On a recent tour of the Yellowstone Club, the now-infamous private ski resort near Big Sky, Montana, my tour guide gestured out the window of the SUV.
“This is the Taj Mahal of Tim Blixseth,” he said as the gargantuan $100 million Warren Miller Lodge slid into view. While the original Taj Mahal was built in Agra, India, as an enduring symbol of love, the Warren Miller Lodge apparently took its notes from the Trump Taj Mahal in Atlantic City. When compared side by side, these two building share striking commonalities: builders with sizable egos, high-profile divorces and difficult bankruptcy proceedings. Their oversized décor and glitz created a mirage of riches while masking less lustrous behind-the-scenes activity.
At the Warren Miller Lodge, however, it appears that the spirit of Montana is gaining the upper hand. The motion sensors operating the immense entrance doors have been switched off. The bears, smart creatures that they are, had been taking advantage of the technology to wander freely into the lodge.
Keeping out the uninvited was a key feature touted by Tim and Edra Blixseth when they opened the Yellowstone Club in 1999. In what is now common lore, the property, acquired in part via a land swap with the U.S. Forest Service, was originally tagged to become the Blixseths’ personal vacation retreat until the plans snowballed into a massive real estate development. Now, in the wake of a tumultuous bankruptcy that resulted in the sale of the club and left the Blixseths (now divorced) facing a veritable mountain of legal and financial claims, a new chapter is opening for the spectacular 13,400 acre property.
|Blixseth outside a Missoula courtroom this spring. Photo by Daniel Doherty.|
But to see where the club might go from here, it’s useful to consider where it has been — and how the myth of the Blixseths snowballed out of control.
From the start, the Yellowstone Club cultivated the aura of exclusivity. But in truth plenty of people were readily admitted past the stone gatehouse: members, their guests, potential buyers, and, notably, all manner of journalists. One day alone in 2001, the hills crawled with 50 ski journalists invited by the Blixseths to test the powder. Gushing reports duly emerged from these junkets: It was difficult not to be impressed by the spectacular peaks and the deep and untracked snow, and Tim Blixseth knew how to deliver interviews to match.
Stories were sprinkled with tales about the “team of ex-Secret Service agents” guarding the property (The New Yorker), the border-patrolling helicopter (the Seattle Times), and the “sniff test” (New York Times) given to all potential members. A 2004 Forbes article recounts the time Tim Blixseth “tore up the $1 million check of a prospective member who insulted one of the club’s waiters.” In the same article, Blixseth referred to himself as “a benevolent dictator.” Forbes later offered readers “Tim Blixseth’s Five Investment Tips.”
The Yellowstone Club worked the celebrity angle hard, recruiting the likes of Olympic skier Hank Kashiwa, golfer Annika Sorenstam and ski legend Warren Miller to help market the club. Cycling great Greg LeMond was persuaded to join early as a minority equity owner and bring in friends (a deal everyone involved would come to rue). Dan Quayle and Jack Kemp offered some Republican establishment credibility. Bill Gates, probably the only member who really needed the much-touted security, signed on, too — and his name has appeared in connection with the club ever since.
|Big Sky, the Southwest Montana community that is itself a symbol of the challenges and opportunities of the New West, is growing up, even as its economy teeters. This story is part of a series about Big Sky produced by students from the University of Montana School of Journalism in collaboration with NewWest.Net.
Click on the headlines below to catch up with the other parts of the series.
Besides doling out lots to his celebrity promoters, the Blixseths also doled out cash. While “Sometimes you have to pay to play” was the club’s motto, the Blixseths themselves paid to attract attention, with full-page ads in The Wall Street Journal and by taking prospective clients on expensive wine-and-dine jaunts. When the club went bankrupt, among its debts was some $400,000 owed to The Robb Report, a magazine for the ultra-rich. Incidentally, Bill Curtis, the publication’s owner, is a club member.
Yet magazine headlines such as “A Ski Community Where There’s No Such Thing as Too Much” belied what members say existed; a down-to-earth attitude where the mahogany caviar-and-champagne-bar in the Warren Miller Lodge was avoided in favor of hamburgers.
“The club attracts people that by nature want a family-type environment,” says Kevin Welsh, a Los Angeles-based senior managing director for Kayne Anderson Capital Advisors. “If they wanted glitz, they would have gone to Aspen, Vail or one of the other high-end resort areas.”
Member Scott LeMond, Greg LeMond’s cousin, echoes this view.
“When I first joined it was the closeness of all the members. We used to eat dinner with a couple families [and] we all became close friends.”
One former employee, who requested to remain anonymous, said that while she didn’t view the place as being entirely unpretentious, she agreed that it was “very family-centered” and added that most of the members with kids worked at exposing them to the Montana that existed beyond the luxurious million-dollar log cabins.
Shaun Barnes, who managed IT services for the Club, laughs at the myths that grew up around the security. “There was security, but the club ran with it too much,” he said. “Most of the guards were from Big Sky or Bozeman.”
Barnes adds that while security at the club was more than competent, it was primarily restricted to manning the gatehouse, checking surveillance videos and monitoring house security systems. As for the Secret-Service training, only Bruce Bales, the club’s “Director of Privacy,” could boast of such credentials, having been a member Gerald Ford’s protection detail.
Several years ago, Rob Story, a journalist writing for SKI magazine, detailed the day he skied from Big Sky Resort into the private Yellowstone Club ski runs, dressed in a gorilla costume. In his article, Story was nonchalant about the club’ security, taunting “Bring it, Bales.”
As for the much-referred-to “sniff test,” club member Welsh, of Kayne Anderson, tells a different story.
“There was no official membership process,” he said. “Just friends bringing friends.”
Given the Blixseths’ ambitions and focus on expansion, it seems unlikely that anyone willing to drop millions on membership and property would have been turned away from the club. In an interview with Forbes, Blixseth revealed the extent of his uneasiness about the club’s fiscal success. “Almost every morning in the inceptive years, I thought, ‘God, I hope this works,’” he said. These are not the words of an overly-discriminating man.
But “a nice place to go with the family” doesn’t necessarily sell multi-million-dollar lots, and as the high-end real estate boom of the 2000s picked up steam, so did the myth of Blixseth himself. It was working, after all. Blixseth, regardless of what came later, had performed a remarkable feat of entrepreneurship: transforming a remote, logged-over mountain valley into a one-of-a-kind luxury real estate hot-spot, attracting hundreds of members and getting it the point where it would ultimately survive him.
In his book Accidental Branding, writer David Vinjamuri claims that “the trick in building your founding myth is selecting the facts that you want to tell and deciding how best to share them.” Blixseth carefully laid his foundation. Nearly every article written made careful mention of his welfare-to-wealth tale, complete with immigrant parents and a childhood spent in a purported cult. No one noted that his much-told story about his first business deal — rebranding donkeys as pack mules and selling them for triple the price – was actually less than flattering.
And of course, in most interviews, Blixseth neglected to address his previous bankruptcy, in 1986, which included an episode in which he was accused of hiding valuable jewelry from the bankruptcy estate. Even sophisticated business publications were happy to let bygones be bygones — perhaps because Blixseth had managed to break into the Forbes 400 list.
Landing a spot on the Forbes 400 lends entrepreneurs instant credibility and respect. Yet the list is notoriously uneven in its estimates of peoples’ net worth.
Fellow quasi-billionaire Donald Trump — who, amusingly, said at one point earlier this year that he might be interested in buying the Yellowstone Club — has fumed in the past at Forbes’s estimation of his wealth. In Trump: Surviving at the Top, Trump wrote that “Every year the Forbes 400 comes out, and people talk about it as if it were a rigorously researched compilation of America’s wealthiest people, instead of what it really is: a sloppy, highly arbitrary estimate of certain people’s net worth.”
When Blixseth made his debut at number 346 in 2005, the magazine listed his wealth at $1 billion. Anchoring Blixseth’s perch was the value of the Yellowstone Club itself, which was pegged at more than $1 billion by investment bank Credit Suisse in connection with a $375 million loan made to the club that same year. Yet in the club’s bankruptcy proceedings, a raft of expert testimony showed that figure was wildly inflated, and that the real value — even then — was probably less than half that.
While Blixseth may have been a billionaire only on paper, the Forbes listing was as good as real currency.
Although 2007 saw Blixseth’s star drop to 380th on the list, Blixseth-mania steamed full speed ahead. Tim Blixseth’s photo appeared in the business pages of magazines, on the front pages of newspapers and between the covers on books about the new rich. All this attention served to perpetuate and deepen the Yellowstone Club myths. A particularly illuminating interview appeared in Richistan, a tome penned by Wall Street Journal reporter Robert Frank. During the interview Blixseth spouted off several regrettable statements such as “Money is like a truth serum … if someone’s already a jerk, they become even more of a jerk after they’re rich.”
But cracks had begun to appear in the Yellowstone Club’s foundation long before the market lost its balance. Tim may have made himself out to be the “benevolent dictator,” but unlike Stalin or Castro, he had to contend with minority shareholders. In 2006, Greg LeMond filed a lawsuit alleging that the Blixseths were mishandling the management of the club, and specifically had failed to keep minority shareholders in the loop or include them in profit distributions from the company.
The LeMond lawsuit brought an unwelcome focus on the club’s shaky finances and questionable operating practices. Meanwhile, construction on the Warren Miller Lodge went drastically overtime and over-budget. Because of the location of the IT offices, Barnes witnessed first-hand the behind-the-scenes calamity at the lodge
“When you get down to the wire, it was a big mess,” Barnes said. “There were so many contractors working and they were able to pay some and not others.”
When William Hosbein of Bozeman worked in the Warren Miller Lodge’s kitchen three years ago, he noted that “despite having all the food they needed and more, it was very unorganized and wasteful.” In one instance he was forced to toss out lobster mushroom ragout after the chef decided not to serve it. Another time he was given the task of fishing asparagus spears out of un-served soufflés and storing them for later use.
Then there were the projects that failed to materialize, such as the $155 million “Pinnacle” home that Tim Blixseth intended to build and sell on spec. After spending nearly $2 million on the driveway, the blueprints for the 53,000-square-foot mega-house were scrapped and Blixseth sold the plot for $10 million. Meanwhile, the daily wear and tear from thousands of contractor vehicles had left the property’s roads dotted with potholes. Adding to the unkempt look of the property was the unsightly collection of trailers dubbed “Man Camp” located at the base of the Warren Miller Lodge.
|The castle in France.|
All in all, it was not the best of times to dream up Yellowstone Club World, a super-luxury vacation club in which members would have access to a string of exotic properties around the world. Yet that’s what the Blixseths did, hiring Dieter Huckestein from the Hilton Hotels Corporation to run the clubs and setting off on a global shopping spree. (In an interview with Executive Golfer, Huckestein said that a potential member “wouldn’t have to worry about getting [his] membership deposit back” as “no debt” existed on the business balance sheet. In fact the handful of people who signed up for Yellowstone Club World will likely lose most or all of their $1.5 million deposits, because there was in fact lots of debt.)
The New York Times covered the Blixseth’s international property shopping binge in great detail. Published in March 2006, “Club Med for the Multi-Millionaire Set” reads as a salivating press release for the Blixseths and their plans. The article gives the impression that the Blixseths were secure in their billions and expanding their hospitality venture for the sheer fun of it. Tim is quoted likening the search for new properties to add to his portfolio as “Easter egg hunting.”
Appearing almost as an afterthought — after heady mention of the Blixseths’ charity work in Palm Springs, their offers to contribute to the construction of the new high school in Big Sky and their monetary donations to the victims of Hurricane Katrina — is the fact that the Blixseths paid in cash for the properties. It is now known that this cash came from the infamous $375 million Credit Suisse loan that would eventually lead to the downfall of the Blixseth empire.
In the article, Tim Blixseth stated “I always have an exit strategy.” But his exit from the Yellowstone Club, a $450 million sale to club member and real estate investor Sam Byrne of CrossHarbor Capital Partners, fell through in March of 2008. And his marriage to Edra Blixseth was on the rocks.
Still, the presses continued to roll. Andy Warhol once quipped “Don’t pay attention to what they write about you. Just measure it in inches.” Blixseth must have put away his reading glasses and dusted off his ruler in 2007.
One widely-circulated Wall Street Journal article featuring Tim and Edra focused not on the Yellowstone Club, but rather on their unique divorce process. “A Billionaire Divorce — And Not a Lawyer in Sight” (also penned by Robert Frank) detailed the two amicably dividing their assets (estimated by the Wall Street Journal at $2 billion) “in a matter of hours” on two pads of paper. It seemed too good to be true, and indeed it was.
Six weeks later, the pendulum swung from good humor to ferocious contention. Edra gained control of the Yellowstone Club in August of 2008 as part of the divorce settlement — just in time for the financial crisis to bring the lagging membership and lot sales to a complete halt. By November, unable to make its debt payments or its payroll, the Yellowstone Club filed for bankruptcy, with just $40,000 in its bank account.
|The entrance to the club. Photo by David Nolt.|
As the economy came apart and the Club’s bankruptcy proceedings exposed its inner workings, attitudes toward the club entered a time of schadenfreude. Articles began featuring quotes from incredulous Big Sky locals and unpaid and upset contractors from Bozeman. Headlines that had once described the Yellowstone Club as a “fantasy” and “paradise” now fired out verbs such as “looting,” “revolt” and “ruin.” The Land Report tooted its horn about not jumping on the previous media “bandwagon” that had been “clamoring over one another to give more column inches to the biggest, gawdiest [sic] monstrosity in the West.” Yet the LandReport admitted to “watching the feeding frenzy as those same news channels cover the demise of the elite enclave.”
“All the PR that Blixseth generated during his heyday and past has fit perfectly with how much the press wants to align it with the excesses of the era,” said Welsh.
Unsurprisingly, Tim Blixseth’s temperament towards the press soured. When I encountered Blixseth, it was not for a quiet interview on the ToothFerry, his private yacht. Instead we sat side by side on a hard bench inside a windowless Missoula, Montana bankruptcy courtroom. (Blixseth declined to be interviewed for this article.)
The dream had darkened into a nightmare and a vicious battle erupted over who was to blame and what would happen to the insolvent club. After many months of legal wrangling and a court finding that the $375 million Credit Suisse loan was, at best, grossly irresponsible, the club was sold to CrossHarbor Capital under a complex agreement in which all trade creditors would be paid before the Creit Suisse lenders got their money back. (Members and the new owner considered the trade creditor payments to be crucial, lest they be viewed as pariahs in Big Sky). Edra Blixseth was herself forced to file personal bankruptcy, and is being sued by a number of parties that lent her many millions of dollars. Tim still faces legal claims that could exceed $200 million (probably more than his remaining fortune.)
Through it all, as news outlets (led by NewWest.Net) covered the bankruptcy proceedings in all their gory detail, a placid public front was put in place. Anyone surfing the Yellowstone Club’s website would see little to indicate turmoil. Edra Blixseth still smiled and welcomed potential members to enjoy the club’s family atmosphere. This halcyon attitude infuriated many members, including Scott LeMond, who said that Blixseth “really sucked the joy out of the club for many.”
“My family was involved a lot with what happened with the club, so the whole dealings were pretty personal to me,” LeMond said. (Greg LeMond’s original lawsuit was settled for $38 million, but legal issues remain over the settlement payments.)
Club members also found it frustrating that the media tended to portray them in the same unflattering light, according to Welsh, who says that most members are from humble backgrounds and earned their money through years of hard work.
“We were unfairly painted with the same brush. We all hired a lot of local people, built homes, bought goods and services and paid them on time and more than honestly.”
By most accounts, the club is now recovering from its financial and public relations nightmare. Byrne and Discovery Land Company, an investor and an operating partner in the property, are girding for the long haul, raising dues and getting services back up to snuff while acknowledging that resumption of robust lot and membership sales is at least a few years off.
This past June, skeletons of partially constructed buildings remained, but construction workers milled about, brandishing hammers and sheetrock. Although building activity may never reach the peak of 2005-2006, when around 1,400 vehicles passed through the gates every day, construction has picked up from last year when contractors were told to stop working.
Inside the Warren Miller Lodge, a handful of employees were hard at work in the empty building, perhaps scrubbing away the last remnants of the Blixseths. Most of the French chateau furniture hand-picked by Edra has been placed in storage. Gone as well is the seldom-used caviar bar. It has been converted into a casual breakfast bar, where members can now grab a Danish and coffee before hitting the slopes. Touches of the olden days can still be spotted. Visitors will find the bathrooms stocked as usual with L’Occitane products, while the occasional item such as a lamp sprouting bright pink feathers serve as reminders of a not-too-distant past.
Like the Taj Mahal, the Warren Miller Lodge will most likely endure for generations, titillating its visitors with its storied history. After all, this is the stuff of which myths are made.