Off the rails

The Las Vegas Monorail, Bruce Woodbury insists, has been a success -- if by success you mean a "good transportation system."

Of course, by that standard, we could label long-defunct American Motors a success -- if by success you mean the company built something called the Gremlin that could go from point A to point B (sometimes).

But many others have a different view of business "success." One that insists a company, product or service meet enough of a consumer demand to turn a profit and be viable in the long term.

Mr. Woodbury, a former county commissioner who now sits on the monorail board, admits that the monorail falls short in that regard. The rail system "did not meet the goal to make enough money to pay back all of the startup construction funds."

Indeed, like most mass transit projects, the monorail never generated the anticipated revenue because ridership projections had no basis in reality. While backers maintained the line would attract 20 million riders a year, it has struggled to reach the 10 million mark since its first trip in 2005.

So now the Las Vegas Monorail Co. is negotiating a restructuring agreement with bondholders and its insurance company to pay off some $650 million. The restructuring might include bankruptcy, but Mr. Woodbury says he doesn't see the rail system shutting down.

"That wouldn't benefit anybody," he said last week.

Monorail supporters continue to harbor hopes of expanding the line -- which now runs east of the Strip from Sahara Avenue to Tropicana Avenue -- to the airport and to other resorts. Fine. As long as the taxpayers -- who at this point have no liability in the project -- aren't dragged in as cash cows to cover the costs of such ambitions.

And here's a tip: As the company tries to shore up its balance sheet, executives might want to get a handle on expenditures, particularly personnel costs. According to the monorail's 2008 tax returns, the company saw revenue decline by $3 million to $33 million. Yet expenditures increased by $1 million to $99.5 million -- with the amount paid to employees up a whopping 43 percent to $3.3 million.

If that kind of generosity continues, the Las Vegas Monorail Co. may go the way of American Motors faster than you can say "Pacer."