ABL, part the third
Could a space shuttle orbiter be pawned? That would be a tough one. It would be helpful if there were at least two, if not three in the marketplace. Great pains would have to be taken to show the lenders that the new team has analyzed the documentation (thorough as only NASA can be) and won't be blowing up their collateral. Remember, the bank doesn't work for the borrowers, it works for the depositors.
How 'bout the ISS, or NASA's share thereof? Hmmm. If you're getting steady access from the COTS folks, and the partners are sustaining their commitment, then there would be value. Wresting it from NASA's control might be a good thing in that regard, as now you've paved the way for a couple of Bigelow balloons to be added for a vast increase in space, and an increase in the number of allowable dockings. Traffic of scientists traveling back and forth to lab benches on orbit for short periods, through cargo to EML-1, return samples from EML-1 and the Moon, fuel depot traffic control, there's a lot of stuff that the ISS -could- be doing to be useful that for which absolutely no allowances are being made.
Like with the ISS modules. IIRC they could all in theory be lofted masswise into orbit by the EELVs, though perhaps not gently. I don't understand why some kind of shrouded STS-analogue cradle can't be figured out. I recognize that that doing so would change Cp versus Cg. (Quick, to the computers!) Perhaps some sort of collabsible internal cross-beam stress-distribution framework, like those collabsible spheres, but different.
By that point, with evolved ISS access, all kinds of financing opportunities will be opening up. How about securitizing the docking fees for berthing at the ex-NASA part of the station? (like David Bowie with his future record sales on certain titles) Franchising the right to establish a shielded fuel depot within a certain distance of the ex-NASA portion of the station? Leasing used micro-g experiment boxes for use on the station? (That's got to be a goldmine right there) Brokering used CEVs and CXVs? Inventory financing on the fuel in the depots?
So of the two assets, I think you'd have much better luck with the U.S. portion of ISS. Not so much the collateralizing of the physical assets themselves, as securitizing the income streams from the U.S. portion. Docking fees, power fees, oxygen fees, bench space leases, equipment leasing, comm fees, you name it.
What's really needed is dependable and frequent access to the station and back. We have to pray that NASA doesn't muck up COTS. With it, there is potential for a lot a value to come from the station. Without it, the station will continue to hang like an albatross around our necks, denied the opportunity to soar to new heights.
My suggestion would be a quasi-governmental entity along the lines of COMSAT. It would hold the actual international treaty and legal obligations of the U.S. government, but also serve as a management company for the U.S. portion. Ownership of the assets might be done under a sale-leaseback structure with an off-balance sheet company. Believe you me, there are guys on Wall Street that would love to put together the kind of complex financial structure that would be required for such an undertaking.
So is the space field ready for asset-based lending?...
How 'bout the ISS, or NASA's share thereof? Hmmm. If you're getting steady access from the COTS folks, and the partners are sustaining their commitment, then there would be value. Wresting it from NASA's control might be a good thing in that regard, as now you've paved the way for a couple of Bigelow balloons to be added for a vast increase in space, and an increase in the number of allowable dockings. Traffic of scientists traveling back and forth to lab benches on orbit for short periods, through cargo to EML-1, return samples from EML-1 and the Moon, fuel depot traffic control, there's a lot of stuff that the ISS -could- be doing to be useful that for which absolutely no allowances are being made.
Like with the ISS modules. IIRC they could all in theory be lofted masswise into orbit by the EELVs, though perhaps not gently. I don't understand why some kind of shrouded STS-analogue cradle can't be figured out. I recognize that that doing so would change Cp versus Cg. (Quick, to the computers!) Perhaps some sort of collabsible internal cross-beam stress-distribution framework, like those collabsible spheres, but different.
By that point, with evolved ISS access, all kinds of financing opportunities will be opening up. How about securitizing the docking fees for berthing at the ex-NASA part of the station? (like David Bowie with his future record sales on certain titles) Franchising the right to establish a shielded fuel depot within a certain distance of the ex-NASA portion of the station? Leasing used micro-g experiment boxes for use on the station? (That's got to be a goldmine right there) Brokering used CEVs and CXVs? Inventory financing on the fuel in the depots?
So of the two assets, I think you'd have much better luck with the U.S. portion of ISS. Not so much the collateralizing of the physical assets themselves, as securitizing the income streams from the U.S. portion. Docking fees, power fees, oxygen fees, bench space leases, equipment leasing, comm fees, you name it.
What's really needed is dependable and frequent access to the station and back. We have to pray that NASA doesn't muck up COTS. With it, there is potential for a lot a value to come from the station. Without it, the station will continue to hang like an albatross around our necks, denied the opportunity to soar to new heights.
My suggestion would be a quasi-governmental entity along the lines of COMSAT. It would hold the actual international treaty and legal obligations of the U.S. government, but also serve as a management company for the U.S. portion. Ownership of the assets might be done under a sale-leaseback structure with an off-balance sheet company. Believe you me, there are guys on Wall Street that would love to put together the kind of complex financial structure that would be required for such an undertaking.
So is the space field ready for asset-based lending?...
posted by murphydyne at 7:39 PM
12 Comments:
Wow, that was an underwhelming response.
I'll take that as a big fat NO to my rhetorical question...
I believe that most readers of this blog are of the opinion that the shuttles are too expensive to operate to make an honest profit in an open market. That is my opinion at least, though I don't have the time and patience to defend it properly in this forum.
Interesting, and certainly honest response. One that begs the question, though, of whether everyone should be denied the opportunity because of said belief, which is admittedly widely held. (and pretty much by myself also, but I try not to make assumptions)
Would the change from a 'developmental' vehicle to an 'operational' vehicle necessitate a rethink of the work flow? (Mmm, yeah, I'm guessing) Could savings be derived therefrom? Would a coating of thin plastic film on the ET solve any problems? Could certain structural elements be removed for further mass savings?
The keys obviously are analysis of the data associated with the orbiter potentially purchased, and the quality of the team implementing the operations. If they paid a fair price for the hardware, then no good American, IMHO, would deny or begrudge them the opportunity to make a go of it.
Besides, it was mainly about the ISS side of the equation.
When one considers that multiple low cost orbital vehicles could probably be developed for the price of a single Shuttle flight, (for example COTS), the Shuttle just becomes irrelevant. The Shuttle did lots of amazing things, but that is no excuse to throw even more good money after bad, even though it was very large quantities of bad.
What is your objective here? Low cost space access or Shuttle centric nostalgia and national pride? The Shuttle is just a distraction, (ISS and ESAS also), and you have been distracted :-). My advice is to not waste any more time on it. There are all sorts of little new space related tasks that need doing where a little effort can go a very long way.
Low cost development work and the developing of a new industry requires keeping contact with “City Hall” to an absolute minimum. Fundamentally we need to be designing for maximum bureaucratic avoidance, as bureaucracy costs dominate and kill the pace of development, (assuming genuine low cost development). Look at SpaceX, I expect they need to be designing, building and launching once a month or less, not once every six months. They have got bogged down, and the world will quite possibly pass them by because of it. They are being pushed further and further towards the NASA way of doing things.
Designing for bureaucratic avoidance means specialising, so as to minimise the number of departments that one has to learn how to deal with and deal with. XCOR have been forced to so generalise, fortunately they have still managed to keep their head above water, so to speak, but I fear it is damaging their focus. A 1% up front bureaucratic cost probably has something like a 5% total inhibiting effect on the development. In the competitive race environment, which development is, this really hurts.
Now days I think you need to be designing to be able to launch many times a day, especially during development. I am not sure how to manage this with regard to range costs and constraints, but I have been edging towards air launch for this reason.
For example, I am working on a kind of very cheap ultra light helicopter system that among other things should be able to carry a rocket via tether to the equator or some other out of the way place and launch it at useful altitude and speed. It should eventually scale to a thousand ton or so if need be and be able to fly at passenger jet speeds, if so engined. Kind of like the sea launch system but much faster and cheaper. I am currently developing by parts and a small working prototype is still probably a year or so away. This is how I think I can best serve the cause - for me it also avoids ITAR.
Okay, let me get this straight. I spend ONE paragraph in three posts on the shuttle and folks think this is a shuttle-centric thread? Is there a problem with reading comprehension?
I spend the entire first post on satellites and GEO. The second post dwells one para. on CBL, three on ABL, two on reusable stuff, and one on ESAS. The last post spends ONE paragraph on the shuttle and SIX on the ISS and people this is a shuttle arc?
What am I getting at? I'm talking about ASSET BASED LENDING concepts. A B L, like the titles. Is such a concept really so difficult for the space community?
Yeesh, rub the wax out of your eyes.
Sorry for my lack of clarity, let me try again.
For space to happen we need a period of Moore’s law like reduction in launch costs. This will cause a Moore’s Law like reduction in space infrastructural costs, even including satellites, although they may hold their value a little longer. In such a scenario NASA derived boondoggles will quickly become even more worthless. I do not see asset based lending as compatible with such a necessarily quickly depreciating infrastructure, would asset based lending have worked with computers?
The mammals did not prevail over the dinosaurs by interbreeding with them, or by quickly growing to the size of a Tyrannosaurus Rex and taking them on in direct combat. They prevailed by keeping small and nimble, by continuing to evolve in the shadows well out of reach of the death throws of the dinosaurs. Once the dinosaurs were irrelevant or dead, they took over, but until then, they took great care not to draw undue attention to themselves. This is the model that science and technology usually follows, it is the model that new space needs to follow.
>>>>Okay, let me get this straight. I spend ONE paragraph in three posts on the shuttle and folks think this is a shuttle-centric thread? Is there a problem with reading comprehension?<<<<
My reading comprehension filters through my personal interests. I tend not to focus on things I find uninteresting.
>>>>I spend the entire first post on satellites and GEO. The second post dwells one para. on CBL, three on ABL, two on reusable stuff, and one on ESAS. The last post spends ONE paragraph on the shuttle and SIX on the ISS and people this is a shuttle arc?<<<<
I was responding to your underwhelming response comment. For ISS, who cares? IMO ISS is only useful in terms of transportation availability, as you point out.
>>>What am I getting at? I'm talking about ASSET BASED LENDING concepts. A B L, like the titles. Is such a concept really so difficult for the space community?<<<
ISS is a very shakey asset.Without transport availability, I would not want my money used to back the note. The mix of lending I am using on my business would probably be as risky to an outside observer. You need to be a lot farther inside than most of us to see sufficient value in ISS to use it as collateral.
>>>Yeesh, rub the wax out of your eyes.<<<<
I tried. It just smeared the wax all over my face.
Access to capital should be interest to anyone and everyone in the space field. It's what makes things happen, and there are a lot of different ways of making it happen. VC is one. Private equity (what we in the bank call 'stupid money') and hedge funds ('black-boxes' is the phrase I use) are other ways. There's the good old equity markets, with such wonderful variants as preferred shares and capital units. There's also a place for debt in the company's financial structure.
If private companies are going to be joining the stampede to the heavens they're going to need access to private capital. ABL is one way to do that. I've thought about writing about some others, but as usual I appear to be about five years ahead of the game, so maybe not. Ah well, c'est la vie.
Oh, and for the wax on the face, my grandpappy always told me a dab of rocket fuel will take that stuff right off. ;-)
And pete, the mammals also survived and prospered by taking advantage of whatever it is that the dinosaurs leave behind. Dinosaur scat, I guess you could say. (Hmmm, ISS as dinosaur scat. I don't think that sounds quite right...)
The only practical way I can currently see of ABL working would be in a PC type environment where there would be a sufficient diversity and turnover in space stuff to self insure and to average out the high depreciation rates. I can not see this being accomplished in a centralized fashion as the market signals would be too prone to being ignored - a few X-33s would poison the well for everyone. Hence this would require a small scale high numbers approach – again ruling out NASA derived architecture.
Most of the trick with rocket financing is about identifying the lowest energy, (lowest money), trigger mechanism for getting over the initial development hump, and then finding a way to finance that trigger mechanism, and that trigger mechanism alone. If this can be accomplished the vast majority of the rest of the financing can occur by conventional tried and accepted means.
An approach I have been considering of late is a public company that promises to invest a given amount in the first few companies, (via shares purchased on the open market), that achieves a specified goal. For example, the first few companies to fly fifty separate orbital flights. This works as a prize but allows the prize company to get a return on their investment. Unlike other such schemes, I do not immediately see any legal problems with such an open approach. Due to speculators such a prize company would not necessarily generate the highest returns, however the risk would be very low, especially if it ran multiple prizes at once.
Such a stock would be an obvious magnet to those who wish to invest in the future of space, and yet still be assured of retaining their investment. By investing only in companies that succeed, it should be a fairly blue chip stock, an investment option not currently available in the new space environment. Hopefully one would not have to be a new space expert to invest in such a company, opening the industry up to a much larger group of investors. It is sort of a highly geared prize system, which should make much larger prizes possible. With such distributed investment it might also enable ABL approaches.
This is an example of the type of investment trigger mechanism approach we need, not that I know whether this specific example would necessarily work. Any other ideas?
You can talk about reading comprehension, but what is the very first question? "Could a space shuttle orbiter be pawned?" Given the Shuttle-based confusion that followed, I think the question would have been better put as "Could a space shuttle orbiter or the International Space Station be pawned?"
Early items in a story are remembered better than later stuff. So I think there's reason to be gentle to the Shuttle-obsessed posters in this thread. Another example of the amazing power of human reading comprehension, I read the ABL series in reverse order because that's how it appeared on the page.
In any case, I have to say there's little value in the Shuttle for commercial activity in space. I see two problems. First, the vehicles require a large labor force, have delicate and extraordinarily complex equipment, and there's too few of them to get economies of scale. I don't think anyone disagrees here.
On Earth, it'd make a good cornerstone for a museum and NASA could probably get decent money (by decent, I mean a few tens of millions of dollars) for one just from that.
The ISS is in a similar situation. It's still functional but as an asset it is far less valuable than what it cost. So there's commercial activities that could be run on the station. But it's not going to cover the amounts that have been lavished.
My take is that standard economic transactions like asset-based lending will come through only when there's substantially more economic activity in space - pretty much what you say elsewhere in this series. The COTS program seems to be a good step in that direction.
>>>Oh, and for the wax on the face, my grandpappy always told me a dab of rocket fuel will take that stuff right off. ;-)<<<<
I agree. Also I note that the primary rocket fuel is a solid, is delivered in small rectangles, and has numbers in the corners and pictures of old people in the middle.
I think you are a bit ahead of the game on ABL. I think your whole thing is based on someone that can figure out how to make a profit with ISS. No profit would make it a non asset. The majority of the work should properly be in turning it into an asset.
In my little construction company, it is easy to get formal loans on recognizable assets. My homebuilt gadjets are not eligable for formal loans from established lenders,no matter how profitable. They are one offs. They do get ne private backing from both suppliers and customers that stand to profit from dealing with me.
If I am successful in building a base as Jon describes around my construction business, then I will be in a position to leverage a small space company. I have gained backers over the last few years and established a bit of credibility on the business end. If I get back in, it will be with backers that are business wise on the formal financial end.
The ISS is far before the time frame that I could possibly deal with.
Dennis Wingo is the best source I know for ISS use and would probably have valuable input into your concepts.
Like with the ISS modules. IIRC they could all in theory be lofted masswise into orbit by the EELVs, though perhaps not gently. I don't understand why some kind of shrouded STS-analogue cradle can't be figured out.
Until someone builds, tests and proves a working space tug, how do you make the new ISS module approach and dock with the station?
The Russian Mir and core ISS modules had power, propulsion, guidance and docking systems. It's kind of like building a house out of small motor homes - every room in the house has an engine, transmission, suspension and fuel system, never to be used again. Or perhaps more accurately, it's like building a space station out of expanded Soyuz and Progress modules.
The American, European and Japanese modules tend not to be self-propelled, powered and guided. They rely on the shuttle for delivery and docking.
Or am I totally wrong here?
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