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My final word on bread and circuses, New Space style July 6, 2006

Posted by Thomas Olson in Uncategorized.

While it has been an “enlightening” conversation of late, regarding the philosophy and economics of that-which-we-will-NOT-call-spaceports, it has reached the point where there is a definite risk of going around in circles (as NASA has for decades) to a place of marginal utility. So I purport to make my final case here, then move on to other topics, as there are so many to discuss in the kool-aid universe.

I also find it interesting that someone who admits to “not being a rocket scientist” – and presumably not an economist, academic, investment manager, or serial entrepreneur, either – attempts to “defend” the efforts of people like Peter Diamandis, Eric Andersen and Sir Richard Branson, without any real knowledge of their personal or business motivations for doing what they are doing. (In fact, if I were they I would not presume the need for such a defense, and would say so in no uncertain terms.)

Having said all that, I believe there is only one place where alt.space or New Space, as it were, can truly add value and make the ultimate human expansion into space possible, and that is “CRATS”: Cheap and Reliable Access to Space. If that is not achieved, all the theme parks in the world will amount to nothing. I also submit that building lots of “spaceports” without certified “spaceships” to fly out of them on a regular basis could ultimately backfire on promoters and their investors. Those investors – assuming they’re private – will be loathe to invest again, the industry will fail (again) to gain credibility, and yet another generation’s time and energy will have been wasted going down a false road.

I’m 52 years old. I’ve already waited over 30 years for CRATS – if I have to wait another 30 I’ll be investing in biotech and nanotech (but NOT alt.space!) simply to keep me alive and healthy long enough to finally see that day. (There are people who insist that the technological capability for CRATS is already available, and it’s just a matter of getting rid of what is perceived as political, bureaucratic and budgetary constraints – but that is a topic for another series of posts – for now I’ll just refer you to what I call the “three doctors paper“.)

Moving on, I have to say that this quote floored me:

“But I don’t see how theme park spaceports can hurt provided we do not expect too much from them.”

[snark] Yes, “Mr. Bill”…I’m certain Diamandis, Branson and Andersen said that very same thing in their business proposals to take taxpayer’s money in NM, Dubai, and Singapore [/snark].

But seriously – I’d bet potential investors in those theme parks – taxpayers in particular, who are involuntary – have a LOT of expectations for them, based on the hyperbole being pitched by the promoters themselves. They have been told to expect oodles and oodles of money flowing in through lots of repeat business.

What is the promoter’s and pol’s plan to pay back the tax money to the people being forced to subsidize these operations? There isn’t one, because being a taxpayer means never having to receive value for their money, and being the politician who spends it means never having to apologize to them for throwing it away – they instead try and use it as a lever to higher office. (NM Gov. Bill Richardson, in particular, has Presidential aspirations, or so I’ve heard.) They just wave their arms and claim all that increased tourist activity will magically generate lots of taxable income to more than make up for the tax dollars being re-routed from other programs. That’s going to be a big issue in NM in particular, which is technically one of the poorest states in the US. I haven’t seen a definitive study verifying this, however.

No, going back to an earlier analogy, we should forget Tin Cup (which was an eminently forgettable film, in any event), and look instead at a Kevin Costner classic that unfortunately fits the alt.space world all too well – Field of Dreams. Most New Space companies’ business plans are distilled directly from the major tagline from that film: “If you build it they will come”. Even the most optimistic prognostication from the Futron study stated that, 15 years down the line, they, in fact, would not come, at least not at a rate sufficient to keep even one dedicated launch facility going at the level of the smallest terrestrial airport capable of handling a 737 or better.

“Mr. Bill”, however, continues to insist that these very low flight rates don’t matter – it’s just the entertainment value that counts, and that’s what will (somehow) keep people coming, to ultimately subsidize further R&D and pay back the poor taxpayers of NM. It ain’t necessarily so. Let’s go back to school, specifically Econ-101:

All risk capital – even capital stolen from taxpayers – has both an intrinsic and opportunity cost associated with it. The intrinsic cost is either straight-up interest for a banker, Return On Investment for venture cap, or net tax dollars funneled back into the system via increased taxable economic activity at the site – in the hopes that more comes in, net-net, than was spent out. The opportunity cost is an analysis of how well one might do investing in this particular opportunity as opposed to other competing opportunities, i.e., “what else may I be missing out on?”.

The amount of capital out there – whatever its source – is limited. There is competition for that capital by businesses large and small who already understand how to turn a decent buck in established growth industries. If I have $100 million to invest, and I have to choose between a space theme park and the next generation microprocessor which has 100 times the speed at one tenth the heat output, what do you think I’ll pick? A veritable minefield of a new industry with no track record and fraught with unknowns, or something where the market, customer base, and path to profitability is well understood?

Five so-called “spaceports” are being built when not a single commercial spacecraft has proven itself, let alone received an AST launch license. If you stick with the theme park business, however, you’re now back in the Real World, a la The Matrix; in other words, you now find yourself in heavy competition with a LOT of other theme park chains who have have their marketing turf staked out quite well, not to mention cheaper rides. While there may be a lot of traffic initially due to the “novelty” value, it going to take a lot more than “build it and they will come” to keep customers coming back. Why? Because theme parks suffer another challenge: “seen one, seen ’em all”. It costs a lot of money, creativity, and advertising to keep things fresh and tourists encouraged to return. Kids in particular outgrow things quickly.

I haven’t been to Disneyland since I was 17, and was forced to shepherd my sister around. I took my daughter to Hershey Park when she was 12. Now she’s 17 and would rather drive to Idaho with her friends to see the Red Hot Chili Peppers concert. Theme parks? Mickey Mouse? Fuhgedaboudit. Experiencing space tourism from the sidelines, which is what this is, will, like extreme sports, be done once or twice for the experience. Then, “Mr. Damn, Mrs. Damn and the whole Damn family” will go find something else to waste their 2-week vacation on in future years. The more adventurous will eventually tire of watching things from the sidelines, and will grow frustrated that the costs of the Real Thing haven’t come down far enough to get within the Damn Family’s budget.

Can the “Rocket Racing League” generate the interest, crowds, ad revenue and aftermarket sales as NASCAR? I will submit a qualified “no”, for one reason – you can drive a NASCAR vehicle yourself, or mod something similar in your own garage, if you have the tools and desire. Ergo, people know they can go along for the ride if they wish, but are content for now to live vicariously through Dale Earnhardt, Jr. How many people will be building rocketplanes in their backyards? There is an initial “ohhhhh-ahhhh” factor, but it will once again wear off, just like Apollo and the Shuttle, as people realize this will never apply to their own lives and within their own budgets, any time soon. The “qualification” however, is that it’s probably not the promoter’s primary goal to make as much money/recognition as NASCAR does – perhaps only a small fraction will suffice to keep interest up, and development/sponsor dollars coming in.

Given that theme parks may not make the nut…space tourism itself definitely won’t drive enough traffic soon enough to make a difference…so again, why is all this necessary, and how is it going to pay?? And before anyone tries try to lecture me that some taxpayers are in favor of subsidies to businesses – like building new ballparks to keep the major league team in town – those voters actually had a say in the matter on an actual bond issue at the ballot box.

Again, quoth Mr. Bill: “…should we hold Diamandis and Branson to a higher ethical standard than the NBA, NFL and major league baseball?”

Well, perhaps we should, actually(!) – but more to the point, the taxpayers themselves are now holding their own city governments to a higher standard. In the late 1980’s, the owner of the San Francisco Giants, Bob Lurie tried twice to convince the voters of that fair city to subsidize the construction of a new ballpark at China Basin. The measure failed both times. But despite veiled threats, the Giants never left town. Ultimately a new China Basin ballpark was finally built, in 2000, but using private money. This has now become a curse for other baseball franchises seeking taxpayer help to build new ballparks in their towns.

However, nothing is mentioned about public plebiscites in any of the currently proposed “spaceport” areas.

The last thing that I thought was a bit over-the-top was this line: “…doing a makeover of a Lear-jet so it can fly in space is wicked cool…but no one should pretend that a made-over Lear-jet is on the critical path to anything more significant than an awesome episode of Monster-Garage.”

That statement is just so wrong on two fronts: (1) the people at Rocketplane, who are leveraging millions to make their vision a reality, may not think of their efforts in that vein (and, like Peter D. and Sir Richard, may not appreciate someone like this as a self-appointed defender); and (2) we shouldn’t think of anything in this area as “wicked cool” until the builders have proven it won’t wickedly kill people right off the tarmac. Hyperbolic press releases notwithstanding, rocketry is a dangerous game, with a very real risk that someone will get maimed or killed in the process. Death of paying customers in a fireball or a crumpled fuselage is not “wicked cool”, especially if one of those customers is friend or relative of yours.

Those promoting and attempting to build these theme-park-hybrid-space-carnivals may succeed very well, and God bless ’em if they do. They will take whatever tax subsidies they can get, as that is free money, and they have no responsibility to those taxpayers once the thing is built – if the traffic and increased tourism doesn’t pan out in the long run, the pols will take the heat, but the promoters will cash in – maybe.

However to me, such projects are nothing more than a bread-and-circuses distraction. I’ll probably be a customer myself this year, at XPrize Cup – nevertheless, I’m not in any way convinced these projects will seriously do much to help make CRATS a reality – and CRATS will be the only real legacy of New Space that will be worth writing about, to future historians. Fail in that, we fail everybody.



1. Bill White - July 6, 2006

So then, what revenue source do you propose NewSpace tap into?

2. oldspacecadet - July 6, 2006

In short, military is the big one and biomedical is the smaller one.
The USAF has been begging for reliable space launch capability on short notice. Both DARPA and USAF have been funding small scale projects related to this goal. These agencies are reluctant to commit significant money to small groups of alt.spacers on the say so of those same alt.spacers. As a taxpayer, I consider their reluctance to be prudent. Track records need to be developed over time with projects to increasing magnitude to demonstrate both managerial and technical competence.
I commented on the potential for tissue engineering in space in a previous blog. The people who sign the checks demand reliable timelines for the experiments. That does not mean “We will launch your payload next month, or maybe next year, or possibly in 2 years.” That may work for some academic programs (who are generally underfunded), but it simply won’t work for big pharma. They won’t do the experiments instead of trying to do them with uncertain and unreliable timelines. Solve the problem and convince the biomedical science community in a credible fashion that the problem is solved and you are on your way to getting rich.
Web sites that say “we offer cheap rides to space” won’t do it unless there is a history of actual launches to back up the claim.

3. Shubber Ali - July 6, 2006

It’s not our job to tell people what they should start companies in.

What we are attempting to do is give them the critical analysis tools they need so they don’t waste time setting up companies in kool-aid stands.

We also endeavor to help the potential future kool-aid stand investors recognise the sugary substance for what it is – and if they still wish to invest, it’s their coin.

4. Bill White - July 7, 2006

What we are attempting to do is give them the critical analysis tools they need so they don’t waste time setting up companies in kool-aid stands.

This is a most worthy endeavor, indeed.

That is why I was surprised to see an analysis of “spaceports” that assumed a single revenue source, the ticketed passenger. A burger joint might lose a tiny amount of money on every hamburger sold but if soft drinks are selling at a 120% mark-up the entire operation can still be profitable. Failing to take this into account undermines your otherwise laudable cynicism.

George Steinbrenner ran the NY Yankees at a paper loss because he gave his cable TV company an amazingly good deal on the cable TV rights.

As for New Mexico, the Las Cruces region is pretty bleak from an economic perspective. Is a spaceport a good idea? I’m not sure having not done the due diligence myself. However in my town we had a multi-year debate about a public financed parking garage and the issues appear much the same. If it draws in enough tourists (like me) it will be a good idea. If not, well then, no – – its a bad idea.

And yes, this business model has almost nothing to do with “becoming spacefaring” as a species. But so what?

= = =

As for theme parks, I agree with this comment 100%:

While there may be a lot of traffic initially due to the “novelty” value, it going to take a lot more than “build it and they will come” to keep customers coming back. Why? Because theme parks suffer another challenge: “seen one, seen ’em all”. It costs a lot of money, creativity, and advertising to keep things fresh and tourists encouraged to return. Kids in particular outgrow things quickly.

Therefore, strike quickly and use this novelty to raise the money needed for XCOR to build and test rocket motors that can be started and stopped hundreds or thousands of times. How do we test RLV engines without testing them? If the Rocket Racing League can bring in enough spectator revenue to stay afloat for a few years and those engines are fired up and shut down and fired up and shut down over that period of years XCOR will have a data base and practical experience on how to maintain a robust reliable and reuseable rocket engine.

Or an angel can fund several years of testing at whatever pre-revenue burn rate he can afford. Why would that be better? Space theme parks are a novelty. Use that to bring in revenue to supplement and extend the pre-revenue burn rate for as long as the novelty lasts.

The lander challenge is a similar example. If 12,000 Bermuda shorts clad land lubbers watch Masten or Armadillo test their hopper those guests will contribute revenue to the host (X Prize Cup) which will then be better situated to provide a forum for future events. Why is that bad?

= = =

Biomedical is a terrific possibility for commercial orbital operations. Another club in the bag. 😉

Too many enthusiasts are seeking the one true killer application. Multiple revenue streams will provide the most stability. Today, a media and marketing tie-in simply is the fastest and easiest way to make supplemental money. And that means circuses, whether live or on TV.

Using the bio-medical example, whatever Big Pharma company first leases research space on a Bigelow orbital module would be well advised (IMHO) to sign a marketing deal with Intel (for example) to allow Intel to show TV commericals trumpeting the fact that “Intel Inside” chips run the computers that process the data from the experiments. Intel logos on the equipment sent to orbit could be imaged from on board cameras and used for TV commercials.

Thus, that bio-medical company has two revenue streams. Potential profit from the research AND marketing revenue from its equipment suppliers.

= = =

Finally, I assert that “CRATS”: Cheap and Reliable Access to Space is itself the ultimate Field of Dreams boondoggle unless it is tied to a realistic revenue stream. It doesn’t matter whether Earth to LEO costs $10,000 per pound or $1,000 per pound or $100 per pound or $10 per pound, unless you have a revenue source, there is no commercial viability.

Russian lift is ~$1000 per pound, today. SpaceX intends to match that. I do not see $100 per pound on the horizon.

If we cannot find a business case that closes at ~$1000 per pound to LEO maybe we all need to just go play golf.

5. AmberJane - July 7, 2006

I posted the following argument at Rand’s blog some months ago – i think it applies to the ancillary market of “related tourism” as much as it applies to the core market of actual tourism revenue itself. A startup dependent on a startup’s success isn’t where I tend to invest my spare change.

I read the tea leaves this way: I think that space tourism is an implausible market.

Let me question the idea that space tourism is a plausible economic engine for development. At the moment three people have paid to fly in space with Space Adventures as the travel agent. Perhaps the market for such people is a bit larger than that, but I will assume that it’s no more than ten people.

The reported ticket price is 20M. I’m going to assume that someone in the target market for this service would part with no more than 20% of his or her net worth on average in order to fly. Some people might go a little higher, but the wealthy don’t get or stay that way by spending all their money on vacations. This is consistent, by the way, with Tito’s and Shuttleworth’s net worth – about 200M each. Tito, in particular, from what I’ve read, advises pension funds for a living, and must necessarily be a very financially prudent person.

There are around 5,000 people who have net worths over 100M. And with an assumed market of ten people at that level of wealth who will actually sign up to fly, that’s a prevalence of 0.2 percent.

If you assume further that the price can somehow be reduced, by clever engineering, better management, or new technology, to 200,000 per ticket, you might get more takers. This would put the number of potential riders at 0.2 percent of a much larger base. Using the same net worth proportion as earlier, there are about 500,000 Americans with net worths above 1M. There are thus approximately 1,000 people actually willing to spend 200,000 dollars on a trip to space.

The market being addressed is thus about 200M worth of revenue. I’m unable to see how the investment necessary to reduce the cost of a flight to space a hundredfold can be done for such a small figure.

I see in researching this that there are market surveys indicating somewhat higher numbers. I’m skeptical. It’s easy to tell a pollster, “Sure, sounds like fun” but harder to write the check.

Still, that’s for a ride like the one Space Adventures arranged on a well-tested and flight-proven system – a Russian Soyuz rocket. A ride on a new machine might be palpably riskier, at least at first.

Next, I note that the 200K per flight figure is common in the space tourism community.. but they’re not talking about orbiting the earth, just very brief up-and-down flights offering possibly four minutes of approximate weightlessness. This is a significantly less desirable experience, and I think the demand for it would be correspondingly less. Assuming it’s a tenth as desirable, the market being addressed is probably around 20M, which doesn’t cover the costs even for the Spaceship One effort you linked to, never mind the other rivals in the marketplace.

Feel free to assume different numbers if you like for any of these proportions. I might be mistaken by twenty percent or so, but I don’t think it’s obvious that I’m pessimistic.

If space tourism happens, I think it will be because some very wealthy person with a personal passion for the subject invests in it for his own reasons. But it’s not a business at the moment, it’s a belief. And for theme park style revenues alongside the shaky core business, well.. I’m skeptical.

6. TomsRants - July 7, 2006

(*wheeze, pffffssst*….the Force is strong with this one…)

Score one more for the skeptics. (Hey, c’mon…after writing over 1000 words on this topic, I’m entitled to a cheap laugh, aren’t I?)

7. oldspacecadet - July 7, 2006

amberjane gets it

8. Bill White - July 7, 2006

Jane does get it.

And as I have been saying, NO ONE will be building no spaceport in reliance on passenger ticket revenue. Not New Mexico, nor Dubai nor Singapore. New Mexico is counting on the land lubber tourist revenue coming in from spectators for the X Prize Cup and zero gee parabolic flights and exhibits about New Mexico’s history.

Dubai and Singapore? Its like Pharoahs building pyramids – the value is in the prestige.

Now, this all may very well still be Kool Aid but it is a very different flavor than what was originally asserted.

9. oldspacecadet - July 8, 2006

It is a matter of relative magnitudes. Suborbital space passenger revenues won’t cut it. Why does Bill think that “land lubber tourist revenue” will? I can do a parabolic flight near Orlando and visit Disney World (and stay in a decent hotel). Why would I do a parabolic flight in New Mexico? The proposed spaceport is a long way from decent airports with convenience flight access (El Paso or Albuquerque) or other amenities(Albuquerque). If I want to soak up the culture of New Mexico, there is Taos, Santa Fe, and Albuquerque. The infrastructure to support these postulated ancillary activities do not exist within convenient distance of the “spaceport.” Building a resort hotel needs a more generalized attraction than the space-related activities Bill proposes to generate a decent return on investment.

Amberjane suggests a total suborbital market revenue of $200 million. (She may well be high on that estimate.) She then doubts that that revenue will support the R&D to significantly reduce the cost of space access. I agree. Also, investors are stuffy about wanting a return which is another stress on revenues.

Bill suggests that a quick strike will get the money that will allow XCOR (his example) “to build and test rocket motors that can be started and stopped hundreds or thousands of times.” Although I invested in XCOR several years ago, I still do not see a space launch market to support that kind of motor lifespan for a hypothetical space launch RLV — especially since very robust motors have mass penalties compared to one (or even 10)shot motors. I do see the possible use of such motors in specialized aircraft, but I also suspect that the market is very small. (How many Hellcats fly in the Reno Air Races? Reno is much easier to get to and from and has the hotel and restaurant infrastructure that does not exist near Truth or Consequences, NM.)

10. Pete - July 8, 2006

Billions in private/local money is being invested in space ports, new expendable launch vehicles, sub orbital tourism, etcetera. Point remains, the market for space settlement is space settlement. I suspect if these investors had put the same effort into that market as they have into the distractions, then we would have almost had CATS by now. I think few here will doubt the long term economic viability of space settlement, yet this does not seem to be the basis of many new space business plans.

Cheap space settlement infrastructure is every bit as critical a problem as CATS – it is the market after all and you can not have one without the other. Personally I would like to see many more small focussed no frills development companies each tackling a separate part of the problem and all evolving together towards an overall solution. Rocket engines, carrier aircraft, rocket vehicles, small CATS satellites, miniature CATS station modules, orbital tugs, etcetera. This enables the low cost fast development necessary for a robust all sides attack on the problem of CATS. Also, in this fashion the payback can be just as fast as the distractions, and being on the critical path they are more likely to retain their relevance and so are lower risk. Unfortunately all the major groups seem to be trying to do everything at once all by themselves, resulting in very high risk long payback development that typically loses its focus and fails. Everyone wants to build a 747, no one wants to build a Wright flier, let alone just the engine for it.

(I note SpaceX is expecting to be cash flow positive for this year, and yet is still to have a successful launch – just what market signals is that sending…)

11. TomsRants - July 8, 2006

I note SpaceX is expecting to be cash flow positive for this year, and yet is still to have a successful launch – just what market signals is that sending…

That is one of the more interesting challenges in trying effectively be a business analyst for New Space, as none of the players are public companies, and thus have no SEC reports available in the public record. Players other than Musk, Carmack, Allen and Bezos (who are clearly self-funded) are very secretive regarding their plans, operating budgets, income streams (if any) and angel/VC funding sources. (A couple outfits of won’t let you use their toilet without signing an NDA! LOL) Your only resort is to talk to a lot of people, people who know other people, and read between the lines frequently, as there is so little else to draw from in terms of overall track record. Ergo, what SpaceX says it “expects” and what is real is subject to extreme speculation, and we may never know the complete honest truth – it’s all in how one does the accounting.

Having seen a lot of firms come and go, and far more investor money lost than earned thus far, one also becomes very skeptical of fanciful PowerPoint shows and hyperbolic press releases. I really support what Elon is doing, for example, I think he has a real shot – but even I had to raise eyebrows when he began cranking out press releases for Falcon 9 and this new reusable capsule, when Falcon 1 has yet to fly. Fly Falcon 1 ten times, sucessfully, and get paid for them. Then fly Falcon 5 two or three times to show they mean it…then when talking about F-9 and capsules, I might be more willing to leave my skepticism at the door.

12. Ray - July 8, 2006

Well, this is a good topic, and I’m glad the Space Cynic raised it in this way. The spaceport folks definitely need to make sure they have a good business plan with appropriate levels of risk. From the point of view of a state government, they may be happy enough funding work that will be done in-state, with in-state workers, building in-state businesses, designed to draw tourists from in and out of the state to do business there. The image of the state as being on the frontier again (eg in the case of NM), and the synergy with existing space-related sites (VLA, White Sands, others) may help them make the case (although these sites are spread out). They may never know how much business the spaceport drives – noone polled us on our NM trip to ask why we were in the state for a couple weeks going to restaurants, driving rental cars, buying museum tickets and souvenirs, paying for hotels, etc. I don’t think any of it looks like space-related business.

I don’t see any problem mixing actual flights with ground activity like spaceport T-shirts or coin-operated telescopes to get a better view of flights or whatever. The flights are being marketed as space *tourism*, after all. It seems a perfect match. I used the analogy of a shopping mall anchor tenant for the actual flights. Another analogy that comes to mind is a seaport, or tourist “seaport”. I’m thinking about a Baltimore Inner Harbor, a San Francisco Fisherman’s Wharf, or to be a bit more realistic a similar operation outside the city (a small resort port). You may have an expensive boat tour for the tourists. You will also need to have the trinket shops, suntan lotion sales, etc. In-between, you have activities related to the port-ness of the place, but cheaper. You have paddle boats, personally-owned boats, water taxis, a beach, some smaller tour boats, a maritime museum, Grey Lines Tours with all-day trips to Wine Country or Santa Cruz, an acquarium, a boardwalk, and so on. Can the analogy work? If it helps justify the spending on the “real” infrastructure of the port needed for the flights, and it gives educational and entertainment value to the customers, and it helps some little space companies get some practice with real flight operations and real businesses with real customers so the best of them can make it to the next level, it sounds good to me. That’s why the prospect of less-ambitious fights like rocket racers, Virgin Galactic’s chase plane tourist flights to watch the main flights, and parabolic flights seem more important to me than they might at first. There might be a lot of similar opportunities for less-ambitious (than actually reaching space) space-related flights that don’t cost a lot. Right away the idea of flights that get very high, but not to the edge of space, comes to mind. Some space addicts who can’t afford to reach the edge of space might want a ride on the carrier plane of an air-launched operation (presumably on its day off). How many people can say they’ve ridden such a thing now?

A site in the middle of the desert might make it tricky to get the crowds, but I may feel differently about that in January. Anyway, you don’t need Disney levels of traffic. 100 out of state tourists per day, spending 1 week and 1,000-3,000 per trip in the state, sounds like a good start for helping justify the state’s expenses (in terms of not just tax revenue but also happy businesses), if you can supplement that with a few “crowd-drawing” special events per year.

One big question is how this will all be presented in the media. If the ships and ports get built, will they be able to advertise it skillfully and get free and favorable media hype? Will the actual start of business operations change the market? Will golf partners start talking about how great the trip was, or how it was a waste because they were sick the whole trip? Will the perception of the general public change from disapproval of tourist rides to seeing these as pioneering flights? What about celebrities that go on flights – will they give their seal of approval for their fans?

I’m also interested in the 2nd round of tourist ships and operations, should the first thrive. Will they be able to improve operations and lower ticket prices more? Will the experience get better (better views, longer flights, more room, safer)? Will more passengers fit per flight?

What about firsts? Will there be a first marriage in space on one of these flights? Will there be a kind of contest to see who gets in the record book for the most flights? (pilots excluded?) Will some web site be made to track all of the spaceflight tourists that want it, and make they first few thousand celebrities of sorts (potentially for thousands of years)?

What about non-tourist business for the flights? Will news organizations pay to get their journalists on flights? What about other organizations getting their employees on flights? Will NASA astronauts get any benefit from going on the flights? Will there be business launching experiments or doing remote sensing or reconnaisance?

I wonder what the spaceport blogger would say about all of this?


The bottom line is that the Space Cynic is right about the difficulty of succeeding at this kind of thing. All involved will need to work hard, look carefully at their business cases, and learn from the history of similar businesses.

13. oldspacecadet - July 8, 2006

There is a significant regulatory risk associated with the hypothetical crowds watching suborbital launches. AST seems more concerned about injury to noninvolved people than it is about injury to “spaceflight participants.” One way to reduce the MPL in the risk calculation is to reduce the number of people near the vehicle at launch. Look at the Blue Origin EIS.

14. Bill White - July 8, 2006

To answer oldspacecadet:

Suborbital space passenger revenues won’t cut it. Why does Bill think that “land lubber tourist revenue” will?

Cut it for what? What land lubber tourist revenue might do is stimulate the local economy in and around Las Cruces. Its about an hour drive from El Paso and I am looking forward to making that drive in a region of the country I have never visited before. And but for the X Prize Cup I would probably never travel to Las Cruces, ever. New Mexico may very well recover the $100 million they plan to invest in the SW Regional Spaceport (or they may not) yet either way its little different than spending tax money to develop Chicago’s Navy Pier.

As for the larger issues of space exploration? Theme parks will do very little to move us forward (except perhaps to stir the imagination of a child, something we should not discount too severely) but again I see little reason to get all bent out of shape about New Mexico seeking to generate interest in a very undeveloped corner of their state. Orlando was essentially the boondocks before DisneyWorld – – low land prices are part of why it was selected.

Bill suggests that a quick strike will get the money that will allow XCOR (his example) “to build and test rocket motors that can be started and stopped hundreds or thousands of times.” Although I invested in XCOR several years ago, I still do not see a space launch market to support that kind of motor lifespan for a hypothetical space launch RLV — especially since very robust motors have mass penalties compared to one (or even 10)shot motors.

Reliable reuseable engines are necessary for re-useable lunar vehicles. Hoppers and re-useable landers.

A mantra of the NewSpace RLV world is that “littering the Atlantic with hardware” is a lousy way to run a space program. To the extent that is true throwing away an LSAM after one use is far, far worse. There is a five to one ratio between mass in LEO and mass on the lunar surface (very approximate) using chemical propulsion and soft landings. The waste of paying to send a lander to the Moon and then using it once only, is far greater than the waste of dropping empty expendable stages into the Atlantic.

Sending a lunar suborbital hopper once and using it many times is very economical for surface exploration and travel between lunar sites compared with sending a new lander on each mission. Using lunar oxygen (even if water isn’t available) multiplies these savings.

To “hop” 500 miles on the Moon will only need small engines, yet those engines need to be darn reliable, and capable of repeated cycles. XCOR can “practice” that in the Rocket Racing League. To reach lunar orbit or EML-1 requires a rocket not all that unlike what can carry passengers (or drag racers) to 100 km on Earth in a suborbital trajectory.

Deploy a re-useable LSAM at EML-1 and the cost of lunar access goes way down. Terran suborbital helps us practice with the engines that can do that.

= = =

I agree 100% with you (oldspacecadet) on the medical issues. Gosh, Disney World’s Mission to Mars ride has killed people as has the Rock-n-Roll Roller Coaster. This is partly why the suborbital passenger may never really take off.

15. oldspacecadet - July 8, 2006

Just so I understand this: In your opinion, XCOR should spend their resources developing and testing motors capable of starting and stopping many, many (hundreds or thousands) of times by practicing on rocket-powered air racers even though the expected market is tiny on the off chance that those same motors, or derivatives thereof, might be useful in future lunar hoppers? Even if that were to work out, how do they sell enough hopper motors to make a decent payoff for their investors when we can’t even get to the Moon right now? Until we can get into LEO cheaply, frequently, and profitably, how can we do significant commerce on the Moon? That sounds like a risky business strategy to me.

16. Professor L - July 8, 2006

AmberJane you make lots of sense. Please email me off line at drspace@thespaceshow.com as I would like to discuss your presenting your logic on The Space Show if you are interested. Your position is very well thought out and I think listeners would find it interesting and challenging to hear
Professor L (Dr. David Livingston, Host of The Space Show).

17. Bill White - July 8, 2006

In your opinion, XCOR should spend their resources developing and testing motors capable of starting and stopping many, many (hundreds or thousands) of times by practicing on rocket-powered air racers even though the expected market is tiny on the off chance that those same motors, or derivatives thereof, might be useful in future lunar hoppers?

Only if the Rocket Racing League pays them to do this.

18. Bill White - July 8, 2006

In your opinion, XCOR should spend their resources developing and testing motors capable of starting and stopping many, many (hundreds or thousands) of times by practicing on rocket-powered air racers even though the expected market is tiny on the off chance that those same motors, or derivatives thereof, might be useful in future lunar hoppers?

Only if the Rocket Racing League pays them to do this.

= = =
Follow up – isn’t it better for XCOR to work on this project using funds furnished by the Rocket Racing League rather than;

(a) An angel investor funds R&D in the pre-revenue stage of operations, or

(b) NASA issues a cost-plus procurement contract?

19. Shubber Ali - July 14, 2006

Follow up – isn’t it better for XCOR to work on this project using funds furnished by the Rocket Racing League rather than;

(a) An angel investor funds R&D in the pre-revenue stage of operations, or

(b) NASA issues a cost-plus procurement contract?

Which raises two questions:

where does RRL get their money to fund these projects?

how do they select between one company and another as recipient of the funds? (or are you assuming they are sitting on piles of money?)

20. Bill White - July 14, 2006

Presumably, RRL gets the money from spectators and sponsors. If they cannot raise money from spectators and sponsors, well then, they shouldn’t be buying rockets. If RRL can garner a cable TV deal on some ESPN clone (speed boat racing has a cable TV deal so its not impossible) then RRL has money.

XCOR’s EZ-rocket already has flown. Therefore to buy a few “off the shelf” simply gives XCOR some revenue they wouldn’t otherwise have and lets them accumulate data and engine time on their rocket engines. Better than test stand time.

All of this is relatively small potatoes and I do not claim otherwise.

But if ESPN gives a deal and a dozen sponsors offer cash for logo exposure and 5,000 spectators travel to Las Cruces to watch the league championship in 2007, well then that is non-taxpayer sourced revenue, which I believe is a good thing.

21. Bill White - July 14, 2006

Also, being non-government means RRL can choose its suppliers the same as any other business.

22. oldspacecadet - July 15, 2006

Bill, you have the problem reversed. How can RRL buy motors with revenues they hope to gain in the indefinite future? How can a company develop those motors with nonexistent revenues unless they have a pile of R&D cash?

Actually, a cost-plus contract from the government works better for a small, lightly funded corporation since the cash flow is moderately in tune with their funding requirements. Customers who put down deposits on a promise for future delivery of an undeveloped item must have confidence in the ultimate delivery.

XCOR’s rocket has already flown. If you are referring to the Long-EZ with the two small rocket motors, you might want to look up the max rated airspeed for the bird and estimate its acceleration rate at various climb angles with 800 lbs thrust (both chambers)and then figure out the practical duty cycle time for the motors in a hypothetical race.

Right now, it looks to me like a lot of sales are based on promises and those sales are largely promises too. Kool-Aid anyone?

23. Bill White - July 16, 2006

RRL may very well fail and the rocket racers are indeed puny things. But the XCOR rocket racers have already flown. The plan (as I recall) is to buy four this year and six more after the first season. If things appear to be working out.

Business success will depend upon creating a fast enough “buzz” to get a media deal and get customers/spectators into the stands or on TV. Fail to do that and RRL will collapse, I offer no argument against that. I see no harm in trying, however, if an enthused rich dude wants to try on a privately held basis with “sophisticated investor” requirements to protect people who shouldn’t be betting the retirement money. Paying to start an RRL racing league is like funding an America’s Cup yacht, it’s a speculative gamble. So?

Now = IF = RRL does attract fans (not a sure thing) they will grow bored watching these tiny rockets but then may become interested in X Prize style suborbital rockets (single seat?) drag racing to 100 km. As I said before, cameras can be deployed on high altitude balloons to track the action and business success will depend upon getting enough viewers to attract sponsors. The RRL business model is really about sponsorship money, in my opinion. They just need spectators to attract the sponsors.

An RRL themed PlayStation or X-Box game is also a possibility and would be plenty easy to code using existing car racing programs.

= = =

This approach is NOT exclusive of small targeted government grants on whatever basis the governmental agency will approve. When looking for revenue streams, either/or questions need to be answered “both” or “all” as often as possible.

24. Paul Dietz - July 23, 2006

There is competition for that capital by businesses large and small who already understand how to turn a decent buck in established growth industries.

An example of this springs to mind when space promoters. exploiting the current energy problems, try to push space solar power: the internal rate of return on a 20,000 barrel/day Fischer-Tropsch coal plant in Wyoming, at current diesel prices, would exceed 100%/year.

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26. Professor L - July 30, 2006

Scott Edwards: Stop spamming our list. Do you really think anyone visiting this list gives a bloody damn about your likely bogus business? Get off and stay off or action will be taken with sources that police the internet to stop your spamming. People interested in space are free to comment and enter dialog here, not someone such as you promoting their own personal business. Spacers, be ware, Space-Cynics in no way endorses this guy or his so called business, we do not want him on this list and we urge you to stay away from his website and cookies and anything related to his postings at this site. Mr. Edwards, you should have some manners and common sense. Please exist this list unless you wish to participate in space development discussions. This is not your personal promotional ground. Thank you.

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