to another time.
As soon as I arrived, Otten gave me a tour of the resort in his Jeep. From the road, the buildings had looked perfectly preserved, as if they could open tomorrow, complete with a tuxedoed waitstaff. As we drove behind the building, though, I saw the white clapboard structure—charred and rotting. Otten plans to tear that wing down, but he’ll restore almost everything else. Rebooting the Balsams without the historical buildings, he said, would be a waste. “If you started from scratch, you couldn’t re-create the bordello or take people to the underground poker rooms,” he told me. He was recalling the resort’s Prohibition era as if he’d been there. He had other stories, too—and sepia-tone photographs to go with them: the visits from midcentury celebrities, the black-tie parties. When the circus came to town, he said, elephants marched 10 miles to the resort from Colebrook. Through all of this, generations of guests shared more or less the same Balsams experience: no TV, no Internet, and a full staff serving them hand and foot at the wilderness palace. Otten used the word “magic,” with some embarrassment, to describe the place.
Otten is just the latest in a long line of capitalists to pitch the Balsams’ temptations to the rich since the resort first debuted more than a century ago. George Parsons opened it after the ravages of the Civil War. Next came Henry Hale, who expanded the property. Finally, industrialist Neil Tillotson turned it into his personal fiefdom, building a latex factory on the grounds and running the resort, mostly, Otten says, so he’d have a nice place to eat dinner. After the Balsams closed, in 2011, two local businessmen bought it and realized they didn’t know what to do next. So they called Otten.
At the time, Otten was running a green-energy company and had his hand in a business that markets a golfing device, along with his charities. He was also licking his wounds from a failed campaign for the Republican nomination for governor of Maine. He wasn’t looking for a new project. But the Balsams’ new owners were insistent. “They kind of played to my ego,” Otten said. If there’s anybody who can do something with this, it’s you. Dan Hebert, one of the new owners, told me Otten was their first and only choice.
Otten hesitated at first: The Balsams’ adjoining ski mountain was small and its slopes faced the wrong way, making snow conditions poor. He was about to pass, but then he saw something that made his heart race. Poring over topographic maps of the surrounding area, “I saw what I can only describe as a phenomenal ski mountain,” he said. “Everyone’s an idiot savant at something.” For Otten, it’s seeing ski resorts on topographic maps. Where developers had seen only unusable virgin terrain, he saw a mountain materialize before him—the lifts, the trails, the lodges he could build. What had appeared to be a third-rate ski area could actually be a gold mine.
Otten’s vision is enticing, but realizing it will not be easy. Because of its remote location, the Balsams amounts to a self-contained town, with its own sewage treatment plant, roads, and other municipal trappings. Further, according to two officials from the Appalachian Mountain Club, the project’s environmental costs have yet to be fully reckoned with. New Hampshire’s public support and potential loan guarantee, however, certainly improve Otten’s chance of succeeding. State officials unequivocally view the Balsams as the greatest hope for revitalizing the North Country’s moribund economy and predict the refurbished resort will create hundreds of local jobs and bring in busloads of tourists—along with their much-needed cash.
In a region that voted overwhelmingly for Trump, Otten looks an awful lot like another risk-taking developer promising to come to the people’s aid. He doesn’t like the comparison. “Can you not make me sound like Donald Trump?” he asked. He views himself as far more cautious than our new president and objects to being described as a gambler. “A true gambler makes a bet on the slimmest of odds,” he said. By contrast, Otten won’t break ground at the Balsams—and spend his investors’ millions—until he completes his meticulous planning and can be reasonably assured of the project’s success. “By the time I go ahead with something,” he told me, “it’s because I think I’ve finally taken enough of the risk out.”
As I bid farewell to Otten at the Balsams and started the long trek back to Boston, he suggested I take a more scenic route. I took his advice and drove up the Dixville Notch mountain pass. Near the top, a lumber truck careened by on a hairpin turn. Down the other side, golden-hour sun lit up orange leaves and a stream. After a few minutes, I did a double take and saw Otten pulled over to the side of the road, his arm extended out of his window, beckoning. He needed to show me one more thing.
Back inside his Jeep again, we bumped along a dirt road, Sophie in the back seat, sticking her wet nose between us. We were climbing into the heart of the ski mountain he’d envisioned, what he was sure would be the greatest mountain in the East—if only he got the chance to build it. We stopped at the base of a pristine valley. The slopes were so steep they seemed to be closing in on us. “Right here,” Otten said, pointing at the towering face before us, “the chairlift will have 1,500 feet of vertical. It’s going to be…” He trailed off. “I can’t say huge.”
With the specter of Trump stalking him, he said, “I don’t know what adjective to use.” At an uncomfortable loss for words, we were forced to gaze at the mountain in silence, contemplating the enormity of our surroundings and, at least in my case, of what Otten had taken on. Otten has explained to me that the Balsams, as he’s conceived it, is an all-or-nothing proposition: If he realizes his vision, it will be a glittering retreat—and wildly profitable. Anything less, and the project won’t be economically viable. So, gambler or not, he’s playing a high-stakes game. “This thing’s either gonna fly,” he later said. “Or it’s gonna make a big splat.”
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