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 Rock 'n roll legend Neil Young will no longer have his own trains to play with under the Christmas tree. Lionel LLC, the famous model train maker, left bankruptcy on May 1. But Young, who owned a 20% stake in the company, isn't any longer part of its post-Chapter 11 life.
The company entered bankruptcy on Nov. 15, 2004, because of a patent dispute with rival Mike's Train House Inc., and the ensuing three-plus years proved to be bruising ones for all involved. The dispute was finally resolved. And like shareholders in most bankruptcies, Young was wiped out in the reorganization plan. In a sign of the times, private equity firm Guggenheim Corporate Funding now has a 48.6% stake in the reorganized Lionel. To be sure, these are very different days for the toy industry, and not just because of PE involvement. Lionel's founder, Joshua Lionel Cowen (initially Cohen), in 1901 first sent a flatcar with a battery buzzing around a brass track. But the Lionel train is decidedly low tech compared with the Wii and other video games kids play with today. Will Lionel be able to make it in such a world? Let's hope so. Just like hearing the train whistle in the distance has comforted many an insomniac in the middle of the night, so too has the miniaturized version inspired a few generations of model railroaders. And while video games assimilate so many things, one thing they can't do is emulate the fun of creating towns, or putting up trestles or having smoke come out of a little locomotive. Young certainly lent some cache to Lionel, but the company's enduring quality has been its adherence to an age when toys actually required not just hand-eye coordination, but actual creativity, some manual dexterity and the fun that goes along with being a hobbyist. - Terry Brennan See The Deal's Bankruptcy Insider's full coverage of Lionel CategoriesComments
From: Ryan Baldwin,
I can particularly relate to your quote about the train whistle comforting insomniacs in the middle of the night. I wasn't an insomniac as a kid, but I grew so accustomed to hearing a whistle less than a mile from my childhood home that, when we finally moved, I found myself almost craving the sound of the train as I struggled to fall asleep in my new bedroom. I wrote yesterday about your quote and Lionel's current situation: http://undercurrents.tmgstrategies.com/2008/05/08/who-killed-the-lionel-train/ Of course, I welcome any comments you may have!
Posted on:
May 9, 2008 12:11 PM
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"But the Lionel train is decidedly low tech compared with the Wii and other video games kids play with today."
Not anymore! Although trains that have a simple whistle and smoke are still being made, the high end trains are far from low tech. Engines and cars today contain sophisticated wireless components and microprocessors. Neil owns a separate company Create Trains which has joint venture with Lionel and designs and produces all of the electronics for Lionel’s trains. Today’s trains cost thousands of dollars and can be remotely controlled via a handheld wireless controller. Lionel’s latest “Legacy†system allows one to control up to 99 trains, 99 accessories, etc. Neil’s experts have digitally recorded the actual sounds from the still existing steam engines and programmed this into the engines. We can now digitally record a complete sequence of events, starting the engine, coupling to waiting cars, pulling out of switching yard, remotely throwing switches and controlling the realistic sounds of the train. All of this can also be controlled via a computer interface. Although trains today are mostly the domain of the aging baby boomers they are also one of the best kept high tech secrets around.