I'm not out to make this a K4 debate thread, it has to be a careful restoration, period.

What it looks like to me from the owner of EBT was to sell it, perhaps he wanted to get out of the operation. The folks buying it look like they have their act together, the team working the preservation have already shown their abilities and dedication to EBT here on these forums. So it looks good EBT has a future, you probably have to expect something like this would have to happen, it takes many people to make EBT work, like IRM the success with one owner has to change to a society style driven design to perpetuate it. Had the owner died before doing this it may have been more chaotic and maybe cause scrappings to occur, that we DON'T want.

And our second twofer prize goes to Chris Webster.

The final question: How do you more than double revenue and end up with a bigger loss?

Now if memory serves me, 2011 was the last year the EBT ran, right? So there'll be significantly smaller revenues on the 2012 990, no?

If there was a board, and it was functioning and not just the out fundraising and leaving the officers alone (the kind that a decade some now departed or neononymous posters then advocated) it would be asking for answers.

As it stands, we have a 501c3 with a single individual in total control, who has produced financial results that certainly would generally require some inquiries at the least, with perhaps more onerous actions to follow in this case, and contentious Chap 11 in the near past.

Sorry, but until he gets an independent and competent board, my modest resources will go elsewhere, as charming and invaluable as this place is, it smells a lot like a hostage taking-either I get $8M in small donations, or the three footer gets whacked.

If there's an appraisal of the property and it's MORE than $8m, then I'm a bit less suspicious.

By the way, congratulations to the posters who put on their big boy pants and raised serious objective questions based upon a legal document of record and known facts and circumstances.

Oh by the way, apparently the 8m won't include some hopper cars, as they were listed for sale on one of the industry mag-sites. I know many are beyond hope, but the listing didn't say for scrap.

I have the same feeling I did when I was pointing out the dangers of investing in a microbrewery (Franconia, Pocono Summit, PA) to a friend who took a loan from his 401k to drop 10K in that business. It folded in less than a year.

HEY, I resemble that remark! (Ok, in my defense , it is after 1AM, local time)

Well, common sense could explain that... the 2011 season started earlier and was extended well beyond that of the prior one (Running trips through December, when their "normal" season usually started in June and ended September) with many many more trips than usual operated:

They opened in May, not June as was normal, so that added 24 trips to the schedule
In July, for Thomas, they ran 6 days of 7 trips per day, adding 42 trips to the schedule (and if I recall, they ADDED a couple trips too) Add in the fireworks evening train.
They ran Thurs and Fridays from mid July to mid August, adding 24 trips to the schedule.
October, they ran Fridays, Saturdays and Sundays. (Usually, the only trips taking place in October were that of the Fall Spectacular) adding 36 trips to the schedule, plus 9 Halloween Evening Trains.
For Polar Express, they ran 40 trips over 13 days.
Dinner trains throughout season = at least 6 trains run.

That's over 175 additional trips to the year's schedule. The year prior year saw about 110 trips., so 285+ trains operated in 2011 compared to 2010. And in 2010, some off season trips were run with Diesel, whereas the 2011 season was all steam.

Had they doubled revenues within the same 4 month operating season as the year prior, I would say yes, its quite odd...but that's not the case.

So yeah, that $47,000 in extra employee salaries, benefits, etc and the other operational expenses could explain the $48,000 loss for the year. $80,000 in 'other expenses' could be contributed to any work performed on grounds for the new events, including the rebuilding of the siding in front of the station for Thomas, more track maintenance due to addition trains, paying for the dinner train caterers that they used, sponsoring of the fireworks (they can run 10K easily) the updated ticketing system they used for the major events, of which a % of sales is usually the payment for said services, all of which I am sure the K's told the non profit "if you want it, its your responsibility".... plus, didn't they have to pay a percentage of ticket sales to the K's for the lease of the railroad?

The 2010 year also did not have $92,000 in royalties to be paid for Thomas and Polar Express events for 2011. (they only had diesel powered Santa trains in 2010)

Assuming, like another non-profit I know of that operates way more than 260 trains a year, that ticket sales cover only 2/3's - 3/4's of the operational expenses, they would have needed to raise an addition $150,000+ to cover all expenses. So to me, a $48,000 final loss is not bad for a very busy year of a "new" organization, that showed ridership numbers not seen in well over a decade for the prior operator, with little outside revenue other than ticket sales (ie; grants, outright donations, membership fees, etc) all the while paying out a load of dough for operating rights.

Subtract Royalties alone, and they would have shown a $40,000+ profit immediately...
Subtract half of the additional payroll expenses, now you're at $60,000+...
Subtract 2/3 of the additional expenses not itemized but assumed as physical plant improvements, you're at $100,000+...
Subtract 1/3 of that PR budget, and your at $120,000+ profit.
Subtract whatever the percentage was paid to the owners of the Railroad and you have more than that 120,000 profit amount....

Oh wait, they're non-profit...they can't show a profit. Whoops. They would have had 120,000+ to spend on upgrades, had they not had all of those additional expenses... and that's not even touching the Travel Expense money.



And I'm sure when we see the 2012 filings, we will be able to tell that?

This form that I am looking at, that was link provided, is for the calendar tax year 2011, with the 2010 years income posted as "prior year" on page 1 of the document.

And no, it doesn't necessarily mean revenues will be smaller for 2012, depending on what fund raising they did, their revenues may indeed be higher in 2012, despite no operations...of course, their expenses should however be significantly reduced for the 2012 year, since no operations took place under the Non Profit's wings.....but wait, they're buying a railroad...there goes that theory of less expenses.... as was said earlier "but wait..there's more!"

One of my earlier nonprofits was a one man show. I incorporated in Delaware, hired a registered agent in DE so I could maintain my principal office in Ohio, filed for tax exempt status and was granted it, and generally had no problems. At the time I was living in Columbus working for CSX and there really wasn't anyone else involved in the preservation project that I created, so I was not comfortable just going out and finding two people to give majority control of the organization to. We have since expanded the board to five people as the project has taken off and it has more support.

Mr. MacDowell is absolutely correct in his "rant" that the armchair quarterbacks will always sit back and criticize but would never venture forth to do anything so bold themselves. So Mr. Salone has had a business failure in the past. So did I! Its a consequence of taking a risk. Perhaps this business arrangement is the only one that would appease Mr. Kovalchik. As we know its not easy to secure a purchase option on the EBT!

As for the RMM and the 1361, isn't that locomotive now sitting in a new roundhouse out of the weather? you know it could have ended up like the dozens of other mostly dismantled steam locomotive restorations out there with a hulk parked in the weeds and 1/3 of the parts missing never to be seen again. Seems like Mr. Salone knows that historic equipment needs protection and is taking action.

Mmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmm....... NO.


You make it sound as if that fate has been escaped with certainty. It hasn't. Not yet.

Thus my earlier remarks re: "disappear".

From experience with other operations like the original New Hope & Ivyland RR and the
Branford Electric Rwy. Ass'n., I agree that advertising is fantastically expensive. I wouldn't
be surprised if Disneyland charges more than $90 for a day pass to keep the advertising cost
down to 25% of the ticket revenue.
Could this be true in our industry, "Advertising doesn't pay for itself, instead you have to
charge enough for tickets to pay for the advertising"?

Yes, there was. But because the owner is only interested in money, and the Preservation Association threatened legal action, nothing was made public about the effort. Just because you don't hear anything publicly, doesn't mean efforts weren't under way.

All we can do is keep our fingers and toes crossed, I'd hate for this line to sit idle forever.. used to go there every year as a child. wanted to take my girlfriend last year and they weren't operating. and i see theres mention of the 1361. part of that locomotive is stored at the EBT. (i believe its the boiler) its sitting on an EBT flat car inside one of the shops. So it is out of the weather.

"Mr. MacDowell is absolutely correct in his "rant" that the armchair quarterbacks will always sit back and criticize but would never venture forth to do anything so bold themselves. "


No, Mr. MacDowell wasn't that polite, and your characterization requires no quotes-his post was the very definition of a rant. It was filled with subjective indignation and and a gratuitous insult that quite frankly appeared to be a freudian slip.

Other posters went to the document, looked at numbers, asked questions.


"Subtract Royalties alone, and they would have shown a $40,000+ profit immediately...
Subtract half of the additional payroll expenses, now you're at $60,000+...
Subtract 2/3 of the additional expenses not itemized but assumed as physical plant improvements, you're at $100,000+...
Subtract 1/3 of that PR budget, and your at $120,000+ profit.
Subtract whatever the percentage was paid to the owners of the Railroad and you have more than that 120,000 profit amount...."


Yeah, and if they got a $5m from the EPA or $1m in TARP money that would have made a difference. The problem, is that results are set in stone. An active board wouldn't be making fantasy income figures, but asking why with all the additional revenue did net results get WORSE. Can you imagine some retail CEO turning in worse results and telling his board, but we did all this extra stuff?

Wait, don't IMAGINE it, read up on JC Penney.

I am an advertising guy, so I have my own bias...

I would expect any EBT operation to require a great deal of advertising over its first few years of operation, and then slightly less for eternity.

Advertising is one area where museums/tourist railroads often underspend... not just in dollars but effort. Good marketing increases revenue. That's why large companies spend millions on it and why small operations should also make a well-financed, professional effort at it.

The EBT is off the beaten path. Without significant marketing, advertising and PR it will never get by. Never.

I, for one, think spending 25% of revenue on marketing the EBT was justified and perhaps even low for what was going on in those years.

Rob

PS: I am now ready to take any comments from the underwear keyboard brigade telling me I have no idea what I am talking about.

A common thought, Supe, but not a valid assumption.

Cut the PR and the total revenue should go down, too. I see it all the time... "if I just cut PR and marketing all that money goes to my bottom line."

But it doesn't.

Good PR and marketing INCREASES revenue.

Take it away, and revenue DECREASES.

Rob

"part of that locomotive is stored at the EBT. (i believe its the boiler) its sitting on an EBT flat car inside one of the shops. So it is out of the weather."

Funny, I got a chance to see a nice new roundhouse in Altoona. It had both open finished bays and a couple being finished up. Whatever value there was in carting the thing to Orbinsonia is now questionable. The EBT shops can't possibly afford the protection that new construction provides, it should be sent home.

Some people think individual initiative is so valuable it can't be questioned. Really? Not everybody is named Gramling, Levin or Moedinger.


"A common thought, Supe, but not a valid assumption."


Except it isn't mine, and I didn't even endorse it.


"Advertising is one area where museums/tourist railroads often underspend... "

Agreed. But at the end of the day, spending (in the aggregate) must be less than revenue and your expenditures must contribute to the bottom line. An active an effective board would be asking not only about the AMOUNT of spending, but the nature. Radio, TV? Print? Social Media? It's all about producing ca-ching. You are an advertising guy? If you were named imperial dictator of three foot marketing, what would your ad campaign look like? (and that's not sarcasm)

The funny thing is that I work for an organization where accountability was always vested at the entity level, until our new CFO came in. Now, thanks to cool new software, we can ask individual managers about their expenditures. Was there resistance to accountability? Hell yeah.

It's not that they are really changing what they do, but the mere fact that the finance guys are coming in to ask questions is changing their perspective. Before sending an employee off to a cool industry conference, they ask-what's the takeaways? Does it enhance the employee or the enterprise?

Even if Mr. Salone is the most thoroughly dedicated and capable individual, he'd be better with a BOD.

So noted, my mistake.

"So noted, my mistake."


No problem. I await your thoughts on an effective and efficient marketing campaign as it would apply to a rural three-foot guage railroad in Southwestern PA.