By Peter Burrows email@example.com 11/5/14
“It is hard to imagine a more stupid or more dangerous way of making decisions than by putting those decisions in the hands of people who pay no price for being wrong.” Thomas Sowell
Last Friday’s crash of a Virgin Galactic rocket-powered space plane took the life of one of the test pilots and seriously injured the other. This tragedy is sad confirmation that New Mexico’s $250 million Spaceport America will probably never launch a single manned flight. Spaceport America was to be Virgin Galactic’s world headquarters.
Conceived out of hubris, good intentions, and an appalling lack of analysis, Spaceport America was a doomed boondoggle from the start. Its very premise was false: Space travel needs a spaceport. No, it doesn’t. The space-tourism of the sort envisioned by Virgin Galactic’s founder, billionaire Sir Richard Branson, and many others, requires a viable space ship. Once you’ve got that, spaceports are dime-a-dozen.
In fact, there are nine spaceports approved by the FAA in the United States and at least 12 additional sites awaiting approval. New Mexico’s was the first in the U.S. but maybe not in the world. By the time ground was being broken here in 2006, at least two other spaceports were announced: a $226 million project in the oil-rich United Arab Emirates, and a $115 million facility near Singapore’s Changi International Airport.
The UAE and Singapore are wealthy nations with deep pockets, deep enough to sink New Mexico’s ambitions without a trace. In response, Spaceport supporters cited New Mexico’s 4,000 foot altitude as an inherent cost advantage over sea-level spaceports, but that considered only the cost of the flight, not the cost the customers pay getting to the site. Spaceport America is in the middle of nowhere.
It’s a moot point anyway. In 2011, Colorado’s governor, John Hickenlooper, announced plans for a spaceport at an airport 22 miles east of Denver. That’s about 1,200 feet higher than Spaceport America, with the added advantage of roughly two million customers closer than the 6,000 or so at Truth or Consequences.
In hindsight, maybe Governor Richardson should have asked the New Mexico pension funds to make the “investment” in the Spaceport rather than asking the tax payers to foot the bill. This would have brought professional investors with a fiduciary responsibility to the table, people with a legal obligation to make prudent investments or risk losing their jobs and/or facing prison.
“Investment” has a very different meaning in the real world as opposed to the political world, where the word is used to justify all sorts of dubious government spending. Whenever I see some project being pushed as an “investment in our children’s future,” as the Spaceport was, my boondoggle detector goes off. Yes, some spending does benefit our children’s future, and caring people are susceptible to that argument. And, if all the dream-world, wishful thinking about the Spaceport would have come true, it would have benefited all of us, children included.
A smidgen of thought and analysis would have torpedoed the Spaceport project. One of the first things a professional investor would have asked is: After we put $250 million into this “factory” to produce space trips, what sort of competition will we face? Will the competition have a pricing advantage, lower costs, better product, closer access to customers, etc. etc. ?” Spaceport America would have flunked on all counts.
Other basic questions would have been: Since the Spaceport for all practical purposes depends on just one customer, Virgin Galactic and its founder Richard Branson, what happens to our investment if Branson dies or changes his mind? What happens if Virgin Galactic does not meet its 2010 startup date?
According to an article in the Las Cruces Sun-News 1/09/13, “Galactic could break its lease agreement with a relatively small penalty, ranging between $500,000 and $2 million, according to the lease.” Other terms of the lease require Virgin Galactic to make lease payments of $85,833 per month plus another $2,500 per month for land rent, once the Spaceport meets certain operational requirements. These payment started in January of 2013. For the mathematically inclined, that works out to $1,025,000 per year on an investment of over $200 million, or a rate of return of less than one-half of one percent.
What a deal. For Richard Branson, net worth $4.6 billion.
Apparently, no one thought to put a performance clause in the lease, e.g. if the commercial flights forecasted to start in 2010 didn’t begin by, say, January 1, 2015, the State of New Mexico could demand the cost of the Spaceport be compensated by Branson’s parent company, Virgin Group. Obviously, no one did any thinking on this whole mess.
What to do now? We could appeal to Branson’s sense of decency and ask him to buy the Spaceport. Be worth a shot. He’s 64 now and probably thinking about his legacy. The Spaceport is certainly a tarnish on his escutcheon and a blow to his ego. Fifty cents on the dollar? I’d take it but probably not the legislators. Too much of an admission of government stupidity.
What about Richardson? We can’t vote him out of office, and we can’t put him in jail. Besides, he had lots of Republicans voting to fund the Spaceport. Can’t put ’em all in the pokey, much as I’d like to. We can, however, give “The Guv” some recognition for Spaceport America. He told one very enterprising reporter, “I consider the spaceport my legacy accomplishment.” (See Joshua Wheeler’s brilliant article in BuzzFeed 3/20/14: http://www.buzzfeed.com/jgwheel/failure-to-launch-how-new-mexico-is-paying-for-richard-brans?bffb)
Why not rename his legacy accomplishment “Spaceport Richardson?” My first choice was “Richardson’s Folly” but that’s already been taken by the Rail Runner, another monstrously expensive Richardson boondoggle. I suggested “Spaceport Richardson” to another long-time Spaceport critic, and he implied my idea was a little on the petty side. Well that’s me, Petty Pete.
In my defense, all I want to do is give credit where credit is due. Spaceport Richardson would be a forever monument to the stupidity of the political class, a teachable moment, so to speak, and a small but valuable investment in our children’s future.