In the last several days we have had a couple of threads, specifically,

Price of Preservation- 1913 Baldwin 0-4-0 75K in which someone says… I can't speak directly for the WK&S, but I have already been involved (at two arms' lengths) with proposals to bring newer/replacement power to the WK&S. Just rest assured that they are working towards the long-term goal of "fresh" motive power. I would agree that this would be a handsome potential acquisition, if only it were cheaper and closer. The bold being my addition…

Separately we discussed the Price of Preservation-Specifically F Units 275K?

So, are we all bottom feeders?…

In the collectors car market, Ferraris currently start at about $75,000 for a decent Dino Fiat… (It isn’t a true Ferrari, as it only has a 6 cly engine…) about what is being asked for the 0-4-0.

275K will just about buy you a Daytona hard top, the entry level for private Ferrari collectors. But it will buy you a locomotive capable of hauling a dinner train.

Why do we expect a 50 ton steam loco to cost less than a car?

Yes, and we have trouble spending maybe $8K to acquire, move, and house (in a pole barn) an historic 100 ton freight car. Or you could spend that same sum for a rusted out, unreliable, used car POS.

Hard to relate cost and value in a discussion like this.

Bob Kutella

It may be a matter of utility, fungibility, and ownership costs. The Ferraris you cite can be operated on the public highways; they do not require a specially equipped private right of way. While undoubtably a collectible, they also can be used to provide essential transportation for the owner. There is also a sizeable market for them, so they are a passable investment. Finally, they can be housed in the garage of a residence and at least receive "running repairs" on site. Locomotives require their own expensive, specialized, facilities.

Finally, bored rich people buy Ferraris beciuse they either enjoy the thrill of driving them or to show them off, or more likely, both. Alas, locomotives have no such cachet.

What first came to mind when I read this thread... Opportunity cost
Most of the organizations that we speak of or are involved in here, work very hard for a modest income - it is not easy to fork over $$ that might equal years of revenue. I don't mean to say that car collectors don't work hard - but it seems most have more financial resources (deeper pockets) than we do.
Throwing this out there - I wonder too, if the fact that they are 'collecting' the equipment simply for ownership, not necessarily for revenue has a lot to do with it. After all, many operations, much of the time, need to expect some sort of return on equipment or facility investments - which is difficult in this day, with rising labor, fuel, taxes, and material costs - our organizations can't simply collect items anymore.

-Sully

Interesting and hard to explain. Seems to me that a steam loco. is so specialized and so restricted in how/where it can be used and so expensive to bring into life and maintain that these factors severely restrict the potential buyers.
As mentioned above a collectors auto can be driven,shown off,garaged at home etc.,etc., and since there's lots of others interested it will probably appreciated in value over time.
When we attempted to sell C&O 614 in 1999 we advertised in some of the slick magazines that cater to the super rich on the chance that someone who had all the other toys might want to add a first class mainline steam engine to thier stable! We actually got several serious inquiries but when they learned the realities of what it would take to gain track access they passed and I can't blame them.
I'm afraid the facts are that the market for steam locomotives is extremely limited and that's not going to change!
Ross Rowland

Earlier someone mentioned that buying a steam locomotive might just be the cheapest thing about owning one. True enough, just like owning horses.

What I thought was interesting and a lot of homework would have to be done on the little engine, is the work already done. If one was serious about finishing the restoration and had a use for it, it might not be the worst deal around. If the work was done by non professionals and most of it had to be done over which happens quite often, maybe not. With the cost of rebuilding drivers/axels, boxes, running gear, half the cost of restoration is done already. The big "IF" from my point of view is who did the work and will it pass muster? The road to hell is paved with good intentions and locomotive repair is gold plated in more ways then one. For the owners and engines sake I hope the already done work is top notch so one day this cute little engine has a better chance of running again.

If I had the money I would be taking a close look at this one simply because of the work already done. Collecting things and justifying cost is a personal thing, hence the addage " one mans junk is another mans treasure". It would be a chunk of change to invest in a switch engine though. "But if I had the money.........."

Cheers, John.

Ferraris are chick magnets... locomotives are not. 'Nuff said ?

A person has to know and love steam to realize its potential. The money to maintain a locomotive is enormous, not to mention the preventative care that comes from burning an acidic fuel. If you own a Ferrari and have the expertise, you can tinker with it at will, or better still, hire some other guy to do the grunt work some you can simply enjoy the play value. Locomotive require far more equipment and infrastructure. Throwing a tarp over a 4-6-2 until your brother-in-law comes over to help you fix it some Saturday just isn't an option.

There are a few private collectors with estates and a narrow gauge locomotive they rebuilt on their own, but they are few and far between. It strikes me this little 0-4-0 is exactly the elegant creature a club or privately financed venture would thrive on.

Many of the car collectors do so with an eye toward eventually selling it at a profit. Now by collectors, I mean the folks that ride on down to Barrett Jackson type auctions and spend more money on a car than I make in five years. I do not mean the guy (like me) who buys a wreck, and rebuilds it as time and money allow. Sort of like so many of our museums. (And yea, I finished my 1963 Fairlane 500 hardtop and made it out to a few cruises before it got too cold. A four year endevour.) But in many instances, just buying the wreck and moving it is more than our museums can afford.

Sadly, we have chosen a very expensive hobby.

Maybe we could get Jay Leno interested in trains!

Later!
Mr. Ed

Oh, he's already quite interested in trains...... but only in Amtrak (and, by natural extension, any railroad) as the butt of way too many exaggerated and unfair jokes about wrecks. (Anyone remember the "commercial" for an Amtrak toy train set with "authentic" wrecks and disasters, complete with a bonus "train clock" that caught fire on the hour?) Rush Limbaugh treats the Clintons more kindly than Leno treats/treated Amtrak, seriously.

There are plenty of dreamers around, most of whom fail to realise said dreams because they are so far detached from reality that they seem to be on another planet....

Recently I've had two emails from people who claim to be seeking a standard gauge Garratt to restore/operate, possibly in the USA, one was from the USA and the other was an AOHell address. Given that neither had managed to find the four listed on my website I class both mails as being from or sent on behalf of total nutters.

If they could afford it (unlikely) I don't think that the Australians would want to sell.........

I think most millionaires go yacht racing - more of a babe magnet ( and the showers are free).

So, are we all bottom feeders?…

Since it seems the intended points of the posts weren’t clear, so I will try to make them clear (and hopefully polite and civil). In some respects, however, others have clearly latched on to the issues that I intended to provoke discussions about (fungibility, opportunity cost, the difference between price/cost/value) so thanks to Mr. Risley, co614 and Thirdrail.

While these posts weren’t intended solely to get everybody to get their scratchpad/10 key/ Excel worksheet out and begin counting beans, based upon the number of failing and for sale tourist roads, languishing or interrupted restoration efforts (not all of which are in Pennsylvania), locomotives withdrawn from service, offered for sale for interminable periods of time and then withdrawn from sale, etc, its apparent that a good many operations are operated long on initiative and fervor, short on economic realism. As an adjunct testimony to the thin reserves of this game, even when “stuff” is provided gratis, transportation costs often seem insurmountable or to be major considerations.

A few places are making explicit and sound economic decisions or at least trying to do so. I think Aarne Frobom provided among the best public discussions of this ideal (and a taste for the difficulties in estimating the less certain costs) in an article in Trains about 10 years ago, I think “sustainable steam” was in the title.

Obviously we all know an enterprise or endeavor needs to earn its keep and that this concept is at its heart, as inescapable and quantifiable a calculation for finance and management as one involving the law of gravity is for an engineer. Of course, unlike mass and acceleration due to gravity, the numbers aren’t independent of human factors or as clear in the windshield as they are in the rear-view mirror, especially on the revenue side of the ledger. Although there is a somewhat disturbing proposal to eliminate the term "net profit" from the nomenclature of accountancy, it is still the best measure of "true north" in business, even with the advisory “earnings are estimates, cash is fact” kept in mind. I suspect it will survive for decades in internal reports and in the popular lexicon, even if it’s officially banned from annual reports.

A good part of the difficulty with ex ante financial estimations of alternatives is estimating opportunity cost-the hidden cost of pursuing one alternative over another. Using the “right” asset can contribute to revenues or reduce costs or both and can be the difference between profitability and insolvency. Still after the fact, there won’t be a line on the expense side that says “costs attributable to management’s choice of acquiring 0-4-0T over 2-6-0” Worse, this is different for every purchaser. Perhaps that’s why economics-whose insights, inferences and directives drive sound financial decisions-has been referred to as “the dismal science”.

Still part of the decision is acquisition cost. The value to your operation is driven by an uncertain calculus of how useful will the equipment be on your line, attractive to customers, easy to use, etc. The physical characteristics of your line are among the most fixed operating constraints and the most important with steam. Sure getting or having an engine that ran on your line years ago is great, but perhaps a “foreign” engine would be better suited to operations or more attractive to the public. Ross hit on this point succinctly in his post.

For example, would it make sense to get a prettied up pacific with 80” inch drivers at Western Maryland Scenic? Maybe it would be ok with three coaches on a dry day, but maybe for the same coal and water you can put more revenue paying butts behind the tender. Assume another opportunity, lets say at the start of the operations there you had your choice between the LS&I consol and a real WM pacific-now what makes the most sense? All other things being equal I think I could make the case that the consol is the better engine with its low end lugging power and the fact that there’s a turntable in Frostburg as primary determining factors.

Not everything is going to be saved; even less will be maintained operable and we can assume at some point everything that is saved will become inoperable, due to a lack of parts or lost arts. The question is how can preservation efforts produce maximal results? What can be saved?

In a situation where an asset is “fungible” (indistinguishable/interchangeable with others) and actively traded, you can be sure the laws of supply and demand ensure the price is probably reasonable and fair and a good indicator of value to the purchaser. In the case of historic locomotives a “fair” price can only be inferred through comparison with alternatives that are most the most imperfect substitutes. In many cases a locomotive is a unique asset that will have a very few potential buyers, because the best use will be possible only in a limited number of places. What I’m trying to drive at is that with limited (non-existent) capital, we who harbor grand dreams should give consideration to acquiring assets that fit the situation and provide the best chance for success, getting the ”right” machine at the right price, not just going after the grand or glorious, instead engaging in “rational capital allocation”.

What I’d like to promote with these posts is not cost obsession, but an increased consideration of the “art of the possible”. The first step is promoting thought and discussion. If somebody thinks, hey you know that engine that might be just what we need, well all the better. Acknowledging a need and identifying a best available option would seem to be the first step in developing a conscious fundraising and capital deployment effort.

We did an analysis for our strategic plan that estimates a five-year timeline for restoration to operation for a double truck car at $250,000 - $500,000 in a combination of paid and/or in-kind volunteer services. This was based on our experience with restoration of JTCo 352, TARS 678 and CTCo 27. Given our backlog of restoration projects (two PCCs, a single truck car and a double truck center door), we are very careful when considering the accession of any additional "unfunded liabilities" in the form of another needy car or carbody. Even if we were to limit the above projects to restoration for display only there is still a significant investment in time and materials.

The above model does not include the cost of providing secure indoor storage and transportation for a new acquisition. I recall a legend that at one time IRM required a dowry up front for any acquisition to provide for storage.

At any rate, I'm sure you could do the same ballpark calculations for that CV coach, the 0-4-0, and anything else that we are urged to hurry up and save.

Wesley

"The above model does not include the cost of providing secure indoor storage and transportation for a new acquisition. I recall a legend that at one time IRM required a dowry up front for any acquisition to provide for storage. "

Wes, sort of. We do require some funds or guarantee of same for TRACK SPACE since almost four miles of yard tracks are full of collected cars. That does help diminish the relentless appearance of hulks, although sometimes you might wonder. We also raise funds for new buildings that way, for our pole barns. Those are not the permanent steel and masonry structures we might dream of, but are (relatively) affordable and do provide for 30 years (or more) of protection from the elements.

Costs are not fully spread over the needed infrastructure, as the museum also contributes part of this, and we do not allocate all costs, such as land values, to carry it to an extreme. For a 40 foot car, the TRACK donation would run about $3000 and INDOOR space about $6000. The first is required, the second optional to get Board approval on a new acquisition.

For recent cars I have sponsored I have worked very hard to include both these items in the planned fundraising, and have been succesful on most. It is a start and I believe money better spent than on a quickie paint job to make appearances better, while not addressing real deterioration. CONSERVE and STABILIZE are two words seldom used in our preservation community.

Bob Kutella

Chicks will cost you more in the long run than any Ferrari or locomotive if you attract the wrong one.