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