Monday, August 14, 2006

Shoot the Messenger

Well, for those who haven't been following along on the little debate on the merits (or lack thereof) of Government investment in spaceports, here's a little update on the happenings in New Mexico.

Apparently, not liking the advice given to them by their hired investment advisors (Fort Washington Investment Advisors), the State Investment Council of New Mexico chose to instead terminate their relationship citing a "divergence of interests".

In plainspeak, a divergence of interests appears to mean that they didn't like it when FWIA told them that the decision to put $20m into t/space (and their consideration of another $20m into Virgin Galactic) was not sound investment but rather an economic development program. For space boosters, this is a no go.

Off with their heads, so to speak.

9 Comments:

Blogger oldspacecadet said...

New Mexico retains Fort Washington to perform due diligence on Virgin and t-Space for a fee. Fort Washington does so and wants to limit its liability to the fee. New Mexico then fires Fort Washington for their adverse determination and intends to proceed. This illustrates the reasoning power and critical thinking of the elected officials of New Mexico? No wonder New Mexico is one of the poorest states in the country.

Monday, August 14, 2006 8:33:00 AM  
Blogger TomsRants said...

It wouldn't be the first time an Advisor was canned for telling the unvarnished Truth.

Monday, August 14, 2006 8:43:00 AM  
Blogger Professor L said...

I think a serious question might be what the taxpayers of New Mexico do regarding this story given it was broken in the main Albuquerque newspaper. Will they go along for the ride, launch an investigation, or go on with daily life as usual while incurring yet another government rip-off (alleged) of taxpayer money. I hope we are able to see the respone from the New Mexico citizens. If any read this blog, please update us as necessary.

Monday, August 14, 2006 9:12:00 AM  
Blogger Bill White said...

There are NO investment grade opportunities in NewSpace. Musk can tell you that as can Bigelow. Repeat, there are NO investment grade opportunities in NewSpace.

I am surprised that New Mexico ever expected anything other than this:

Fort Washington was reluctant to sign off on the deals, seeking to limit its liability and telling the Investment Council the proposed investments were "more like economic development projects than private equity transactions."

. . .

t/Space is vying for a NASA contract to build a privately operated replacement for the space shuttle. If t/Space gets the contract, to be awarded in September, the company has said it plans to move that work from Reston, Va., to New Mexico.


The t/Space deal depends on COTS. If t/Space wins COTS to invest $20 million to assure that they re-locate to New Mexico may well be a legitimate economic development project whether or not the investment makes sense from a private equity perspective. Governments give real estate tax relief or sales tax relief all the time to induce business to relocate to their jurisdiction.

Monday, August 14, 2006 11:25:00 AM  
Blogger TomsRants said...

Bill White said...

There are NO investment grade opportunities in NewSpace. Musk can tell you that as can Bigelow. Repeat, there are NO investment grade opportunities in NewSpace.

Indeed, Grasshopper...NewSpace is untested at every level and has much to prove. So if those tasked for due diligence for proper investment of $20 million of New Mexico's tax dollars find NewSpace firms wanting, why would anyone in a position of fiduciary responsibility believe a proposed NM "spaceport" to be worthy of 5-10 times that amount of taxpayer "investment"?

Monday, August 14, 2006 6:43:00 PM  
Blogger Bill White said...

So if those tasked for due diligence for proper investment of $20 million of New Mexico's tax dollars find NewSpace firms wanting, why would anyone in a position of fiduciary responsibility believe a proposed NM "spaceport" to be worthy of 5-10 times that amount of taxpayer "investment"?

Because the New Mexico spaceport isn't primarily about space. "Space" is merely the window dressing and the marketing angle. New Mexico can win even if NewSpace falls flat provided that the money spent while falling flat is spent in New Mexico rather than elsewhere. If the NM tax dollars attract federal tax dollars and private investment.

If t/Space wins COTS funding, then New Mexico benefits from getting those federal tax dollars (COTS money) spent in NM rather than in VA. NM invests $20M in t/Space. That money is combined with COTS money and is spent on employees, a new office building etc. . . all of which are in New Mexico rather than in Virginia. Even if t/Space folds 3 years out, far more than $20 million will have been spent by t/Space near Las Cruces.

Likewise, if Spaceport America helps assure that the lunar lander X Prize challenge is in Las Cruces rather than at Mojave Las Cruces benefits.

Its not really about space at all. Its like helping a pro sports franchise relocate to your town. Sometimes that works and sometimes it fails. "Space" is being pimped to attract terrestrial tourists. Welcome to America.

Notice that those advisers did not criticize the investment as an economic development project.

Wednesday, August 16, 2006 9:46:00 AM  
Blogger Professor L said...

OK blog readers, for those of you who think New Space is untested and there are no markets or economically viable companies, come to Small Sat in Logan, Utah next year. There are multiple floors of companies here with booths, most in the alt.space or new space field, making money, selling hardware, bending metal, etc. Please consider expanding your horizon to include the alt.space and new space entrepreneurs that you may not know of right now but they exist. The new space/ alt.space world is much larger than you think with some damn good businesses making up the group. I have been talking to them since Monday, many will soon be on The Space Show as the show starts showing success models for how you make money in space.

Wednesday, August 16, 2006 1:56:00 PM  
Blogger oldspacecadet said...

I too am at SmallSat. The place is stuffed with small entrepreneurial companies with business plans, management, cash flow,etc. They know marketing, financing and market development. They don't whine or blame others; they just do their thing. They are selling products and services to governmental customers, academic programs, and to other private-sector companies -- including the aerospace biggies. Some have even made their way past ITAR challenges and are selling to foreign customers. Complaining doesn't interfere with their agenda of making legitimate products to sell to real customers for real profits. Readers are challenged: Come to SmallSat next year and see for yourselves.

Wednesday, August 16, 2006 4:32:00 PM  
Blogger Sam Dinkin said...

Soon there may be states and countries that are recovering space tragics.

Thursday, October 05, 2006 9:21:00 AM  

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