She is listed at "sale pending" on the Sterling website. Cost $225,000

http://www.sterlingrail.com/547/class.php?id=107

Yep, you're correct. Never happen. I guess I was just in LaLa land, and not in snowy Minnesota, when I made than comment.

Is an important activity of the National Railway Museum the sale of Holiday cards and personalizations to commercial business mailing lists? Do they need more money to finance this important activity and its increased postage costs?

Railroad museum director resigns

ASHWAUBENON — National Railroad Museum Executive Director Michael Telzrow has resigned to take a position in Madison.

Telzrow's last day will be Feb. 26. His new position will be director of the Wisconsin Veterans Museum.

Telzrow was at the railroad museum for about 3½ years. He said the search for his replacement will begin almost immediately.

Telzrow was honored last week by the Green Bay Area Chamber of Commerce as one of the 20 + 10 People You Should Know in
2010


http://www.greenbaypressgazette.com/art ... 1207/GPG01

I enjoyed a visit to the NRM/Green Bay a few years ago. I found it to have much better than average museum displays (models and railroad paraphenalia) in the main building you enter. The primary equipment display was a bit less engaging, it was more an improved barn experience. I wondered why there was this huge vacant space which could have been used for equipment storage, however it quickly became clear that this was used for parties.

Some unique pieces of the railroad collection had not seen significant attention in years (the narrow gauge shay comes to mind) while other areas were heavily managed.

Looking at the museum's current event calendar, there are 13 private parties or events, 5 events of non-railroad focus, and 7 railroad fun or history events.

There were certainly improvements over time, though I think you could see where the focus was placed.

I have a basic investment question:

If someone bought #261 for $225,000 and leased it to the Sandberg group at a price and terms that they could accept, how good or bad of an investment would this be for the buyer paying the $225,000?

I do not know whether we know exactly what lease price and terms the Sandberg group would accept, but I am guessing that it may have been approximately revealed through all the discussion about this deal.

After Sandberg's experience with the Green Bay museum as a lessor, I've no idea what terms and conditions they might find acceptable. Let me ask you this, though: Would YOU be willing to put $500,000 to $700,000 into a leased asset that you KNEW from experience was a "break even" operation at best? Sandberg's passenger car fleet subsidized the operation of the 261 its whole career.

Well I would not, but I thought that Sandberg was willing to do just that if he could lease the engine for the right price and terms. If a third party buys the engine from the museum, he is free to set his own price and terms for the lease to an operator.

My only question is this: If a new owner of the engine set the lease price and terms low enough for Sandberg to accept, could that new owner come out on his $225,000 investment in the engine?

$225,000 over 15 years is $15,000 yearly. Of course that means you are forgoing the interest on the principal, but that could be written off, depending on how the deal is structured. If the lease was renewed to 30 years then the second term creates profit. Don't forget to add rental income taxes as an expense to the lessor.

Hard to believe the price has dropped to this from the original 800K I thought was quoted. Still, without a carded boiler, it's just a large lawn ornament.

Michael Seitz
Missoula MT

I understand that the original lease price was $10,000 per year with a lease term of at least 15 years, and that if the lease were renewed for that same price and term, the Sandberg group would have been willing to continue leasing the engine and invest in the boiler work. However, the museum wanted to raise the price of a new lease to $25,000 per year and reduce the term to 10 years.

It sounded like the deal breaker was the reduction of the lease term from 15 down to 10 years. Suppose that a new owner of the engine were willing to lease it for 15 years at $17,000 per year. Based on what has been revealed during the recent negotiations, does anyone have an opinion as to whether that price and term would be acceptable to the Sandberg group?

If it were acceptable to the Sandberg group, does anyone have an opinion as to whether it would be a sufficient return on the $225,000 investment of the locomotive buyer? The buyer would recoup $255,000 over the 15-year term and still own the engine, but it would then require more boiler work.

The deal breaker, or at least the most obviously significant one, was the 10 year lease versus the 15 year lease. In simplest terms, the FO261 group didn't see a value in putting the time/energy/resources/etc into the standard 15 year overhaul, and then potentially face having to turn the engine back to it's owner with basically a third of the "available" time left from the overhaul.

My own opinion, for the very little it's worth,, $225,000 seems like a relatively small amount of money. And I'm the first to realize that's purchase price, there's lawyers, insurance, god knows what else, plus transport, storage, etc. In a world of mult-bazillion dollar athletes, celebrities, etc, the amount seems like a drop in a bucket.
(Speaking solely as a wanna-be mult-bazillionaire celebrity of course !)

PS - No facts currently back up the rumor which suggests the former director of NRM in his new role will be looking to sell World War II (don't offer to buy it now, he'll discount the heck out of it over the next several months !)

Second quick followup (re Olin's comments about the narrow gauge Shay at NRM)

Is this not the basis for the very successful Bachmann Large Scale Shay locomotive model (the first one) ? Seems a shame that so much commerical success may be acheived at least in some small part on the backs of such an organzation's efforts for preservation,, without some sort of monetary gift to help ensure that same item remains for years to come. (And apologies if that has occurred and not public knowledge !)

John,

Six years ago an offer was made to the board of the NRM to purchase this Shay, and the terms were agreeable to the GM of the museum and a majority of the board. Three members of the board, however, felt strongly about it leaving, so the majority agreed to table the sale for six months to give the minority the chance to come up with funding and a restoration plan for the Shay. Not only did the minority not come up with funding or a plan, but the board decided to not "untable" the measure, much to the chagrin of the potential purchaser. The 261 situation is not the only case of "does not play well with others." And the Shay remains a disgraceful skeleton in the side yard of the museum.

I too am surprised that the asking price for #261 has dropped from around $800,000 to $225,000. It seems like this should have a profound effect in improving the likelihood for a new lease agreement between the museum and the Sandberg group.

If the Sandberg group were willing to spend up to $700,000 for new boiler work if the original lease were continued, why wouldn’t they now just spend another $225,000 to buy the engine outright? They were willing to spend $150,000 to continue the existing lease. So the whole near-million-dollar-deal seems to be hung up over $75,000.

Just the view from the worm hole here... The whole near million dollar deal seems to be hung up over a lack of good faith on the part of NRM. We have no idea what effect the departure of the executive director will have on NRM's BoD, or Mr. Sandberg's view of them. But if good faith doesn't exist, it's not likely a deal can be struck.