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Station & Transport Lease Rates
How Low Will Our Transport and Lease Rates Be?
Well carry our tenants, their equipment, their raw materials and finished products to orbit and back at no charge.
Every penny of our vehicles costs will be recovered from leasing the interiors of the fuel-filled ETs (converted in orbit) and other shorter, pre-fabricated ETs. Passengers will only pay us for the ET living and working quarters theyll need.
Our fuel-filled ETs will be 180 feet long; 26 feet longer than NASAs (these tanks will be drained of fuels in space and retrofitted for habitation or commercial uses). The shorter habitation section (which on some launches can carry cargo) will be 100 feet long. Both interior diameters will be the standard 27.5 feet. Each ET/Delta Clipper stack will deliver 150,000 cubic feet of ET interior volume to orbit. Well lease 50% of this interior to our clients (Well need the rest for our crew quarters, life support and other uses.)
We forsee a market for hundreds of converted ETs over the next 2 decades.
Well charge tenants $25 per cubic foot per day for the onboard production, laboratory and living quarters they require. For that fee we will supply their electrical power, a baseline of equipment, meals for their personnel, safety training and even appropriate insurance. If they have our bonded personnel operate their production equipment (which is included in the above lease rate) they will save the cost of leasing onboard living quarters for their own staff.
In addition to these rates we will require a 10% royalty on all materials, products or services they produce onboard.
A Guaranteed Cost Formula For Orbital Production
These numbers (zero transport cost to orbit, $25 per cubic foot per day interior lease rates and a 10% royalty) will finally let companies calculate the manufacturing break even points and profitable selling prices for their mass produced micro-gravity materials or products.
For example, they can lease a 10 foot by 10 foot section from us (which will include basic production, analytical and packaging equipment) for $25,000 per day. If they produce 1,600 ounces (100 pounds) of material each day and sell it on Earth for $100 per ounce, there gross daily revenue will be $160,000. After subtracting our $25,000 daily lease and our 10% royalty ($16,000), their daily net would be $119,000.
If they continue at this average rate for a year their annual net will be $43,435,000. Thats a 75% profit margin, excluding Earth-based packaging, shipping and sales expenses.
If they produce 3,200 ounces each day and sell it at $100 per ounce, their annual net will be $95,995,000. ($320,000 daily gross sales, minus our $25,000 daily lease our $32,000 royalty, times 365 days) A selling price of $20 per ounce at a production rate of 3,200 ounces per day will still net them $11,990,000 annually.
Onboard living quarters for their own staff will be available at the $25 per cubic foot rate. Accommodations will range from submarine-like shared sleeping quarters to cruiseship-like cabins. Lab workers (ours and theirs) will communicate with our tenants facilities on Earth through dedicated, secured lines. Our first tenants will generate the broadest patents. Major tenants may lease large onboard sections then sub-lease them to start-up firms in exchange for shared patent rights.
How Will The Space Island Group Make Out On All This?
Leasing 75 of these 1,000 cubic foot sections from each of our launch vehicles turned into space stations will net us $684,375,000 annually, plus roughly $400,000,000 in annual royalties. Our annual operating costs will be about $250 million. (Remember well be able to bring our supplies up for free, since each dual-ET cargo delivery vehicles will be converted to new revenue generators in orbit.) Thats nearly $1 billion annually in net operating revenues for each of our launch vehicles/orbital facilities. Each launch will cost an average of $400 million, so our payback period will be less than 9 months. Each facilitys life expectancy will be about 30 years, with increasing maintenance costs in later years.
So well do fine.
What About The Start-up Costs?
Based on extensive discussions with suppliers, we estimated our start-up costs at $5-$7 billion. Thats $1 billion to develop the dual-ET launcher, $500 million to outfit the first station section habitat/production area, $3-$4 billion to develop and test the first Clipper, and a few hundred million to build our own launch facilities, if needed.
No venture capitalist group could fund us at this level, but we have another option. Bank executives weve spoken with point out that in many ways our commercial orbiting facilities will resemble an Earth-based industrial park or shopping mall. The shopping mall comparison is especially fitting.
In that case architects design the mall, pick a location, sign leases with reputable future tenants, then use those leases as collateral to borrow bank funds to buy the land and build the mall. The tenants commit a percentage of their lease revenues (which include a percentage of the tenants sales) to the banks to repay the loan.
Several banks are exploring a similar arrangement with us to cover our early design and production costs.
Our first (unmanned) test launch will take place in 4-5 years if we attract enough funding this year. If the facility activates properly in orbit and our Clipper prototype returns safely, well have a second, manned launch 3 months later. The second dual-ET will permanently dock with the first, forming the first phase of a habitable ET cluster that will look like a group of pencils bundled together by a rubber band. After that well launch once a month and, within a few years, once a week, eventually the flights will be on a daily basis.
Based on the above revenues, we could pay off a $7 billion loan in less then 10 years. At that time about 2012, well drop our lease rate to expand our tenant base.
Were also looking into revenue source beyond leases and production royalties.
New York ad agencies have told us that major corporations are paying several hundred million dollars each for the naming rights of U.S. sports stadiums and arenas simply because of the name exposure this generates. That exposure is usually local or regional, unless the arena hosts some national events.
Firms that contract with us for naming rights of our first facilities will receive continuous international media coverage for at least a decade, beginning this fall. All stories detailing the design, fabrication, testing, launch and activation of the facilities, including the selection and training of our crew members, will refer only to the (corporate name) Space Research and Production Center.
Sale of these naming rights in advance could generate well over $1 billion in our first year or two, since well offer a range of segment naming options.
Another revenue source is the worldwide TV/Internet broadcast rights from these facilities, which will be far more extensive and dramatic than those NASA has offered in the past. Sale of these rights could also total more than $1 billion in first year.
Weve had preliminary discussions with over a hundred prospective tenants during the last 3 years, and weve begun negotiating the naming rights with a dozen firms. Early on we will be discussing (2) new categories of clients as they began reviewing our project. The reason for their interest is outlines at; www.spaceislandgroup.com/solarsat.html
Adjustments will certainly be made to our plan as we proceed, but the main elements described above will remain. Dan Goldin, who headed NASA during the 1990s, once said that commercial space manufacturing would change Mankinds history as dramatically as the discovery of fire. Based on the remarkable companies were negotiating with and the startling new materials and services theyre proposing, we think that may be an understatement.
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