No. 34 -- VIRGINIA AND TRUCKEE RAILWAY -- Nevada Railroad Reconstruction Chronicles
At the July 13, 2009 meeting of the Carson City Convention and Visitor's Politburo, Dwight Millard dropped a bomb. You can see the meeting at the ACCTV.org website, his comment was made at 56:20.
CCCVP member Molly Walt was asking why the contract being offered to the CCCVP by the Nevada Commission to Reconstruct the Virginia and Truckee Railroad was only being offered for 2009. She was getting a little greedy, wondering if the CCCVP was able to clear a profit on 2009 operations would they get the right of first refusal on a 2010 contract. She was concerned that when private companies see that the railroad experts of the CCCVP can make money at it, they greedy private companies would try to get their hands on the profits. This sort of thinking is not surprising from a public schoolteacher.
Dwight Millard answered, "Running that train from here to there will never be profitable for anybody, no matter what you do. You can't charge enough."
He went on to say that tired old line I have heard from so many in Carson City, that's it's worth running a loss-making railroad because it will bring economic development to Carson City.
LET'S MAKE SURE THIS BENEFITS CARSON CITY OVER OTHER COUNTIES
Well I'm going to wrap it up here. I'm running out of time to waste on watching these jokers. Kevin Ray explains that it was never the intention to make money running trains. He admits that much of the benefit is going to accrue to Washoe County with its superior hotels, casinos and other attractions.
He finally lets the cat out of the bag, he figures that if Carson City does the marketing they can steer people to stay in Carson City hotels. Questionable.
Thanks for following, I'm probably done at this point.
Sunday, July 19, 2009
Doing the Math on CCCVP Operating Costs for V&T Trains
No. 33 -- VIRGINIA AND TRUCKEE RAILWAY -- Nevada Railroad Reconstruction Chronicles
The costs and revenues are moving targets, even in one meeting there were several contradictory numbers put out.
NEWSFLASH: Originally I heard Dwight Millard to say that it would cost the Carson City Convention and Visitor's Polit-Bureau $4000 per weekend to "rent the bus" from the Virginia and Truckee Railroad. I wondered how in the heck the real V&T could make money or even break even, once costs of fuel, employees and wear and tear were factored in. I also thought the train capacity was to be 120, now I hear Millard saying 140. Updated figures are below...
NEWSFLASH PART II: Watching the CCCVP meeting of July 13, later in the meeting Candy Duncan said that the CCCVP was planning on spending $30,000 marketing 24 railroad trips, and only expected to pull in $20,000 in ticket revenues. Numbers are again updated below to reflect these costs, and a new section is added to analyze "the soft bigotry of low expectations."
NEWSFLASH III: I was assuming 24 trains and mapping out numbers assuming they could fill all these trains. Now I hear there will only be Saturday trains after Railfest weekend. So there are only 13 trains this season. Read more for all the conjecture...
NEWSFLASH IV: I just heard Candy Duncan say they are spending $30,000 to market the train, PLUS $20,000 for the VIP reception on Friday August 14, 20009. But when they voted on the marketing budget it was $35,000, plus the $20K for booze.
So the bottom line appears to be the CCCVP will pay $6992 per train, assuming full trains. If they ran at 50% capacity, you'd have $2968 less revenue per train, meaning they'd be paying $9960 per train. With the Commission offsetting $25,000 of these costs at $1923 per train, the CCCVP will be left with a bill for $8037 per train. The total season cost is $104481 at 50% capacity and $77168 at 100% capacity.
LOSE NEARLY $10,000 PER TRAIN THEY PAY TO RUN!!!!
So the ticket prices for the 2009 extended Virginia and Truckee Railroad runs, being done for the Carson City Convention and Visitor's Politburo are:
$48 Adult (round trip)
$36 Child (RT)
$40 senior/veteran
Let's assume that they can sell 140 seats per train. Let's fallaciously assume that every train runs full, and there's 13 trains over twelve weeks.
Let's further assume that for every 140 person trip, 10% are seniors, 50% are adults and 40% are kids.
14 seniors x $40 = $560
56 kids x $36 = $2016
70 adults x $48 = $3360
TOTAL PER TRAIN $5936
SEASON TOTAL $77168
(BUT They are only projecting $20,000 in ticket revenue, so they only plan to run at 26% capacity??????)
Expenses: $4000 per train to the Grays Virginia and Truckee Railroad
$2692 per train for marketing
$300 per train for other expenses (tickets, unknown, etc.)
TOTAL $6992 per train
SEASON TOTAL $90896
I wish them luck. Luck is also what they are getting from the Nevada Commission to Reconstruct the Virginia and Truckee Railway. The Commission has provided a $25,000 subsidy to the CCCVP. I expect the commission will also be paying the costs associated with readying a temporary depot site for the CCCVP. If all the costs were truly accounted for, they would be losing even more money.
But it doesn't matter if they make money or not -- don't forget, this is all about gov't subsidy, not operational profits. They have no incentive to account for all costs and market the event effectively months ahead of time. They will get YOU to pay for it.
And this is all moot, my numbers must be wrong. Respected businessman (real estate developer sitting on unsold houses) and CCCVP Chairman (and V&T Commission Chairman) Dwight Millard said:
"Running that train from here to there will never be profitable for anybody, no matter what you do. You can't charge enough."
See the full post here.
The costs and revenues are moving targets, even in one meeting there were several contradictory numbers put out.
NEWSFLASH: Originally I heard Dwight Millard to say that it would cost the Carson City Convention and Visitor's Polit-Bureau $4000 per weekend to "rent the bus" from the Virginia and Truckee Railroad. I wondered how in the heck the real V&T could make money or even break even, once costs of fuel, employees and wear and tear were factored in. I also thought the train capacity was to be 120, now I hear Millard saying 140. Updated figures are below...
NEWSFLASH PART II: Watching the CCCVP meeting of July 13, later in the meeting Candy Duncan said that the CCCVP was planning on spending $30,000 marketing 24 railroad trips, and only expected to pull in $20,000 in ticket revenues. Numbers are again updated below to reflect these costs, and a new section is added to analyze "the soft bigotry of low expectations."
NEWSFLASH III: I was assuming 24 trains and mapping out numbers assuming they could fill all these trains. Now I hear there will only be Saturday trains after Railfest weekend. So there are only 13 trains this season. Read more for all the conjecture...
NEWSFLASH IV: I just heard Candy Duncan say they are spending $30,000 to market the train, PLUS $20,000 for the VIP reception on Friday August 14, 20009. But when they voted on the marketing budget it was $35,000, plus the $20K for booze.
So the bottom line appears to be the CCCVP will pay $6992 per train, assuming full trains. If they ran at 50% capacity, you'd have $2968 less revenue per train, meaning they'd be paying $9960 per train. With the Commission offsetting $25,000 of these costs at $1923 per train, the CCCVP will be left with a bill for $8037 per train. The total season cost is $104481 at 50% capacity and $77168 at 100% capacity.
LOSE NEARLY $10,000 PER TRAIN THEY PAY TO RUN!!!!
So the ticket prices for the 2009 extended Virginia and Truckee Railroad runs, being done for the Carson City Convention and Visitor's Politburo are:
$48 Adult (round trip)
$36 Child (RT)
$40 senior/veteran
Let's assume that they can sell 140 seats per train. Let's fallaciously assume that every train runs full, and there's 13 trains over twelve weeks.
Let's further assume that for every 140 person trip, 10% are seniors, 50% are adults and 40% are kids.
14 seniors x $40 = $560
56 kids x $36 = $2016
70 adults x $48 = $3360
TOTAL PER TRAIN $5936
SEASON TOTAL $77168
(BUT They are only projecting $20,000 in ticket revenue, so they only plan to run at 26% capacity??????)
Expenses: $4000 per train to the Grays Virginia and Truckee Railroad
$2692 per train for marketing
$300 per train for other expenses (tickets, unknown, etc.)
TOTAL $6992 per train
SEASON TOTAL $90896
I wish them luck. Luck is also what they are getting from the Nevada Commission to Reconstruct the Virginia and Truckee Railway. The Commission has provided a $25,000 subsidy to the CCCVP. I expect the commission will also be paying the costs associated with readying a temporary depot site for the CCCVP. If all the costs were truly accounted for, they would be losing even more money.
But it doesn't matter if they make money or not -- don't forget, this is all about gov't subsidy, not operational profits. They have no incentive to account for all costs and market the event effectively months ahead of time. They will get YOU to pay for it.
And this is all moot, my numbers must be wrong. Respected businessman (real estate developer sitting on unsold houses) and CCCVP Chairman (and V&T Commission Chairman) Dwight Millard said:
"Running that train from here to there will never be profitable for anybody, no matter what you do. You can't charge enough."
See the full post here.
Millard to CCCVB: An Introduction to How a Railroad is Run!
No. 32 -- VIRGINIA AND TRUCKEE RAILWAY -- Nevada Railroad Reconstruction Chronicles
Notes of the Carson City Convention and Visitor's Politbureau meeting of July 13, 2009
As I have said in other posts, the overloaded nine-member Nevada Commission for the Reconstruction of the Virginia and Truckee Railway has too many members to make operations decisions. This is the story, according to Kevin Ray at the June meeting of the Carson City Convention and Visitors Politburo. Accordingly, the NCRVTRWY has handed off operational responsibility to the CCCVP.
So if nine cooks spoil the soup, will five ignorant cooks do better? At the July CCCVP meeting, Millard kicked off a discussion by saying "this is your introduction to how a railroad is run."
Excuse me for laughing. Somehow the CCCVP is being given operational responsibility for the $40 million project, and they are getting "an introduction to how a railroad is run." This is your government at work, the same people who will bring you health care, energy taxes, and a possible "Nevada net profits tax" that is remniscient of the Depression era policies that just made things worse.
JUST KIDDING, HEADS IN THE BEDS, ASSES IN THE SEATS
Millard then said, "I'm just kidding." The problem is, he's not kidding. The CCCVP, as a body, is questionably proficient at "putting heads in the beds," quoting boardmember Stephen Lincoln. I would note that Stephen Lincoln is also an expert at riding trains and flipping off people he doesn't like. This actually happened as I was making video of a VIP train last year. Hi Stephen!
Back to the point. Millard's characterization is correct, the CCCVP is getting a crash course in railroad operations. They could also use a crash-course in publicity. As of July 19, less than 30 days away from their subsidized event, they have yet to list it on their own website on the events calendar. They also haven't listed it on the Nevada Appeal events calendar. They have not issued a press release.
I guess since the V&T Reconstruction Commission has given them $25,000 to cover expenses, they don't feel pressure to put "asses in the seats." Perhaps the train will be a sellout, but it won't be because of proper advance publicity.
EASTGATE DEPOT IS A "PERMANENT DEPOT"
While the V&T Commission refers to the planned depot on Dump Road / Eastgate Siding to be "interim," Millard appears to let the cat out of the bag when he refers to the Dump Road Depot as "permanent." This tends to support the V&T Commission's claims to have "shelved" plans to run all the way through the canyon and back to the Drako Way location they spent well over $1 million to acquire.
I repeat myself when I say, the main problem with the Commission is they change their minds every month. There is no plan. There is no budget. There's is just a fly-by-the-seat-of-the-pants effort to build a railroad as the pork comes in from the Federal government.
A little furthe into the discussion Millard repeats the Kevin Ray claim by saying "the commission is too big and bulky" to plan operational details. Millard also refers to a Railfest Committee, which should be a public body with public meetings. I have yet to see any notice or agenda from this group tasked with spending at least $25,000.
IS THIS A BUS OR A TRAIN?
Millard goes on to say that the CCCVP will sit between the Commission and the Grays. He notes that in the meeting packet are two agreements, one with each party, to lease the track from the Commission and get the Grays Virginia and Truckee Railroad to operation a train.
He then does something pretty weird, in my view. He refers to the tranportation mode at Railfest 2009 as a "bus." He explains this analogy is an effort to get away from "train syndrome."
Huh? He explains that this is like calling a bus company for a Rotary trip where the bus company sets a fixed price for the trip and is not responsible for selling tickets. He explains that the CCCVP will sell tickets. He then gets back into train-talk and explains, "this is the unknown ground of how we're going to try to run this train in the future."
Ask yourself, would a private business run this way? Would they commit to an operation of a train when it's "unknown ground?" Perhaps the CCCVP can build us a nuclear reactor on some "unknown ground."
WE COULD HAVE SOME LOSSES
After further explaining that the CCCVP is responsible for marketing the train, Millard explains that beyond the opening weekend "we could have some losses and we don't know what those are going to be, but we have obligated ourselves for twelve weekends." He goes on to do the math, that each weekend costs about $4000 so the total obligation is $48,000. He explains that the CCCVB is on the hook for this money.
I will make another post about the math and break-even points. See it here...
At this point the CCCVP got into the details of the contracts. Commission Lackey Kevin Ray was on-hand to answer questions. Molly Walt kicked it off with some questions about item #9. She asked about the $2 million insurance requirement called for by the re-con commission.
Dwight Millard answered that "we learned something" in the process of researching this. It turns out the CCCVP had been purchasing insurance on an event-by-event basis. In looking into the railroad event insurance question, Millard announced that all events were insured by a "pool" and that all previous expenditures for event-by-event insurance were unnecessary. I could have told them that, but hey, it's only tax money, right?
THE GREATEST OPPORTUNITY!
Kevin Ray gave a speech about how the Commission has spent millions of dollars of local, state and federal money to build a track and it shouldn't be left unused. He said the CCCVP has the greatest opportunity to make a go of it. I would note that all the money the Commission spent on an operator selection process seems to have been wasted. I would also note that the thousands the Commission spent for Ken Dorr and Attorney Michael Rowe to fail to negotiate with the Grays Virgina and Truckee Railroad also seems to have gone down the drain.
They apparently could have simply selected the Convention and Visitor's Politburo as the operator from the start. Kevin predicts that people will arrive in Carson City from all corners of the earth to ride the train -- I sincerely hope he's right!
FUZZY MATH or INFLATION?
Kevin noted that the Virginia and Truckee Railroad has been running trains for 37 years. Hmmm.... they started in 1976, it must be 2012!
Then Stephen "Flip-Me-the-Bird" Lincoln asked, "what's going to happen next year." Kevin replied that he hoped the CCCVP had enough success this year that they could continue next year. He suggested that by next year there should be enough interest to run trains seven days a week. How nice of him to commit the V&T to abandoning their Virginia City to Gold Hill operation in Virginia City.
Molly Walt asked if there was an estimate of how much profit the CCCVP (Carson City Convention and Visitor's Profit-Buro) would reap if the trains sold out every weekend. I make estimates of *operating* profits excluding capital costs here. Kevin said, "I don't know." He did seem to think that 100 people per train was the break even point.
Millard mentioned that the train capacity was to be 140 people and the Virginia and Truckee Railroad was charging $4000 per run. I have updated a separate post trying to estimate the break-even point for the CCCVP.
First Kevin said that at 100 passengers they'd break even. My figures show that it might take at least 110 to break even just on operating costs. Kevin later says he thinks they can break even at 50 people, which is a mathematical impossibility. He then says it would be worth it even if the CCCVP spends a few hundred bucks per trip, because it will bring people into Carson City.
Of course he can say that, it bears repeating that the commission he works for is paying for $25,000 of the costs.
LET'S FILL THE HOTELS
Kevin then makes a claim that because people have been waiting fifteen years for a train to ride, they may not all come this year. This is counter-intuitive, usually things like this (think Aces ballpark in Reno) see their highest attendance when it's a novelty, then over the years attendance and ticket sales drop off to a normal level. Oh, well, no one ever claimed there was an economist in the room -- I stayed home to watch this on video.
Kevin did say that these trains would "fill the hotels." Again, if this were a private business the analysis would be much more rigorous. As it is, since we're in bailout nation, these government panels know they can depend on the taxpayer. They have nothing personally at risk.
Kevin makes a point that people throughout the US have been wanting to get the contract to operate the Re-con rails. The funny part, the CCCVP is truly being given a gift. Any private company that owns a railroad would expect a return on their investment for leasing out operational rights.
In the case of the Commission, they are going to let a buddy-buddy government commission (CCCVP) use the rails for free AND pay for maintenance. They will be letting the CCCVP keep any profits! I guarantee you if this had been offered to the Grays REAL Virginia and Truckee Railroad they would have jumped on the deal. That's just my not-so-humble opinion.
ASS-KISSING AND BUTTERING UP 101
One of the CCCVP members asked what a "deadhead train" was. Millard with a straight face said that's a term from the 1960's. He was so deadpan that I think they believed him. Basically the train has to run from Virginia City to Carson City EMPTY in the morning, pick up passengers, make a round trip and "deadhead" back to Virginia City at the end of the day after dropping passengers back in Carson City. Millard went on to tell (BS) the CCCVP that the reason the commission chose them to deal with "so many unknowns" should be taken as a compliment.
There was discussion that they would sell tickets on the deadhead runs whenever possible. They continue show show a total lack of realistic plans and expectations within 30 days of the first run. "Good enough for government."
Trying to make it easy for the CCCVP railroad experts, following Millards "bus" analogy, Kevin Ray makes a cruise ship analogy. He says that at times cruise ships need to make "repositioning" moves. He says that he has seen some good deals on repositioning cruises. Buses, cruise ships? This must all make sense to the railroad experts in Carson City.
In the discussion Millard mentions that their PR firm has almost guaranteed that every train would be full. So forgive me for belaboring the point, the CCCVP are being given the job because they are railroad marketing experts, and then need to hire an outside PR firm to do the job? But no advertising or publicity has taken place WITHIN 30 DAYS OF THE MAIDEN VOYAGE?
Ooooookkkkkkkkk...... I will repeat a mantra I learned a long time ago when dealing with the government, "I will bow down and recognize my superiors, I will not criticize my superiors, even though I paid for their antics. I will bow down..."
FINALLY SOMEONE STARTS TO MAKE SENSE
Molly Walt then identified the CCCVP's involvement in the project as a leap of faith. Actually she first said leap in faith, then said leap of faith. She is correct, for fifteen years the whole project has been a leap of faith.
Then she displays a leap of ignorance of the history of the project. I am not going to write ten pages of detailed history here, but she asks, "if we take this leap of faith and make a profit, what's to stop another company from trying to do it next year." In her ignorance, she is asking a smart question. She wants an option on next years business if this year works out well.
What she's apparently unaware of is the whole expensive operator selection process, the "business plans" submitted by Sierra Railroad, American Heritage (Durango and Silverton) and the Virginia and Truckee Railroad. She seems to be ignoring the failed expensive negotiations between the Commission and the Virginia and Truckee that lined the pockets of Ken Dorr and Mike Rowe. She is not aware everything that happened lo these many years before the V&T Commission abandoned their principles and gave Dwight Millard's other Commission the sweetheart deal of the century.
OFFERING THE SWEETHEART DEAL TO MULTIPLE PARTIES
Kevin Ray responded, "I don't see right now that the (V&T) Commission is looking to sign another deal right behind this one." Au Contraire! At the last V&T meeting it was clearly discussed that the CCCVP deal was just for this year and that for 2010 and 2011 the Commission was looking to Sierra or the Grays or a combination of the two.
MILLARD DROPS THE BOMB!
Thankfully Millard was honest enough to say that for 2010 and 2011 the Commission was considering working directly with the Grays or offering the concession to Sierra. Then he dropped a bomb. He said, "Running that train from here to there will never be profitable for anybody."
That deserves a new post...
Article in progress... ya'll come back now, ya'hear!
Notes of the Carson City Convention and Visitor's Politbureau meeting of July 13, 2009
As I have said in other posts, the overloaded nine-member Nevada Commission for the Reconstruction of the Virginia and Truckee Railway has too many members to make operations decisions. This is the story, according to Kevin Ray at the June meeting of the Carson City Convention and Visitors Politburo. Accordingly, the NCRVTRWY has handed off operational responsibility to the CCCVP.
So if nine cooks spoil the soup, will five ignorant cooks do better? At the July CCCVP meeting, Millard kicked off a discussion by saying "this is your introduction to how a railroad is run."
Excuse me for laughing. Somehow the CCCVP is being given operational responsibility for the $40 million project, and they are getting "an introduction to how a railroad is run." This is your government at work, the same people who will bring you health care, energy taxes, and a possible "Nevada net profits tax" that is remniscient of the Depression era policies that just made things worse.
JUST KIDDING, HEADS IN THE BEDS, ASSES IN THE SEATS
Millard then said, "I'm just kidding." The problem is, he's not kidding. The CCCVP, as a body, is questionably proficient at "putting heads in the beds," quoting boardmember Stephen Lincoln. I would note that Stephen Lincoln is also an expert at riding trains and flipping off people he doesn't like. This actually happened as I was making video of a VIP train last year. Hi Stephen!
Back to the point. Millard's characterization is correct, the CCCVP is getting a crash course in railroad operations. They could also use a crash-course in publicity. As of July 19, less than 30 days away from their subsidized event, they have yet to list it on their own website on the events calendar. They also haven't listed it on the Nevada Appeal events calendar. They have not issued a press release.
I guess since the V&T Reconstruction Commission has given them $25,000 to cover expenses, they don't feel pressure to put "asses in the seats." Perhaps the train will be a sellout, but it won't be because of proper advance publicity.
EASTGATE DEPOT IS A "PERMANENT DEPOT"
While the V&T Commission refers to the planned depot on Dump Road / Eastgate Siding to be "interim," Millard appears to let the cat out of the bag when he refers to the Dump Road Depot as "permanent." This tends to support the V&T Commission's claims to have "shelved" plans to run all the way through the canyon and back to the Drako Way location they spent well over $1 million to acquire.
I repeat myself when I say, the main problem with the Commission is they change their minds every month. There is no plan. There is no budget. There's is just a fly-by-the-seat-of-the-pants effort to build a railroad as the pork comes in from the Federal government.
A little furthe into the discussion Millard repeats the Kevin Ray claim by saying "the commission is too big and bulky" to plan operational details. Millard also refers to a Railfest Committee, which should be a public body with public meetings. I have yet to see any notice or agenda from this group tasked with spending at least $25,000.
IS THIS A BUS OR A TRAIN?
Millard goes on to say that the CCCVP will sit between the Commission and the Grays. He notes that in the meeting packet are two agreements, one with each party, to lease the track from the Commission and get the Grays Virginia and Truckee Railroad to operation a train.
He then does something pretty weird, in my view. He refers to the tranportation mode at Railfest 2009 as a "bus." He explains this analogy is an effort to get away from "train syndrome."
Huh? He explains that this is like calling a bus company for a Rotary trip where the bus company sets a fixed price for the trip and is not responsible for selling tickets. He explains that the CCCVP will sell tickets. He then gets back into train-talk and explains, "this is the unknown ground of how we're going to try to run this train in the future."
Ask yourself, would a private business run this way? Would they commit to an operation of a train when it's "unknown ground?" Perhaps the CCCVP can build us a nuclear reactor on some "unknown ground."
WE COULD HAVE SOME LOSSES
After further explaining that the CCCVP is responsible for marketing the train, Millard explains that beyond the opening weekend "we could have some losses and we don't know what those are going to be, but we have obligated ourselves for twelve weekends." He goes on to do the math, that each weekend costs about $4000 so the total obligation is $48,000. He explains that the CCCVB is on the hook for this money.
I will make another post about the math and break-even points. See it here...
At this point the CCCVP got into the details of the contracts. Commission Lackey Kevin Ray was on-hand to answer questions. Molly Walt kicked it off with some questions about item #9. She asked about the $2 million insurance requirement called for by the re-con commission.
Dwight Millard answered that "we learned something" in the process of researching this. It turns out the CCCVP had been purchasing insurance on an event-by-event basis. In looking into the railroad event insurance question, Millard announced that all events were insured by a "pool" and that all previous expenditures for event-by-event insurance were unnecessary. I could have told them that, but hey, it's only tax money, right?
THE GREATEST OPPORTUNITY!
Kevin Ray gave a speech about how the Commission has spent millions of dollars of local, state and federal money to build a track and it shouldn't be left unused. He said the CCCVP has the greatest opportunity to make a go of it. I would note that all the money the Commission spent on an operator selection process seems to have been wasted. I would also note that the thousands the Commission spent for Ken Dorr and Attorney Michael Rowe to fail to negotiate with the Grays Virgina and Truckee Railroad also seems to have gone down the drain.
They apparently could have simply selected the Convention and Visitor's Politburo as the operator from the start. Kevin predicts that people will arrive in Carson City from all corners of the earth to ride the train -- I sincerely hope he's right!
FUZZY MATH or INFLATION?
Kevin noted that the Virginia and Truckee Railroad has been running trains for 37 years. Hmmm.... they started in 1976, it must be 2012!
Then Stephen "Flip-Me-the-Bird" Lincoln asked, "what's going to happen next year." Kevin replied that he hoped the CCCVP had enough success this year that they could continue next year. He suggested that by next year there should be enough interest to run trains seven days a week. How nice of him to commit the V&T to abandoning their Virginia City to Gold Hill operation in Virginia City.
Molly Walt asked if there was an estimate of how much profit the CCCVP (Carson City Convention and Visitor's Profit-Buro) would reap if the trains sold out every weekend. I make estimates of *operating* profits excluding capital costs here. Kevin said, "I don't know." He did seem to think that 100 people per train was the break even point.
Millard mentioned that the train capacity was to be 140 people and the Virginia and Truckee Railroad was charging $4000 per run. I have updated a separate post trying to estimate the break-even point for the CCCVP.
First Kevin said that at 100 passengers they'd break even. My figures show that it might take at least 110 to break even just on operating costs. Kevin later says he thinks they can break even at 50 people, which is a mathematical impossibility. He then says it would be worth it even if the CCCVP spends a few hundred bucks per trip, because it will bring people into Carson City.
Of course he can say that, it bears repeating that the commission he works for is paying for $25,000 of the costs.
LET'S FILL THE HOTELS
Kevin then makes a claim that because people have been waiting fifteen years for a train to ride, they may not all come this year. This is counter-intuitive, usually things like this (think Aces ballpark in Reno) see their highest attendance when it's a novelty, then over the years attendance and ticket sales drop off to a normal level. Oh, well, no one ever claimed there was an economist in the room -- I stayed home to watch this on video.
Kevin did say that these trains would "fill the hotels." Again, if this were a private business the analysis would be much more rigorous. As it is, since we're in bailout nation, these government panels know they can depend on the taxpayer. They have nothing personally at risk.
Kevin makes a point that people throughout the US have been wanting to get the contract to operate the Re-con rails. The funny part, the CCCVP is truly being given a gift. Any private company that owns a railroad would expect a return on their investment for leasing out operational rights.
In the case of the Commission, they are going to let a buddy-buddy government commission (CCCVP) use the rails for free AND pay for maintenance. They will be letting the CCCVP keep any profits! I guarantee you if this had been offered to the Grays REAL Virginia and Truckee Railroad they would have jumped on the deal. That's just my not-so-humble opinion.
ASS-KISSING AND BUTTERING UP 101
One of the CCCVP members asked what a "deadhead train" was. Millard with a straight face said that's a term from the 1960's. He was so deadpan that I think they believed him. Basically the train has to run from Virginia City to Carson City EMPTY in the morning, pick up passengers, make a round trip and "deadhead" back to Virginia City at the end of the day after dropping passengers back in Carson City. Millard went on to tell (BS) the CCCVP that the reason the commission chose them to deal with "so many unknowns" should be taken as a compliment.
There was discussion that they would sell tickets on the deadhead runs whenever possible. They continue show show a total lack of realistic plans and expectations within 30 days of the first run. "Good enough for government."
Trying to make it easy for the CCCVP railroad experts, following Millards "bus" analogy, Kevin Ray makes a cruise ship analogy. He says that at times cruise ships need to make "repositioning" moves. He says that he has seen some good deals on repositioning cruises. Buses, cruise ships? This must all make sense to the railroad experts in Carson City.
In the discussion Millard mentions that their PR firm has almost guaranteed that every train would be full. So forgive me for belaboring the point, the CCCVP are being given the job because they are railroad marketing experts, and then need to hire an outside PR firm to do the job? But no advertising or publicity has taken place WITHIN 30 DAYS OF THE MAIDEN VOYAGE?
Ooooookkkkkkkkk...... I will repeat a mantra I learned a long time ago when dealing with the government, "I will bow down and recognize my superiors, I will not criticize my superiors, even though I paid for their antics. I will bow down..."
FINALLY SOMEONE STARTS TO MAKE SENSE
Molly Walt then identified the CCCVP's involvement in the project as a leap of faith. Actually she first said leap in faith, then said leap of faith. She is correct, for fifteen years the whole project has been a leap of faith.
Then she displays a leap of ignorance of the history of the project. I am not going to write ten pages of detailed history here, but she asks, "if we take this leap of faith and make a profit, what's to stop another company from trying to do it next year." In her ignorance, she is asking a smart question. She wants an option on next years business if this year works out well.
What she's apparently unaware of is the whole expensive operator selection process, the "business plans" submitted by Sierra Railroad, American Heritage (Durango and Silverton) and the Virginia and Truckee Railroad. She seems to be ignoring the failed expensive negotiations between the Commission and the Virginia and Truckee that lined the pockets of Ken Dorr and Mike Rowe. She is not aware everything that happened lo these many years before the V&T Commission abandoned their principles and gave Dwight Millard's other Commission the sweetheart deal of the century.
OFFERING THE SWEETHEART DEAL TO MULTIPLE PARTIES
Kevin Ray responded, "I don't see right now that the (V&T) Commission is looking to sign another deal right behind this one." Au Contraire! At the last V&T meeting it was clearly discussed that the CCCVP deal was just for this year and that for 2010 and 2011 the Commission was looking to Sierra or the Grays or a combination of the two.
MILLARD DROPS THE BOMB!
Thankfully Millard was honest enough to say that for 2010 and 2011 the Commission was considering working directly with the Grays or offering the concession to Sierra. Then he dropped a bomb. He said, "Running that train from here to there will never be profitable for anybody."
That deserves a new post...
Article in progress... ya'll come back now, ya'hear!
Let's the gov't subsidies begin!
No. 31 -- VIRGINIA AND TRUCKEE RAILWAY -- Nevada Railroad Reconstruction Chronicles
A long time ago, in a galaxy far away ... actually it was the sixties. The last guy to run the Virginia and Truckee Railway, Gordon Sampson, was providing an Oral History for the University of Nevada Reno.
In this history, exhaustively titled Gordon A. Sampson: Memoirs of a Canadian Army Officer and Business Analyst—Manufacturing, Motion Pictures, the Virginia and Truckee Railroad, Financial Affairs of Western Nevada, the Washoe County Fair and Recreation Board, Sampson said:
Gordon Sampson said years ago what is coming true today. At the second July meeting of the Nevada Commission for the Reconstruction of the Virginia and Truckee Railway, the Commission approved $25,000 to be given to the Carson City Convention and Visitors Poliburo for operations of a train over the Railfest weekend, Aug 14-16, 2009. (I would provide a link to Railfest, but amazingly just 30 days away from the event they are not listed on any website or event calendar.)
To wrap up this post, unlike virtually all other government infrastructure projects, the Virginia and Truckee Reconstruction project has never been able to accurately project it's full costs. The costs continue to rise, starting with a construction budget of $10 million, now estimated to come close to $70 million. At the same time the original projections were that the railroad would reach an operating profit. As recently as two years ago the claim of operations profits were intact.
But now we are seeing the first instance of operational subsidies. "don't steal, the government hates competition!"
A long time ago, in a galaxy far away ... actually it was the sixties. The last guy to run the Virginia and Truckee Railway, Gordon Sampson, was providing an Oral History for the University of Nevada Reno.
In this history, exhaustively titled Gordon A. Sampson: Memoirs of a Canadian Army Officer and Business Analyst—Manufacturing, Motion Pictures, the Virginia and Truckee Railroad, Financial Affairs of Western Nevada, the Washoe County Fair and Recreation Board, Sampson said:
It would appear that the railway should have been preserved as a tourist attraction. This has been done in other states and to the benefit of all concerned. But there is the other side of the picture. My answer to these inquiries is always the same, there would be no use of operating the "V & T" railway unless it was operated with its own equipment. To do so would require a large expenditure of money on the one and only remaining locomotive, No. 27. As to the equipment, the sole remaining coach, No. 18, would have to be torn down completely and rebuilt with steel concealed behind the old tongue-and-groove outer sides with the traditional canary yellow and green trim. That would take a large sum of money.
Yes, there have been several attempts made to bring the line back into operation, but it would only be through an annual state subsidy, apart from the initial capital expenditure. We also must remember our winter months when the tourist traffic materially drops, and we must also remember that a large percentage of our tourists arrive in Reno to gamble and not to drive automobiles to Carson City for a ride on an old-fashioned type railway as far as Virginia City. Personally, there is no one that regrets more than myself the fact that the railway has not been preserved in some shape or form.
Gordon Sampson said years ago what is coming true today. At the second July meeting of the Nevada Commission for the Reconstruction of the Virginia and Truckee Railway, the Commission approved $25,000 to be given to the Carson City Convention and Visitors Poliburo for operations of a train over the Railfest weekend, Aug 14-16, 2009. (I would provide a link to Railfest, but amazingly just 30 days away from the event they are not listed on any website or event calendar.)
To wrap up this post, unlike virtually all other government infrastructure projects, the Virginia and Truckee Reconstruction project has never been able to accurately project it's full costs. The costs continue to rise, starting with a construction budget of $10 million, now estimated to come close to $70 million. At the same time the original projections were that the railroad would reach an operating profit. As recently as two years ago the claim of operations profits were intact.
But now we are seeing the first instance of operational subsidies. "don't steal, the government hates competition!"
Thursday, July 16, 2009
Renaming the V&T and Janice Ayres/ NNRF needs a history lesson
No. 30 -- VIRGINIA AND TRUCKEE RAILWAY -- Nevada Railroad Reconstruction Chronicles
First, Janice Ayres, president of the Northern Nevada Railway Foundation, must not know her history. She says they have been asked for trademark reasons not to use the name Virginia and Truckee Railroad on their calendars.
She said she used it with permission (probably true) and wanted to use it because that was the name of the railroad featured in the calendar. The calendar from NNRF features photos of the original V&T RR from before 1950.
IN A HISTORICAL SENSE, VIRGINIA AND TRUCKEE RAILROAD AND RAILWAY ARE THE SAME THING
She's not aware, apparently, that the Virginia and Truckee Railroad became the Virginia and Truckee Railway. I believe this was in 1904 but don't quote me. So to put Virginia and Truckee Railway on a calendar would be perfectly well within the trademark owned by the Commission AND would represent the proper railroad, er, railway.
COMMISSION DISCUSSED RENAMING THE PROJECT
Check out this story from Karen Woodmansee of the Virginia City News:
http://www.virginiacitynews.com/link.asp?smenu=95&sdetail=1967&wpage=1
Someone brought up a comment on the Yahoo Group that discussed this project. The commenter was surprised/shocked that the government commission was considering changing the name of their boondoggle railroad reconstruction project.
Here is what I posted in response:
From the VirginiaandTruckee1976 Yahoo Group, which you should check out...
Just to be clear, it's the Commission's Virginia and Truckee Railway that talked about the name change. For those not up to speed on the trademark dispute, here's the scoop:
The Virginia and Truckee Railroad (the good guys) has owned the trademark to operate a railroad called the Virginia and Truckee Railroad since (don't quote me) the 1960's. They were sold this name by Grahame Hardy, famous railroad memorabilia seller and book publisher.
Bob Gray bought/acquired that trademark and if you look it up on USPTO.gov it's clearly for an operating railroad.
Now remember your history, the original Virginia and Truckee Railroad, incorporated in 1868, went into re-organization, I think it was in 1904. They renamed it the Virginia and Truckee Railway and operated as such until abandonment in 1950. For a photo, see http://www.livingsteam.com/virginia-and-truckee-railroad-history.html.
Now sometime later, Grahame Hardy's stepson, Joe Curtis registered the Virginia and Truckee Railway as a trademark for souvenier items like T-shirts, coffee cups, etc. Joe Curtis is the 800 lb gorilla in VC, owns the Mark Twain bookstore and lots of property, and is also the fire chief, and the building code inspector. He pulls a lot of weight up there and many people don't get along with him.
So Curtis is free to slap Virginia and Truckee Railway all over chachki's, t-shirts and bumper stickers. You can also look up his trademark at uspto.gov.
SO WHAT'S THE CONFLICT?
Curtis gave or sold his trademark to the government commission, the Nevada Commission for the Reconstruction of the Virginia and Truckee Railway. This happened in the last few years and the Gray's REAL V&TRR have been fighting it because the Curtis/Re-con commission trademark for Virginia and Truckee Railway does NOT extend to an operating railroad.
Who's to say what a court would decide, but under trademark law the commission likely can't run a railroad with a name so close to an existing trademarked railroad when their trademark is only for souveniers.
So the commission likely has three choices: fight the Grays in court over the use of the name, license the name from the Grays, or choose a different name.
Since the gov't has much deeper pockets than the Grays, I wouldn't be surprised if the Commission ignores the clear trademark precedent, beats them up in a long court process and wins in the end. They are above the law in so many ways, and have experience ignoring and flouting federal law. Why should a little trademark stop them? I hope I'm wrong.
OK, novel over.
(see you next month, MAYBE!)
First, Janice Ayres, president of the Northern Nevada Railway Foundation, must not know her history. She says they have been asked for trademark reasons not to use the name Virginia and Truckee Railroad on their calendars.
She said she used it with permission (probably true) and wanted to use it because that was the name of the railroad featured in the calendar. The calendar from NNRF features photos of the original V&T RR from before 1950.
IN A HISTORICAL SENSE, VIRGINIA AND TRUCKEE RAILROAD AND RAILWAY ARE THE SAME THING
She's not aware, apparently, that the Virginia and Truckee Railroad became the Virginia and Truckee Railway. I believe this was in 1904 but don't quote me. So to put Virginia and Truckee Railway on a calendar would be perfectly well within the trademark owned by the Commission AND would represent the proper railroad, er, railway.
COMMISSION DISCUSSED RENAMING THE PROJECT
Check out this story from Karen Woodmansee of the Virginia City News:
http://www.virginiacitynews.com/link.asp?smenu=95&sdetail=1967&wpage=1
Someone brought up a comment on the Yahoo Group that discussed this project. The commenter was surprised/shocked that the government commission was considering changing the name of their boondoggle railroad reconstruction project.
Here is what I posted in response:
From the VirginiaandTruckee1976 Yahoo Group, which you should check out...
Just to be clear, it's the Commission's Virginia and Truckee Railway that talked about the name change. For those not up to speed on the trademark dispute, here's the scoop:
The Virginia and Truckee Railroad (the good guys) has owned the trademark to operate a railroad called the Virginia and Truckee Railroad since (don't quote me) the 1960's. They were sold this name by Grahame Hardy, famous railroad memorabilia seller and book publisher.
Bob Gray bought/acquired that trademark and if you look it up on USPTO.gov it's clearly for an operating railroad.
Now remember your history, the original Virginia and Truckee Railroad, incorporated in 1868, went into re-organization, I think it was in 1904. They renamed it the Virginia and Truckee Railway and operated as such until abandonment in 1950. For a photo, see http://www.livingsteam.com/virginia-and-truckee-railroad-history.html.
Now sometime later, Grahame Hardy's stepson, Joe Curtis registered the Virginia and Truckee Railway as a trademark for souvenier items like T-shirts, coffee cups, etc. Joe Curtis is the 800 lb gorilla in VC, owns the Mark Twain bookstore and lots of property, and is also the fire chief, and the building code inspector. He pulls a lot of weight up there and many people don't get along with him.
So Curtis is free to slap Virginia and Truckee Railway all over chachki's, t-shirts and bumper stickers. You can also look up his trademark at uspto.gov.
SO WHAT'S THE CONFLICT?
Curtis gave or sold his trademark to the government commission, the Nevada Commission for the Reconstruction of the Virginia and Truckee Railway. This happened in the last few years and the Gray's REAL V&TRR have been fighting it because the Curtis/Re-con commission trademark for Virginia and Truckee Railway does NOT extend to an operating railroad.
Who's to say what a court would decide, but under trademark law the commission likely can't run a railroad with a name so close to an existing trademarked railroad when their trademark is only for souveniers.
So the commission likely has three choices: fight the Grays in court over the use of the name, license the name from the Grays, or choose a different name.
Since the gov't has much deeper pockets than the Grays, I wouldn't be surprised if the Commission ignores the clear trademark precedent, beats them up in a long court process and wins in the end. They are above the law in so many ways, and have experience ignoring and flouting federal law. Why should a little trademark stop them? I hope I'm wrong.
OK, novel over.
(see you next month, MAYBE!)
Sierra Railroad Still in the Works
No. 29 -- VIRGINIA AND TRUCKEE RAILWAY -- Nevada Railroad Reconstruction Chronicles
At the July 10 meeting, the Memo of Understanding between the Nevada Commission to Reconstruct the Virginia and Truckee Railway was on the agenda. Chris Hart and Robert Pinoli of Sierra Railroad were in attendance. They almost traveled a long way for nothing, because Chairman Dwight Millard started off the discussion as if he didn't have any real reason to put them on the agenda.
Turns out Dwight had a plan. He wanted to convince the Commissioners to hire Sierra as a consultant to tell them what to do with the railroad. I thought there had been years of work along these lines, starting with the 1994 study right through the same consultant helping the commission choose Sierra over the Grays a couple years ago. At that time, Sierra submitted a loose marketing plan. Since then Sierra has lost some favor with the Commission and the Grays appeared to be making inroads by virtue of them having equipment and shops in the area already. When the Commission needed train rides last year and this year, they went to the Gray's REAL Virginia and Truckee Railroad.
During the discussion the Commission asked Sierra about their experience with ADA-compliant cars. Sierra volunteered to send a car up that was compliant. They also agreed to work for the commission as a paid consultant. They still seem to be in play as the long-term operator for 2010 or 2011.
Wrapping up, the Sierra re-invention might have been a better idea BEFORE the former Commission Bob Hadfield diverted money from its intended purpose and then backfilled another $1 million to engineer a wye track and balloon track.
At the July 10 meeting, the Memo of Understanding between the Nevada Commission to Reconstruct the Virginia and Truckee Railway was on the agenda. Chris Hart and Robert Pinoli of Sierra Railroad were in attendance. They almost traveled a long way for nothing, because Chairman Dwight Millard started off the discussion as if he didn't have any real reason to put them on the agenda.
Turns out Dwight had a plan. He wanted to convince the Commissioners to hire Sierra as a consultant to tell them what to do with the railroad. I thought there had been years of work along these lines, starting with the 1994 study right through the same consultant helping the commission choose Sierra over the Grays a couple years ago. At that time, Sierra submitted a loose marketing plan. Since then Sierra has lost some favor with the Commission and the Grays appeared to be making inroads by virtue of them having equipment and shops in the area already. When the Commission needed train rides last year and this year, they went to the Gray's REAL Virginia and Truckee Railroad.
During the discussion the Commission asked Sierra about their experience with ADA-compliant cars. Sierra volunteered to send a car up that was compliant. They also agreed to work for the commission as a paid consultant. They still seem to be in play as the long-term operator for 2010 or 2011.
Wrapping up, the Sierra re-invention might have been a better idea BEFORE the former Commission Bob Hadfield diverted money from its intended purpose and then backfilled another $1 million to engineer a wye track and balloon track.
Millard: "I don't know if we're ever going to get to Drako, ever!"
No. 28 -- VIRGINIA AND TRUCKEE RAILWAY -- Nevada Railroad Reconstruction Chronicles
I might flesh this out more I might not. Last month the Commission drastically cut back their operational plan by announcing plans to build a wye and a balloon track so they could run trains from DUMP ROAD down to the canyon and back, and maybe up the hill to Gold Hill. They announced they were shelving plans to build track through the Carson River canyon.
Millard just reinforced that by saying, "I don't know if we're ever going to get to Drako way, ever."
I might flesh this out more I might not. Last month the Commission drastically cut back their operational plan by announcing plans to build a wye and a balloon track so they could run trains from DUMP ROAD down to the canyon and back, and maybe up the hill to Gold Hill. They announced they were shelving plans to build track through the Carson River canyon.
Millard just reinforced that by saying, "I don't know if we're ever going to get to Drako way, ever."
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