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Good morning! It's Thursday, January 18th. Today’s post looks at Brightline, a company that’s spending nearly $20B to construct high-speed railways in the US!

THE FEATURE

Wes Edens' Billion-Dollar Bet on American High-Speed Rails

In 2022, Americans took 23 million train trips in total. In case you didn't know, that's not much— France had 979 million train trips that same year. 

American billionaire Wes Edens is on a mission to change that with Brightline, the first privately funded US passenger rail line in the last 100+ years!

So, What’s the Business?

Wes Edens is best known for co-founding Fortress Investment Group in 1998, later acquired by SoftBank in 2017 for $3.3B! Fortress Investment Group owns everything from Colorado ski slopes to 161 hotels in Japan. 

Edens still serves as chairman for Fortress and directed the group's revenue toward their riskiest bet in 2012: Brightline.

Bringing high-speed train lines to the US is no easy feat. Brightline began constructing its first line between Fort Lauderdale and West Palm Beach in 2014. Only a few months ago, the company finally completed its railway that spans 170 miles from Orlando to South Florida, bringing project costs to a whopping $5B!

While Brightline has only now completed its Florida route, the company has generated revenue since 2018, when it opened its 70-mile stretch between Miami and West Palm Beach. 

In the first nine months of 2023, Brightline generated $44.3M in revenue, a massive increase from the $20.5M in revenue from the same period in 2022. This increase is mainly due to their expanded lines and an uptick in consumer usage. 

The Innovation: Getting Paid to Show the Govt. How It’s Done

Do you remember when the California government broke ground on its "historic" high-speed rail project in 2015? If you do, it's likely because you've seen headlines on how its cost projections have jumped to $128B for its route from Los Angeles to San Francisco with no clear completion date. 

Democratic politicians have long supported bringing European-style high-speed trains to the United States as it reduces the environmental impact of transportation. However, let's be honest: the US government is largely incapable of executing such a project in a timely manner while staying within budget.

That's why Wes Edens unveiled his new project just after finishing his Florida route, Brightline West, a high-speed rail route linking Southern California to Las Vegas. To help that effort, the Biden Administration has given $3B in federal grants to the Brightline West project! 

The funding isn’t a surprise. With its Florida route complete, Brightline showed the federal government that the private sector is far more capable of creating high-speed rail lines at a reasonable cost. 

One of the primary factors that's led to the $128B cost for California's high-speed rail is that they're purchasing large swathes of land and constructing entirely new rail lines. But Brightline showed that it doesn't have to be that way. 

The United States actually has the largest rail transport network in the world, which totals 160,000 miles. The catch: 140,000 of those miles are classified as freight railroads, not personal. 

Wes Edens' stroke of genius was in partnering with those Florida freight lines and using segments of them for long stretches of their high-speed route.

Brightline West will stretch 218 miles from Las Vegas to Rancho Cucamonga and cost an estimated $12B— a hefty cost but a fraction of the California High-Speed Line that's still constructing its 171-mile "starter" line after nearly a decade. 

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