Romancing the West: beach house? They'll take a Big Sky ranch.

When David Leuschen describes his Montana ranch, it sounds as if he's exaggerating. He owns about 200,000 acres of snow-covered peaks and gaping canyons outside Yellowstone National Park and runs 2,000 head of cattle on one of the larger operations in the state. He accesses the high-altitude portion of his ranch by all-terrain vehicle over 23 switchbacks, along a trail with 2,000-foot-high cliffs where the occasional mountain goat, wolf and grizzly bear is the only company. "This is arguably the most remote ranch in the Lower 48," he says.

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The views from Leuschen's Switchback Ranch, straddling the Beartooth and Absaroka Mountains, are nearly as stunning as the panorama from his New York office on Fifth Avenue, high above Central Park. A take-charge sort, Leuschen feels as at home in the muscular land of cowboys as he does in the fast-paced city of exees. When not overseeing operations at his ranch, he runs Riverstone Holdings, a private equity firm that invests in the energy and power industries.

While most CEOs might have a second home in the Hamptons, Nantucket or Palm Beach, Leuschen is part of a circle of top executives, including Ted Turner and Paul Allen, who are drawn to the ranches of the high-mountain West. They got into ranching not for ego but for love. For them, the image of the rugged cowboy is irresistible, as is the desire to keep the spirit of the Big Sky alive.

Leuschen, a Montana native, thinks nothing of flying from New York to his ranch near Cody, Wyo., home of Buffalo Bill. He spends weekends, a summer month and holidays on the ranch. He frequently invites business guests, a great tool for building relationships. In season, he hunts elk, mountain goats and bighorn sheep on his land. He also raises, trains and sells cutting horses, used for the cowboy sport of "cutting," or separating, a cow from the herd. "I'm doing this because I believe in ranching," says Leuschen. "It is my passion."

Ranch ownership also has its practical side. Many owners outsource the day-to-day operations to an on-site manager who oversees a self-contained community with a staff of people, ranging from a cook and a housekeeper to ranch hands who herd the cattle and maintenance workers who plow the roads and keep the fences upright. Common, too, is an amenities staffer, who helps with the special needs and desires of guests, such as a copy of the day's New York Times or warmer clothing for a snowmobile ride.

From a financial standpoint, ranches require an investment of time to figure out the best strategy. Most ranch owners run cattle on their property, and thus can pay a lower tax rate reserved for agricultural land. Some opt for the additional step of putting their ranches under a conservation easement, which, because it restricts development, lowers the land's value and in turn the tax rate. While some owners choose to subdivide their vast tracts into mini ranches to recoup some of the operating costs, most ranches are not income generators. In fact, wealthy owners can use the losses from them as a way to offset income from other businesses they control.

Buying a ranch is not as easy as it may appear. Most are purchased from families who have been on the land for generations but can no longer afford to operate them. These families are not eager to leave, yet they don't want to face selling to a developer. Prospective owners who can promise the family that they will preserve the ranch, rather than develop it, can often win out during typically long and sensitive negotiations. In many cases, the original family stays on, helping the new owner to manage the ranch while also keeping their Western way of life.

Charlie Gallagher, who runs the Denver-based private equity firm Gallagher Associates, has conservation in mind, too. He owns the 19,000-acre Grand River Ranch in northern Colorado, of which he has set aside 11,000 acres overlooking Rocky Mountain National Park for his own weekend escape. He has subdivided the remaining land into several smaller ranches, which he has put up for sale. The parcels that have sold so far have been purchased mainly by CEOs, he says, including a 2,752-acre plot bought by Jack McDonnell, chairman of the Denver high-tech group McData Corp.

In southern Utah, just east of the salmon-colored outcroppings of Zion National Park, David Neeleman, CEO of JetBlue, owns and operates the 4,000-acre Zion Ponderosa Ranch. "This is my piece of heaven," he says of the ranch, which he and his siblings inherited from their grandfather. Most of the land is still raw, but to keep the ranch in family hands and away from developers, he added a modest resort that offers cabins, horseback riding, nature hikes, rock climbing and fishing. Two of Neeleman's sisters help run the resort, which doubles as an executive retreat. A nearby real estate project, with about a dozen rustic-looking but luxurious homes for sale, is also part of the property.

To be sure, it's not a profit motive that's attracting CEOs to ranching. "I will never make back the money put into the ranch unless I sell it, and I expect the ranch to outlive me," says Leuschen, 53, who intends to someday pass it on within the family. He is in the process of putting the ranch under a conservation easement, which would restrict development on the land.

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Gallagher shares that vision. He says his ranch is not a money maker. Rather, he says it is set up to attract "like-minded people who share my view of it as multigenerational." He designed the subdivision so that the land will never be home to more than 20 families. With 13 grandchildren, Gallagher has future generations in mind.

Gallagher, a turnaround specialist for troubled industrial manufacturing companies, does plan to recoup some of his investment through sales of his "mini ranches." The prices range from $1.7 million for a 336-acre plot to $4.5 million for 680 acres. So far, he has sold 65 percent of the property, bringing in a total of $24 million--the same price he paid for the ranch in 1999. But he is nowhere near breaking even, having invested $20 million in improvements, including 20 miles of gravel roads, utilities and fencing in addition to recreational facilities and a 7,000-square-foot communal lodge.

Although Grand River Ranch has 28 horses and 300 head of cattle, Gallagher calls it a "recreation ranch" because of the many sports options there. The property includes an indoor ice hockey rink, two stagecoaches, a fleet of snowmobiles and ATVs, a fly-fishing stream and a lake, an equestrian center, fishing cabins, a boat house and white-water rafting on the nearby Colorado River. The facilities are shared by the property owners, who pay maintenance fees toward the ranch's $1 million in annual operating expenses.

Part of the appeal is that CEOs who buy one of the mini ranches can become, in effect, gentleman ranchers. "I call this a nobrainer ranch," says Gallagher. "Here, you can own your own big ranch and just lock up and leave when you go," he says. "Everything is maintained" for you.

At Switchback Ranch in Montana, Leuschen employs a staff of 15, including nine ranch hands, an accountant, a horse trainer, two outfitters who run hunting expeditions and a cook for those outings. Ranch owners like Leuschen often use recruiting services to find couples interested in being caretakers. Seven families live on the ranch, help to maintain it and take care of guests' needs.

Leuschen, who spent 22 years at Goldman Sachs before cofounding his private equity firm in 2000 as a joint venture with the Carlyle Group, sounds every bit the sharp executive as he ticks off the five businesses that his ranch operates. The largest is the cattle business, which brings in annual revenues of about $1 million. Each year, some 1,700 yearlings are raised for market, selling at a price of about $1 per pound, or nearly $1,000 per head. Factoring in the costs of veterinarians and feeding and trucking the cows, he says, "we have almost as much in as we get out." His beef is sold to top-quality steakhouses. He also owns a 40 percent interest in an organic beef company called Montana Legend, which fetches up to $1.50 per pound.

A second business, Switchback Outfitters, leads hunting expeditions on horseback into a camp five miles from the eastern boundary of Yellowstone. Executives from Goldman Sachs and The Carlyle Group, as well as others from the oil and gas industry, have participated in the trips.

The cutting horses are another business Leuschen has started on the ranch. The cost of these horses is about $50,000, and with travel and training, the operation costs him several hundred thousand a year. These costs can't be offset by the prize money from this sport, or from breeding and selling the horses. Nonetheless, he has just finished construction on an indoor arena and horse barn for cutting-horse shows.

Finally, Leuschen offers a charitable program for underprivileged children. Each summer, he hosts 10 to 15 kids who are selected from urban schools and gives them an opportunity to experience Western ranch life as it was meant to be. All part and parcel of life under the Big Sky.

RELATED ARTICLE: ADVICE

Owning a Ranch

Here are some tips on operating a cost-effective Western ranch:

* Raise cattle to qualify for a lower tax rate on agricultural land.

* Put your ranch under a conservation easement, which restricts development of the land and lowers its taxable value.

* Subdivide a portion of your land into mini ranches for rental or sale. Rental cabins can help recoup operating costs.

* Use financial losses from your ranch to offset other sources of income.