Marcoeconomics Sno-Boarding

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The ski industry has been around since the beginning of the century. Since that time the retailing industry of the ski world has been on a steady increase. At the beginning of this decade the increase began to skyrocket. However, skiing was not the reason for the growth. The reason for the dramatic increase in industry sales in the retail world of skiing was due to snowboarding. By now almost everyone in the country has either seen a snowboard, ridden one, or knows someone who has. The purpose of this paper is to discuss what snowboarding is, and to shed some light on the financial aspects of this new sport. Snowboarding hit the scene in 1972. Jake Burton, at the age of 15, decided that he had enough of skiing and wanted to do something a little different. With a little ingenuity and some of his dads tools he began working on the first snowboard. His project lasted about three weeks and when he was done he decided to take his invention to the slopes and she how it worked. This was almost the end of snowboarding. Every slope Jake went to denied him access, saying that they only allowed skis on the hills. Jake was a very determined kid and this did not stop him. He began hiking every back-country trail he could find and he became quite efficient at snowboarding. At the same time he continued to knock on all the ticket windows at every resort but still had no success. He decided that the only way he could prove his invention was nothing more than a different version of a ski would be to make a video of himself riding down the back country hills. This was no easy task, keep in mind the year is 1972. Jake was Jones2 determined and he met up with a guy named Craig Kelly who at the time was into video production of skateboarding and skiing. Jake gave the sales pitch and Craig bit hook, line, and sinker. The next week the video was complete and Jake took it to all the resorts with Craig and they pled their case. By this time Jake had made about a dozen more prototypes of his snowboard and all his best friends were riding them. Finally a small mountain, Okemo, said "O.K. Jake you can ride, but only during the week" This was all it took and from then on almost anyone that saw this crazy kid zipping down the hill on a wooden board with both feet strapped to it began to ask questions. From that moment on Burton Snowboards, INC. was created and is now the number one manufacturer of snowboards in the world. (Burton 1988). In the 1980 s snowboarding was still not extremely popular and it was very rare for a resort to allow it on the hills. As the yuppie age ended and the Generation X ers began to get into skateboarding, BMX bikes, bungee jumping, and roller blading, snowboarding took off. By 1991 eight-five percent of all ski resorts allowed snowboarders to share the mountains with skiers. (Gatlin 1993) According to the same article over 73% of the people snowboarding in 1991 were under the age of 25. This age group typifies Generation X. Along with snowboarding came an entire new image. Brad Wilson, the marketing director for Big Bear Mountain in southern California summed it up well with this quote: "It was kind of like the 1960 s all over again, snowboarders dress differently, they have different haircuts and they ride on this different-looking board down the hill." (Feldman 1995). In an age where being different is normal, snowboarding Jones3 just seemed to fit right in to the picture. Now, in 1996 only 3% of ski resorts do not allow snowboarding. The resorts have realized that if they want to stay in business then catering to snowboarders is one of the easiest ways. Many resorts have begun to add new trails to the mountain just to accommodate snowboarding. Most of these extra slopes have huge jumps, half-pipes, tables, trash cans, metal pipes, and even cars for snowboarders to jump on or over. The most important feature of these special slopes is the fact that skiers are not allowed on them. The reason that many resorts have added these snowboard parks is because of the problems between skiers and snowboarders. (Feldman) Roger Hauser, the director of Massanutten Ski School, said that there were quite a few reasons the resort added the "snowboard only" park five years ago. First of all, he said the mangers of the mountain were taking a lot of "heat" from skiers because of all the jumping and tricks the snowboarders were doing on the slopes. He said that when kids are doing tricks they are going to be falling down, when they fall down people run into them. So the mountain added the park and now limits snowboarders who want to do tricks to use that slope. The rest of the mountain is still open to snowboarders. Hauser said that since the park was opened there has been a dramatic decrease in injuries between skier and snowboard collisions. He also said that business has picked up about 15% in the past five years which he believes is attributed to snowboarding. Ski resorts are not the only place that business has picked up in the past five years. The main area of financial growth is the actual snowboard manufactures of snowboards. Currently there are 117 snowboard companies in the world. (Schacter) Of the 117 there Jones4 are five that hold 50% of the market. Burton is number one with an annual sales of around 30million, Ride is number two, and three, four and five are: Sims, Morrow, and Anthony. (Baker 1995) Morrow and Ride have seen the most dramatic increases in the industry since 1993. The total current assets for Ride in 1993 were $2,365,000 and in 1995 they were up to $37,139,000. Morrows total current assets went from $6,607,000 to $31,179,000 in the same time period. Net sales for both companies went up dramatically in the past five years also. Ride has seen a net sales increase of 611.2% while Morrow s sales have increase 74%. (These figures are directly from the company records of both companies.) The cost of snowboards is one reason that sales have gone up for these companies and it is also another reason for the popularity of snowboarding as compared to skiing. If Joe Public sixteen year old wants to start snowboarding he is going to need to get himself some equipment. The average cost of a complete setup, which includes a snowboard, bindings that hold the board to the feet of the rider, and boots, costs around $450 according to Transworld Snowboarding 1996 buyers guide. If the same kid would want to set himself up with a ski package he would have to get the skis, bindings, boots, poles, goggles, neon ski-outfit (required for skiers), and multiple other flashy accessories. The average cost of a new ski setup is around $850 according to Ski magazine 1996 buyers guide. It is clearly cheaper to get into snowboarding. This price advantage of snowboards over skis is much more attractive to the average teenager who probably Jones5 doesn t have much money anyway. It is also more attractive to Mom and Dad to spend less on a snowboard than skis. Sepp Kobler, the manager of Freestyle Sports in Charlottseville, said that five years ago snowboards and accessories accounted for about 5% of all sales in the shop. Now it accounts for close to 30%. Kobler feels that if it were not for the dramatic increase in snowboarding he would have had a hard time keeping the shop open. "Kids are into it, and so are there folks, its cheaper, its more fun, and its easier to learn" says Kobler. A sales clerk at Bear Mountain, Brian Almarez says that is extremely hard to keep the hooded flannel shirts in stock. Also, the baggy pants "fly out the door faster than natty neon-colored ski wear." Almarez also states that "you don t see too many snowboarders out there who aren t making a fashion statement." (Feldman) The final area of retailing that has reaped many positive benefits from snowboarding is in the sales of lessons. The author, a professional snowboard instructor, has seen lessons go up 50% each year over the past three years at Massanutten. Considering that a one hour private lesson costs $30 this is a huge increase in revenue for ski resorts. Hauser, the Massanutten Ski School Director, expects snowboard lessons to

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