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".
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 even UP is getting concerned about being able to run E units down the road. They could get more wheels made, but the smallest run the builder will do of wheels is like 200,000 !!
When opportunities arrive for an engine to visit and do some runs they will do that, but it sounds like they can continue without an engine for some time and just lease out their sizable car collection.They are also still planning train trips, with the next one being selling tickets to a private car excursion to Chicago in April and May using obs car "Cedar Rapids" and the "Super Dome" which is currently just finishing restoration work. They also have acquired the business car "Milwaukee" which was used by the president of the Milwaukee Road, and was last used about 10 years ago behind Frisco 1522.
They would like to find a steam locomotive to lease (not buy) but it would need to be large enough to handle 12-14 car trains at 60+ MPH for 100 mi. at a time, and have roller bearings...which pretty much limits it to engines built after 1930 or so. Also it would have to be easy to get at. He noted the Burlington engine in Golden CO (5629) would probably cost $200000 to get to Minneapolis, as BNSF would have to build tracks to it's location and then close down the Powder River Basin coal mainlines for a few days.
Ideally, they would like to find an engine in a city park somewhere and lease it for 15 years, with part of the deal being an endowment being made in the name of the city that owned the engine that would draw interest during the time of the lease. Then the engine could be returned to the city after 15 years, and the endowment would be enough to cover upkeep, cover, etc. for the engine in perpetuity. He said they don't want to take an engine from someplace where it's being well maintained and is part of the community already.
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.
Bucyrus 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.
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?
cprted Bucyrus 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 price of purchase were overall cheaper than leasing, is there some special reason why he would not want to purchase?
I just assumed that Sandberg was looking for the lowest cost option. I was not aware of the fact you cite that he has ruled out direct purchase.
BucyrusI 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 price of purchase were overall cheaper than leasing, is there some special reason why he would not want to purchase? I just assumed that Sandberg was looking for the lowest cost option. I was not aware of the fact you cite that he has ruled out direct purchase.
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.
cprted BucyrusI 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 price of purchase were overall cheaper than leasing, is there some special reason why he would not want to purchase? I just assumed that Sandberg was looking for the lowest cost option. I was not aware of the fact you cite that he has ruled out direct purchase. 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 if Sandberg personally invested money in #261, but I thought the Sandberg group or whatever operating entity it is, has a lot of their money invested in the engine. There was the initial total rebuild, which must have cost at least $500,000, if not three times that amount.
I understand that their lease with NRM cost $10,000 per year over 15 years. Sandberg was willing to renew that lease and invest another $500,000-700,000 in boiler work to certify the engine for another 15 years. So overall, that is a commitment for spending up to $850,000 to operate the engine for another 15 years.
So they are willing to gamble on a major breakdown, which would cost them their investment if they walked away from the engine rather than repair it. I don’t know if that original lease obligated them to the full 15-year term for $150,000, or whether they were on a year-to-year basis, and not obligated to the full term.
With this recent negotiation, the NRM wanted to raise the lease price to $25,000 per year, and reduce the lease term to 10 years. The deal breaker was the 10-year term. Sandberg did not want to invest $700,000 in boiler certification work good for 15 years, and give a third of that investment away by returning the engine only after 10 years.
I don’t know if he would have accepted the new lease price of $25,000 per year if he could have gotten a 15-year term. If so, he would have paid $1,075,000 for the next 15 years for the lease and boiler recertification. If he bought the engine today, that price would be $925,000 for the next 15 years.
When the lease negotiations broke down a month ago, NRM was asking $800,000 for the engine, whereas today they are asking $225,000. Assuming there is a relationship between what NRM thinks the engine is worth and what they want for a lease, it seems strange that they killed the deal by asking so much for the lease, and then turned around and cut the sale price by 72%.
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.
C.B.&Q 5629 4-8-4 in Golden,CO
C.B.&Q 5633 4-8-4 in Douglas,WY
C.B.&Q 5631 4-8-4 in Sheridan,WY
Santa fe 2912 4-8-4 in Pueblo,CO
Santa fe 3765 4-8-4 in Wichita,KS
and many others.Both the SP 4449 and the SP&S 700 are owned by the city of Portland and the city will lease you one of the locomotives for I believe around $5,000(not sure if that is per trip,day,or whatever).Of course you would have to pay for the cars,insurance,fuel,crew,etc.
Thomas 9011 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.
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....
Your friendly neighborhood CNW fan.
Thomas 9011 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. C.B.&Q 5629 4-8-4 in Golden,CO C.B.&Q 5633 4-8-4 in Douglas,WY C.B.&Q 5631 4-8-4 in Sheridan,WY Santa fe 2912 4-8-4 in Pueblo,CO Santa fe 3765 4-8-4 in Wichita,KS and many others.Both the SP 4449 and the SP&S 700 are owned by the city of Portland and the city will lease you one of the locomotives for I believe around $5,000(not sure if that is per trip,day,or whatever).Of course you would have to pay for the cars,insurance,fuel,crew,etc.
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....
http://www.261.com/generations.cfm
Because I wanted to let Sandberg do it. Today, I rest my case.
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.
Jim
Modeling BNSF and Milwaukee Road in SW Wisconsin
I'm shocked and dismayed by how staggeringly expensive it is to do a steam engine overhaul.
aegrotatio I'm shocked and dismayed by how staggeringly expensive it is to do a steam engine overhaul.
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."
aegrotatioI'm shocked and dismayed by how staggeringly expensive it is to do a steam engine overhaul.
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.
John
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 to be done by a certified welder.Certified welders are in ample supply and can be hired for under $20.00 a hour.Yes there is specialized jobs like hot riveting that not too many people know how to do.But there is alternatives to that.A firebox or smoke box can be welded to the boiler instead of riveting.Same with the tenders.You can weld everything up.The firebox could not be modified and replacing that would be very expensive.
If you have the time look into industrial auctions.I have seen 1" thick plate steel 10 feet long and 10 feet wide go for $100 dollars a sheet.If you bought that from the stell mill it probably would have cost you $5,000 dollars.Any foundry can make a spare part from a blue print.That $25,000 dollar air pump from the steam locomotive supply store can be made at the local foundry for 900 dollars.Whistles,bells,guages,headlights,and everything else can be found on E-bay.
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.
Thomas--
You raise some potentially interesting points. There are several "howevers" in there, however.
Any welder CAN weld two pieces of metal together. However, I wouldn't want just any welder doing fabrication work on a bridge span for me unless I knew he was more than qualified to do the weld properly and not create a stress riser location in a fracture critical member, for example.
Many old parts can be re-used, so long as they are not safety critical items. That is what most museums are good at doing. That's called "authenticity" that all good foamers drool for. But even for the sake of authenticity, I doubt if anyone would use hot rivets in place of modern bolts for most things.
I'm sure money can be saved, but that should not be at the expense of safety. Throw in the odd new regulation here and there that did not exist in the prime days of steam and you start adding dollars fast.
I don't know anything about the operation or staffing they have working on 261, but I would be surprised if it is terribly large. I used to live in the Twin Cities and would often go by their building in North Mpls. I may have to get back there and join the fun some time.
Restoration of the 261 is looking for donations. Pictures of the work in progress.
Tourist Railroads
TheRailroadNation
R.N.C PEACE :->
Nice 261 coverage in today's St Paul Pioneer press
http://www.twincities.com/localnews/ci_15562933?nclick_check=1
I use Fire Fox, and it takes me to secure cs.trains and says it can't locate the server.
May be temporary problem...
About getting work done more cheaply, and materials, too, the problem arises with insurers who will underwrite the restoration and subsequent use of the engine. If you don't mind premiums of $2M/annum, then you will be just fine, provided the insurer is on the up and up. But if you wish the enterprise to sustain itself and to run insured, the underwriter will want certain standards met. That is where it gets more tricky to have work done...work that can be certified, and metals from approved suppliers.
MarknLisa Nice 261 coverage in today's St Paul Pioneer press http://www.twincities.com/localnews/ci_15562933?nclick_check=1
Guess they never heard of a drop pit.
Or the fact that other railroad museums have refurbished drivers in the last 40 years.
Tom,
They do not have a 'drop pit' there, and I suspect BNSF does not have any at Northtown Yard. The NP did have a drop pit at Mississippi St Eng Shops, but that is long gone.
Where the drivers will have their tires renewed is about 100 yards from their location. UP may have the only drop pit that is deep enough to handle those 74" drivers!
TomDiehl Guess they never heard of a drop pit
Guess they never heard of a drop pit
"In the heyday of steam locomotives, this type of work was done differently and more simply. The engine stayed on the tracks and it was moved onto a "drop table," which lowered the drive wheels into a pit where the work was done. The pits have long been filled in at Minneapolis Junction, requiring the cranes to do the job the hard way. "
The majority of both big and small railroads have drop pits where they drop wheels and traction motors from locomotives.There is enough room for a 74" driver.Modern locomotives have 36" and 42" wheels.If you include the traction motor attached to the wheel you will add at least a foot or two.Of course the drop pit design gives you a few extra feet beyond what you need when removing a traction motor.I have seen huge drop pits big enough drop a entire 6 axle wheel assembly on a SD40-2 all in one move.Many railroads including class ones will do contract work on locomotives.They would drop your wheel for you although I have no idea what that would cost.
The SP 4449 used the shortline Portland and Westerns drop pit when the needed main driver bearing work.Photos are here.
http://4449.com/03photos/index.html?albumid=5431727061522064737
MarknLisa Nice 261 coverage in today's St Paul Pioneer press http://www.twincities.com/localnews/ci_15562933?nclick_check=1 ( broken link)
http://www.twincities.com/localnews/ci_15562933?nclick_check=1 ( broken link)
Hopefully this link will work now: http://www.twincities.com/ci_15562933?IADID=Search-www.twincities.com-www.twincities.com
Our community is FREE to join. To participate you must either login or register for an account.