Metrolink - Profitable Or Unprofitable?

[Camden]

Mod Note: Split from this thread.

Their ending The London Grant
Big pot of annual money that was supposed solely to reflect the fact that it was the capital and thus had higher transport requirements. The £700m was already part of the austerity cuts down from the previous £1bn.

Current deal was due to expire in 2015/16 anyway so looks like they've agreed a phased withdrawal.

Work out what it likely means for your own area (no, not more cash) and other areas of the north (although does anyone in Manchester actually give a hoot about that?) and then insert your smiley face.

Oh, and: "they're".

At some point a government is going to instruct a civil service department to cut 40% of its budget, and the department will be coming back and saying "OK, 40% cut. Here's your 40p back."

 

[WatcherZero]

Tfl was crazy wasteful though, for example those £1 flat Tramlink fares, every passenger who paid £1 to travel consumed a further £1 in subsidy, even today passengers are 31.9m while subsidy from the group was £32.2m. Docklands receives £42m in revenue support from Tfl, or almost 40p per journey.

 

[Camden]

And while much is made (by some Mancunians) of how the vaunted Metrolink system "covers its costs", nothing is said by them about the complicated way the construction of it and purchase of the vehicles (and maintenance and track/signalling renewal) is funded by the government, which amounts to massive subsidy in all but name, cleverly designed so that it gives the impression of being something the area is "earning back". Apply the same rules to Tramlink on the basis of London's "earn back" capability and perhaps everyone could travel free. Public transport, to be successful, often requires some form of public subsidy.

 

[WatcherZero]

£365m from normal Dft Integrated Transport Bloc grant (same per capita grant to everyone in the country)
£167m from increasing council tax
£10m developer contributions
£986m borrowing against profits from the systems operation

 

[Camden]

1) I really don't think that's everything, do you? There was a line from Altrincham to Bury and from Cornbrook to Eccles before the current tranche of extensions. I don't see the £400m Trafford extension in there, for example. Adding up the publicised costs of the "big bang" extensions which have just been completed (and which excludes the Trafford Line), gives roughly the total you quote.
2) No mention of the track renewals that will be needed.
3) No mention of the rolling stock, plus funds for renewal.
4) No mention of where the money has actually come from. "Borrowed" from who exactly? And at what rate?... It's no different than any other rail investment bar that you get the subsidy up front instead of over a long period of time. The deal may be flipped on its head, but its still the same deal.

I did suspect that you might be from Manchester, given your churlishness about London's budget cut, but now I am certain of it. You're very good at making it look on the surface that that you might be value for money, I'll give you that, but

5) What is the operating profit of Metrolink per year
6) How much needs to be set aside for cyclical renewals (as that's not included in your figures, bearing in mind that only covers the previously stated "big bang" construction costs)
7) How much has to go to the private sector
8) How much interest is added
9) Therefore, in what century do you suppose Manchester will be closing its "loan account" (of however much it actually is)...

Dress it up how you want, but it's plain as day that your city isn't some shining beacon of self-sufficiency.

 

[northwichcat]

1) I really don't think that's everything, do you? There was a line from Altrincham to Bury and from Cornbrook to Eccles before the current tranche of extensions. I don't see the £400m Trafford extension in there, for example. Adding up the publicised costs of the "big bang" extensions which have just been completed (and which excludes the Trafford Line), gives roughly the total you quote.

In the case of the Altrincham line it's worth noting BR had to do work on the Altrincham-Stockport line to allow it to take regular passenger trains, in advance of handing over Altrincham-Deansgate to Metrolink.

 

[WatcherZero]

1. Your really want to go back 30 years to phase 1 construction? TWAO not even been granted for Trafford yet, £350m is to be funded from uplift generated in business rates, same as TFL contribution to Crossrail.
2. track renewals come out of regular operating budget
3. Figures include rolling stock to operate extensions and renewal of existing fleet
4. Borrowed from the Public Works Loan Board (which generates profits for local councils by allowing them to invest their excess cash) and European Investment Bank
5. Operating profit long term average £30m rising to £50m this year with extensions opening
6. Cyclical renewals of vehicles and track come from operating expenses
7. Stagecoach reporting a £2m annual profit from managing the concession for RATP probably closer to £4m
8. £986m at 2.5% interest rate call it just under £25m interest, growth in profits probably another £10m from new line openings then a conservative 3.5% annual above inflation revenue growth. If all profits were then dedicated to paying interest and repaying loan capital then the loan could be eliminated in 15 years, more realistic is some would be invested in more capacity and 20% or so put aside for renewals which would give a repayment time of 20-25 years.

 

[Camden]

1. Your really want to go back 30 years to phase 1 construction? TWAO not even been granted for Trafford yet, £350m is to be funded from uplift generated in business rates, same as TFL contribution to Crossrail.
2. track renewals come out of regular operating budget
3. Figures include rolling stock
4. Borrowed from the Public Works Loan Board (which generates profits for local councils by allowing them to invest their excess cash) and European Investment Bank
5. Operating profit long term average £30m rising to £50m this year with extensions opening
6. Cyclical renewals of vehicles and track come from operating expenses
7. Stagecoach reporting a £2m annual profit from managing the concession for RATP probably closer to £4m
8. £986m at 2.5% interest rate call it just under £25m interest, growth in profits probably another £10m from new line openings then a conservative 3.5% annual above inflation revenue growth. If all profits were then dedicated to paying interest and repaying loan capital then the loan could be eliminated in 15 years, more realistic is some would be invested in more capacity and 20% or so put aside for renewals which would give a repayment time of 20-25 years.

1) Yes. And even more refusal from you to admit this is public money, when it is even more obviously public money.
2 and 3) This budget didn't exist prior to it being needed.
4) So public money then.
5) Documents please. I believe you may be massively incorrect. This Manchester Evening News article states that revenues are in excess of £50m http://www.manchestereveningnews.co...er-news/metrolink-makes-182-each-tram-9434122 If I have to explain how or why revenues are vastly higher than operating profits (revenues not being profits) then it perhaps explains why this conversation is still going on (and why there may not be much point continuing it). Please deduct operating and other costs before replying (I assume the network costs more than £6.8m a year to run, if you really need help making that small leap...).
6) see 2 and 3
7) So that's £2 to 4m of the profits accounted for already possibly.
8) In relation to the above, and in relation to number 5, your last answer really may have done for you, including with the very generous loan terms. I look forward to seeing the documents confirming the annual operating profits and perhaps we'll take things from there...

 

[WatcherZero]

1. Yes 30 years ago they got a government grant to convert lines on the cheap, are you saying there should be no public supported projects?
2. Budget has always existed
3. Has always existed

Page 59 revenue account

http://www.tfgm.com/Corporate/Documents/StatementOfAccounts/TfGM-2015-Statement-of-Accounts.pdf

for 2014/15 revenue 59,272, expenditure (including servicing debt) 45,900, Metrolink related TfGM staff costs (1,466), other external costs (2,205), profit from interest on cash in bank 50, revenue surplus for the year 9,751

 

[Camden]

Well done, you found it (and interesting to note how profits seem to have declined despite a growing network and according to the article growing revenue per passenger). £9.7m a far cry from over £50m no? How much did you say annual interest was... How much would the private sector might take...

Would you like to revise your payment schedule perhaps?

Also rather interesting notes in the document as a whole... a (growing) running loss on p3, of £9.9m. And what's that I spy on p7? Surely not a whopping £250m in grants? Still at least you should have enough to cover the "loan" repayments. Oh but wait, isn't that public money?...

(ps. No, any budget for replacing Metrolink infrastructure and rolling stock didn't exist prior to the existence of Metrolink... funnily enough).

 

[WatcherZero]

As the article you yourself posted the cost of expanding the network is included in revenue and operating expenses, that's £9.7m after paying the £25m of loan interest and other external expenses.

Your showing your lack of comprehension, page 3 refers to the whole of TfGM as does the grants on page 7 for operating subsidised bus services and investing in public transport infrastructure, or did you think nowhere in the country got grants? By the way the London Grant which started this argument was an extra grant on top of per capita grants to reflect the fact London was the capital, London continues to receive other revenue and capital transport grants.

(ps. No, any budget for replacing Metrolink infrastructure and rolling stock didn't exist prior to the existence of Metrolink... funnily enough).

Are you crazy? of course a budget for renewing Metrolink didn't exist before Metrolink was created, it existed after it was created ringfenced to maintain and renew infrastructure and is called funnily enough Metrolink Reserves, all annual excess revenue goes into this pot controlled by AGMA/GMCA to fund future improvements and renewals and it was tapped to pay for the replacement of the T68's as well as the Altrincham and Bury track renewals a couple of years back.

 

[Camden]

Are you crazy? of course a budget for renewing Metrolink didn't exist before Metrolink was created, it existed after it was created to maintain and renew infrastructure.

Which is exactly my point.

As the article you yourself posted the cost of expanding the network is included in revenue and operating expenses, that's £9.7m after paying the £25m of loan interest and other external expenses.

Your showing your lack of comprehension, page 3 refers to the whole of TfGM as does the grants on page 7 for operating subsidised bus services and investing in public transport infrastructure, or did you think nowhere in the country got grants? By the way the London Grant which started this argument was an extra grant on top of per capita grants to reflect the fact London was the capital, London continues to receive other revenue and capital transport grants.

Of course not, but I think if anyone listened to you they could be forgiven for thinking that everywhere else did except good old, good with money Manchester.

For someone who thought that Metrolink making £50m of revenue meant profit, I don't think you're in any position to criticise "comprehension", and I don't think this conversation needs to go any further. I was perfectly aware it means the whole of TfGM.

I know how precious the Manchester pride is, however sometimes it seems that bubble could do with the tip of a pin IMO.

Actually, perhaps not conversation quite over

As the article you yourself posted the cost of expanding the network is included in revenue and operating expenses, that's £9.7m after paying the £25m of loan interest and other external expenses.

Can you provide reference to the part of the document that states expenditure is including a loan repayment of £25m?

Revenue of £59m, minus £9.7m profit, minus £25m loan interest would mean the network cost £25m a year to run all in. Hmm...

Noting the "COMPREHENSIVE INCOME AND EXPENDITURE STATEMENT" on page 23, I note that if I read this correctly, Metrolink last year had expenditure of over £90m, leaving a loss of £43m.

 

[WatcherZero]

Last years operating revenue £59.27m less debt interest expenditure £20.9m generating nearly £40m for expansion and renewal.

Page 23 includes capital expenditure, the money being spent on building the extensions.

You asked me to prove it with documentary evidence, I did, thankfully you are now no longer protesting the issue. I know you being an exile subscribe to the Liverpool paranoia of government out to get them and deliberately sabotaging the city because: reasons. But you don't have to bring it in to every single discussion, for example this one on London 'Oh look at Manchester, they are getting billions while we are getting nothing'.


And now sadly your original post admitting you were wrong and agreeing to drop the issue has been edited to add more drivel.

 

[Camden]

Last years operating revenue £59.27m less debt interest expenditure £20.9m generating nearly £40m for expansion and renewal.

Page 23 includes capital expenditure, the money being spent on building the extensions.

You asked me to prove it with documentary evidence, I did, thankfully you are now no longer protesting the issue. I know you being an exile subscribe to the Liverpool paranoia of government out to get them and deliberately sabotaging the city because: reasons. But you don't have to bring it in to every single discussion, for example this one on London 'Oh look at Manchester, they are getting billions while we are getting nothing'.


And now sadly your original post admitting you were wrong and agreeing to drop the issue has been edited to add more drivel.

I can only hope you're trying to be a parody. Are you going to say something about football now? No, I don't think I mentioned Liverpool in this discussion about the London grant and Manchester Metrolink... I don't think I mentioned paranoia either, but at least "paranoia" alone might seem to fit more into this particular conversation...

And a rather strange comment, exile of what exactly. It is my choice to spend my working week in northern cities, I haven't been turfed out of London.

This whole issue, since you appear to have forgotten and become embroiled in some strange rage now aimed bizarrely at Liverpool (I mean seriously, what on earth could they have to do with any of this), was because you seemed to celebrate the ending of the London grant, and then went on to suggest that TfL were wasteful with it anyway. You don't get to post "drivel" like that and not get a talking to.

I know we're all supposed to believe that Manchester is the second comingcity, but you are just another city in fact and your services are funded in the same way everyone else's is (bar that perhaps you get more of it than most).

You haven't exactly clarified the issue of interest and whether its deduction is included in the £9.7m "profit", you have just waffled and from what I can see read something else and crossed your fingers and hoped.

It's not a case of me protesting the issue and I certainly haven't said I'm wrong (nor have I edited any post that suggested I was), because I'm not. I added to the post to pick up the above issue which I think perhaps you might have hoped wouldn't be noticed. The exact amount of profit is minutiae, the point is it's paltry compared to that which you claimed (you claimed £50m a year profit, when that was actually revenue) and tiny compared to the vast amounts of public cash spent on it. No I'm not wrong, you are. Not just a little bit wrong either, but w-r-o-n-g wrong. And astonishingly, in spite of being in front of a computer, you still don't seem to get the difference between revenue and profit. Whatever else you say, I don't think I'll be taking your interpretation of the accounts as authoritative somehow.

 

[plcd1]

Tfl was crazy wasteful though, for example those £1 flat Tramlink fares, every passenger who paid £1 to travel consumed a further £1 in subsidy, even today passengers are 31.9m while subsidy from the group was £32.2m. Docklands receives £42m in revenue support from Tfl, or almost 40p per journey.

Can you provide a source for those numbers please? I've never seen numbers that give that level of revenue support per pass journey for Tramlink or DLR.

Data provided by TfL to the London Assembly Transport Committee had trams with subsidy per pass jny of £0.08, DLR with subsidy per pass jny of £0.02, Overground with subsidy per pass jny of £0.09 and Buses with subsidy per pass jny of £0.06. Underground broke even with no subsidy at all. This from data in the 2012/13 Annual Report. Note that investment expenditure is EXCLUDED. This is a revenue / income comparison against gross operating expenditure.

I suspect the numbers for rail modes have improved somewhat and buses may have wobbled given an increase in costs but flatlining patronage and revenue in recent years.

 

[WatcherZero]

http://content.tfl.gov.uk/annual-report-2014-15.pdf

Financial assistance from corporation to subsidiaries table page 239 (32.2m up from 19m)


https://companycheck.co.uk/company/03092613/TRAMTRACK-CROYDON-LIMITED/financial-accounts

Croydon Tramtrack Accounts
Turnover 25.3m
operating profit -12.4m
Depreciation £11.5m
Increase in net assets £10m
Increase in shareholder funds £10m
Increase in working capital £1m
borrowing unchanged (£98m debt with £4m interest payment unchanged in 5 years, also a deferred £18.7m nearly unchanged in five years)

So actually getting hold of tramtracks own accounts rather than Tfl's corporate balance sheet, it looks like the subsidy is lower than £1 per journey I thought, its actually around 50p operating subsidy with the other 50p being capital investment.

 

[plcd1]

http://content.tfl.gov.uk/annual-report-2014-15.pdf

Financial assistance from corporation to subsidiaries table page 239 (32.2m up from 19m)


https://companycheck.co.uk/company/03092613/TRAMTRACK-CROYDON-LIMITED/financial-accounts

Croydon Tramtrack Accounts
Turnover 25.3m
operating profit -12.4m
Depreciation £11.5m
Increase in net assets £10m
Increase in shareholder funds £10m
Increase in working capital £1m
borrowing unchanged (£98m debt with £4m interest payment unchanged in 5 years, also a deferred £18.7m nearly unchanged in five years)

So actually getting hold of tramtracks own accounts rather than Tfl's corporate balance sheet, it looks like the subsidy is lower than £1 per journey I thought, its actually around 50p operating subsidy with the other 50p being capital investment.

I'm no accountant but I'm struggling to see how, given the lack of detail, that you are generating a subsidy number per pass jny that is so far out of kilter with the numbers TfL provided to the Assembly in 2013. I suspect a very considerable amount of the £32m from TfL is to cover the cost of the big programme of track replacement, extra tracks and new trams for Croydon's system.