I’m an alumni member of the Univ. of Minnesota RR Club, and yesterday was the annual “Gopher Rail” convention / get together. One of the speakers / clinicians was Steve Sandberg of “The Railroad Heritage” group (formerly “The Friends of 261”) and he has some interesting things to say about the 261 situation. BTW current club president Davidson Ward is a volunteer fireman on 261.
Steve noted that the guy in California who has signed a letter of agreement to buy the engine isn’t (as has been speculated) a prominent railfan…in fact, he said the guy is an Orange county stockbroker who knew nothing about trains. He says when the guy first talked to Steve about 261, he asked if the engine ran on an enclosed loop of track, like in Steve’s yard, or if it had to run on “regular train tracks”.
[D)]
Anyway, the deal he signed to buy the engine is contingent on him reaching agreement to lease the engine back to the Friends of 261. He strictly is looking at it as a money-making deal, and so wants as much (or more) than Green Bay wanted, so that’s not going to happen and the deal will fall thru.
Steve said in negotiating with Green Bay - whose new president knows nothing about trains by the way, having last run a military museum, and whose representatives referred to the engine either as “the asset” or “216” - that one of the reasons Green Bay wanted so much money was their belief that 261 was bringing in loads of money for the Friends, so the Friends allowed them to go thru all their records (which are mostly public anyway as a non-profit organization) and see where they thought they could raise more money. GB suggested the Friends increase their ‘membership’ rates from $25 to $250, and double the prices of tickets, souveniers, food, etc. which the Friends weren’t willing to do.
As of now they are continuing to look for a set of E or F units, which they’ve been doing for about five years. One odd thing he said is the size wheel used by E units are not made anymore, and apparently e
I don’t know how much Sandberg has already spent getting #261 operational, but wouldn’t a large engine taken out of a park somewhere probably cost at least a million dollars to put into operation? We are talking $200,000 just to move the CB&Q engine to Minneapolis.
Given the cost of acquiring another locomotive, why would Sandberg not simply buy #261 for $225,000, put the $500,000-700,000 into the needed boiler work, and run it? It seems like that would be the lowest cost option. It would be far less expensive than the lease deal offered by NRM and rejected by Sandberg.
Because it is very clear from the posts on the matter that while Mr. Sandberg is willing to restore and operate someone else’s locomotive, he doesn’t want the financial liability of owning a locomotive himself.
If $900,000 to buy and repair the 261 seems like such a no brainer, why don’t you buy the locomotive and lease it out?
I don’t understand what you mean when you say, “he doesn’t want the financial liability of owning a locomotive himself.” What exactly is the financial liability of owning a locomotive? The only financial issue of owning a locomotive that I am aware of is the price of purchase. It is true that the price of purchase is all up-front, whereas a lease spreads it out, so you cannot compare them dollar for dollar. But if the pr
While I have no direct knowledge of the previous lease arrangement for the 261, I would be surprised if Mr. Sandberg had any of his own money tied up in the locomotive itself, whereas if he were to own it, Mr. Sandberg’s personal finances would be about the only source of funding for a rebuild.
The financial risk of owning a locomotive is, what happens if something significant fails? Suddenly the engine you just spent a million dollars on is now a million dollar piece of scrap metal. It is a very foolish way to tie up your money. You either need a non-profit or someone with more money than common sense to run these things. Steam locomotives do not p
While I have no direct knowledge of the previous lease arrangement for the 261, I would be surprised if Mr. Sandberg had any of his own money tied up in the locomotive itself, whereas if he were to own it, Mr. Sandberg’s personal finances would be about the only source of funding for a rebuild.
The financial risk of owning a locomotive is, what happens if something significant fails? Suddenly the engine you just spent a million dollars on is now a million dollar piece of scrap metal. It is a very foolish way to tie up your money. You either need a non-profit or someone with more money than common sense to run these things. Steam locomotives do not pay for themselves.
I don’t know much about the 261 but from what I have read it sounds like a royal mess.I am glad someone finally has the guts to admit that there is big money being made from running these excursions.From what I have been reading from various tourist railroads around the United states many of them are making somewhere in the area of $800,000 to over a million a year.Not bad money considering you are looking at 5 months or less per seaon.So a million to buy and restore a steam locomotive is not a bad investment considering you will probably get your money back in a few short years.I know those mainline excusions such as those with the 261 and the SP 4449 are very expensive and harder to get a good return on.But from my many years of riding trains it seems to me that these are always sold out no matter what the price is.
But getting back to the 261.I don’t see why anyone would dump hundreds of thousands of dollars into a locomotive only to have someone else telling you how to run it and having to lease it back out to the friends of the 261.What kind of a investor is going to spend hundreds of thousands and dollars for the rebuild and then lease it out and not even get a return for at least several years.
This is just my opinion but if a locomotive is going to need a complete rebuild I think it would make more sense to take a locomotive sitting in a park and restore it because you would have total ownership over it and have complete control over it.Many towns across America have steam locomotives in parks in horrible shape.Many of them are happy to get rid of them and will gladly sell it to you for a dollar(on the agreement you don’t scrap it) or donate it to you if you plan to restore it.There are lots of big steam sitting in parks.A few I can think of off the top of my head.
Steve pointed out last year at the 2009 “Gopher Rail” and reiterated this year that the Friends of 261 at best broke even on runs with 261, and normally took a modest loss. The only reason they come out even or slightly ahead for the year is the money they get from leasing out their Amtrak-useable passenger cars to other organizations and private customers. Of course, remember the Friends are a not-for-profit corporation, so any “profits” goes back into restoring cars etc.
AFAIK Steve Sandberg is the Friends’ mechanical engineer, not the “owner”. He’s not a millionaire with money to burn. He’s been involved in a number of projects in the US rebuilding passenger cars for various organizations. I think what an earlier poster said about not wanting the responsibility of owning the locomotive is correct. If the group can lease an engine from say a city for 15 years, if there is a major failure of the engine they can just send it back to the park they got it from.
It really is sad to see so much financial barriers ruining the legacy of a historical steam locomotive. It seems all anyone cares about these days is money… You’d think that NRM would at least be more understanding if the excursions didnt COST them anything. I guess not…
Hope they find a new 4-8-4 to restore and run…lease from someone who understands railroad history and isnt wearing dollar sign glasses…
I don’t know much about the 261 but from what I have read it sounds like a royal mess.I am glad someone finally has the guts to admit that there is big money being made from running these excursions.From what I have been reading from various tourist railroads around the United states many of them are making somewhere in the area of $800,000 to over a million a year.Not bad money considering you are looking at 5 months or less per seaon.So a million to buy and restore a steam locomotive is not a bad investment considering you will probably get your money back in a few short years.I know those mainline excusions such as those with the 261 and the SP 4449 are very expensive and harder to get a good return on.But from my many years of riding trains it seems to me that these are always sold out no matter what the price is.
But getting back to the 261.I don’t see why anyone would dump hundreds of thousands of dollars into a locomotive only to have someone else telling you how to run it and having to lease it back out to the friends of the 261.What kind of a investor is going to spend hundreds of thousands and dollars for the rebuild and then lease it out and not even get a return for at least several years.
This is just my opinion but if a locomotive is going to need a complete rebuild I think it would make more sense to take a locomotive sitting in a park and restore it because you would have total ownership over it and have complete control over it.Many towns across America have steam locomotives in parks in horrible shape.Many of them are happy to get rid of them and will gladly sell it to you for a dollar(on the agreement you don’t scrap it) or donate it to you if you plan to restore it.There are lots of big steam sitting in parks.A few I can think of off the top of my head.
Here’s an interesting link to an article on Steve Sandberg and his family, and the history of North Star Rail and The Friends of 261. It gives a lot of background on how they came together to get 261 operable again, and I think clarifies some points about 261 and the Friends…
From the GB new article, it appears that the ‘Friends of 261’ group(the folks who provide the passenger cars for 261) have indeed got a deal to purchase the engine outright for a number in the ‘low’ 6 figure range. The ‘Friends’ group has been making money or restoring/leasing out their passenger cars and sponsoring excursions through the years. With this purchase, they can restart the overhaul of 261 without worries about ‘leases’. It appears the the ‘mystery’ buyer in California never was really serious about the purchase, and that the Green bay Museum was just trying to up the ante on the lease. When push came to shove, they collapsed and settled for ‘operating cash’…
I suspect that we will not see 261 running this season, but if the financing for the rebuild is there: 2011 may be a ‘coming out’ party for steam on the River Division again! Very good news for a 1st class group.
First of all a steam locomotive is by its nature very large. The various crafts and skills, necessary to build, maintain, and run it are dying out at a rapid rate. They are concentrated in a relatively small number of locations. Their ability to function and make the locomotive a functioning machine require specialized tools and equipment to preform their crafts and skills, require rather large equipment, and cranes capable of lifting heavy weights. A structure to cover the operation to protect mena and equipment from the elements.
All the above is an oversimplification, but you get the point. A locomotive is a self-propelled money and man consuming monster, The analogy is a yatch; (Paraphrasing) Comodore Vanderbuilt was remembered to have said at one point about his yatch," It is a hole in the ocean that the owner attempts to fill with money."
Massive quantities of labor is required. In the steam era labor rates were comparatively low, but even so one of the great advantages of the diesel locomotive is that it only needed a fraction of the manpower. Today perhaps some of the labor may be volunteer, but many aspects of the overhaul require specialized trades. To run on a major railroad everything must be in first class condition before it will be allowed to operate, and they will want the assurance of knowing that competent people carried out all the work.
If you want the project completed in a normal lifetime much of the work will have to be paid. Boilers can be lethal if not properly checked and repaired; it is essential that any work is carried out by qualified people. Other appliances similarly need to be overhauled by somebody who understands them, from air brake equipment, sanders, turbo-generators, injectors, gauges, and so forth. Any worn parts will probably have to be custom made, and this can be a real challenge to reverse-engineer from the old part. The flues likely need replacing and the correct size might not be available in North America. Are the driving wheel tires good for the next 15 years, or do new ones need to be made and installed? Brake shoes for 72" diameter wheels are not exactly a regular stock item.
Think of the cost to completely overhaul your old high-mileage Studebaker weighing perhaps 1.5 tons. Now multiply that by 100 for a 150 ton steam locomotive. Railroad equipment is big, heavy, and expensive to maintain. Many local museums that started with high hopes and enthusiasm have been brought to earth with a resounding thump as they discover the magnitude of the task at hand. No doubt you have already noticed examples of decaying rail displays in city parks and small museums in your region.
I just had a thought. Since the most recent mainline steam was in China, and those people are all force-retired by 45 years old, would it be actually cheaper to ship steam engines in some of the empty containers we send back to China and have them overhaul it on the cheap?
Disclaimer: My only real preservation interests are infrastructure and early diesels, so don’t take this as a knock on the nearly $1M spent to preserve one operating steam engine.
Now that’s a great idea!Probably get a locomotive overhauled in China for 10,000 dollars.I said it before.It is poor management,lack of searching,and frankly stupidity that account for these staggering figures of up to a million dollars for a overhaul.It is like taking a old car to the dealership and saying I want this car to look like brand new again.The repair bill is going to cost $30,000 dollars!It the same way with some of the people running these steam programs who don’t have any mechanical knowledge.They don’t understand the concepts of metal fabrication,how a foundry works,and what a machinist does.They get someone running the show who has a degree in business,doesn’t know the first thing about a steam locomotives,and thinks the best way to restore a steam locomotive is to call a specialist in steam locomotive restoration which is also the most expensive.
Dale McCormick who overseas the repairs and operation of the 4449 is a prime example of a man who has his act together regarding steam locomotives.They keep that massive steam locomotive running on a yearly basis with really no budget,a very small primitive round house,no back up parts or a spare parts locomotive,and probably less than 20 people who really keep the locomotive operational all of them volunteers.How does he do it?Because Dale knows metal.He knows how it is made,how it is repaired,and where it comes from.Instead of paying a welder 100 dollars a hour he can weld something himself.Do you really need to pay Joe blows locomotive shop 10,000 dollars to turn a part on a lathe or can you get the same job done by Andy’s machine shop down the road for 300 dollars?
My point is metal is metal.Any welder can weld metal together.It doesn’t matter if it is a cab,a tender,two pipes,or a boiler.It also doesn’t matter if he ever worked on a steam locomotive.It is welding two pieces of steel together.Some jobs like boilers have
You are correct. Foundrys can cast anything if you give them the blueprint. Here’s the problem They Dont’t like to make just one. They want you to by 100 of them. I run into this problem making re-production parts for American Flyer toy trains. I only need 500 made of a part. But the company that will make the part wants me to buy 50,000 of them. I can’t sell that many. So I don’t make the part.