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1856: Railroading in Upper Canada from 1856» Forums » Sessions

Subject: Hotsun into CGR @ Old Town Kopitiam again rss

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C.K. Au
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Fri Meetup @ Old Town Kopitiam & Boardgamecafe.net 26/1/07 - Blokus Trigon, 1856, Antiquity

Gamers: Heng (ayheng), Alvin (aycee), Henry Yeo (rhyen), Ainul (aanemesis), Alan Tan, and Jeffrey Au (jack208)

Games: Blokus, 1856, Antiquity

Location: Old Town Kopitiam and Boardgamecafe.net, Cheras
Date/Time: 26 Jan 07 (Fri) 8.30 PM - 6.00 AM

-------------------------------------------------------------
1856 (Upper Canada)
reported by jack208

Henry was the next to arrive after he's done with his gym session. While he was looking at the menu to decide on his dinner, we got a surprise! Alvin (aycee) dropped in with Heng (ayheng) and Alan Tan.

We had thought Heng was not able to make it tonite as he has a Gua Tempurung trip tomorrow with his girlfren but surprise surprise he turned up! Guess the boardgaming bug is strong in this fella.

While Henry was slurping his dinner (prawn mee), I took the opportunity to explain the 1856 rules and differences to Alan and Alvin. Both of them have done a learning game of 1856 earlier so it's a matter of just getting them up-to-speed.

(photo)
Ainul and Heng setting up the game

We did a 4-player 1856 session last week, and this week we'll get to experience a full 6-player 1856 session! We quickly draw for player turn order (Ainul, Heng, Alan, Aycee, Jeff, Henry) and then proceeded to the auction for the private companies.

In the private companies auction, each player ended up with one private comp; (in order of ascending cost) Jeff (Flos Tramway), Alan (Waterloo), Aycee (Canada Company), Ainul (Great Lakes), Henry (Niagara Falls), and Heng (St Clair).

First consideration is cash... with 6 players, each player gets only $250 starting capital less whatever they paid for their private companies, not a lot considering the lowest par is $65 and the public companies will begin to operate as soon as the President's Certificate (two share) is sold. This means if no one else invest in your company at the start, it's likely to be cashstrapped!

With that in mind, each of the player still chose to capitalize their own public companies except for aycee who chose a different path. It is true that businessmen in this era built railways more on hope than on solid financial basis! Ainul and Heng both capitalized CPR and CA respectively for $80 par while Jeff started GW at $70. Henry and Alan took WR and WGB at $65 par.

Aycee on the other hand, formed an investment group called "WiiSe Capital LLC" and started wisely investing into railways that were profitable. Through his investment, the GW started operations with 40% of its IPO subscribed while the CA and WGB were 30% subscribed. The other two were a little undercapitalized at 20% only.

(photo)
Everyone's busy with the start-up operations of their first railway company

The respective CEOs were soon busy with their railway start-up operations, building tracks where it's profitable, buying a Type-2 train each and started making money on their routes. Except for GW who bought two Type-2 trains since it has an early route from London to St Thomas and was already building quickly towards its second route from London eastwards to Woodstock.

Most CEOs - wanting to please their investors in the beginning - paid good dividends and as a result their share prices appreciated. The WiiSe Capital company ran by aycee was doing quite well too getting some returns from its early investment. It started to acquire more stakes in various other railway companies.

WGB under the capable management of CEO Alan, after having established good routes from Guelph southwards to Galt and Brantford, and now aggressively building northwesterly towards Goderich (its destination city) decided to acquire one Type-3 train to boost its earnings. CEOs Ainul and Heng not to be outdone, quickly purchased their Type-3 train as well, and at the same time expanding their railway business - CPR southwards to Toronto and CA towards Sarnia - to leverage their new engines.

Most of these companies were undercapitalized initially, so they had to get some Government loans in order to maintain their liquidity but since they were doing well with their routes, they had no problem servicing the loan interest and most of them even continued to pay out good dividends.

(photo)
The Good Times are here: CEO Alan (WGB) having some laughs with Venture Capitalist Aycee (of WiiSe Capital) at the Railway Club.

CEO Jeff of GW was really making some good money.. and soon, he started his second railway company - LPS at $100 par - which already had most of its tracks built by CA and GW! Jeff immediately bought a Type-3 train (the last one) and LPS started making money almost on its first day of operations! Aycee, being a sharp-eyed investor quickly spotted the potential and took up one share in LPS as CEO Jeff promised them LPS will be paying out good dividends.

The CEO of CA (Heng) were seen manipulating the share market by getting his proxies to buy and then sell back CA shares to the Open Market... making it 100% fully subscribed. His proxies made some capital gains by selling the shares quickly back to the Stock Market. CA has strong fundamentals, were making profitable runs, and thus money were good for the shareholders and the company itself.

Note: Shares in the Open Market contribute dividends to the company itself, instead of to the bank (for unsubscribed shares) hence this method is a very smart - and legitimate - way of putting back the dividend income into the company's cash coffer.

By now, CEO Aycee were busy entertaining the various railway CEOs in order to determine his subsequent investments. The early investment round was paying back for WiiSe Capital but while it's making good money for Aycee, the question remains whether the CEOs themselves were raking in more!

(photo)
Railroad Tycoon-wannabe Jeff now controlling two railway companies - GW and LPS

Alas, Good Times do not last forever.

With advancing technology comes the cost of obsolescence. The Type-2 trains which have been serving these railway businessmen so well in the early years of the railway business are now giving way to rust and the efficiency of the new Type-4 trains which promise even greater efficiency and every railway businessmen knew that translate to higher profits.

Dilemma for the CEOs as they now need to withhold dividends in order to prepare their companies for the pending capital expense of upgrading their Type-2 trains to Type-4. Obviously shareholders were not happy with the non-issuance of dividends and that's reflected in the drop of their shares' market value.

(photo)
CEO Ainul (CPR) and Heng (CA) pondering their next business directions as they realized their Type-2 trains need to be replaced soon

LPS was paying out good dividends - as promised by its CEO - and soon it was attracting more investment, some even coming from rival railway CEOs! This surge of capital allows LPS to acquire one of the brand new Type-4 train which further boost its revenue.

CPR, CA and WGB followed LPS and upgraded their Type-2 trains to Type-4. WR (Henry) was a little late to the action and had to fork out a lot more to buy one of the Type-5 trains, which boasted more power but relatively untested at that point in time. The manufacturer even claimed that their Type-5 trains will never need to be replaced. Only time will tell whether that's money well-spent by WR.

CEO Jeff then executed a questionable maneuver..... he authorized a purchase order from GW to buy one LPS Type-4 train for an undisclosed sum. While this provided GW with two trains to bring in more revenue, it left GW low in cash, and LPS a little weak on the train department. Obviously LPS shareholders were not happy, and demanded an explanation. GW shareholders were concerned as well.

At the Press Conference, CEO Jeff not only pacified his shareholders but instead made them happier when he announced that LPS was selling its old Type-4 train to GW in order for LPS to raise sufficient capital to buy one of newest Type-5 trains. In fact, he even invited CEO Henry of WR - the first railway company in Canada to testdrive the Type-5 train - to give his testimonial to support the purchase of the Type-5 train, which was touted as the Engine of the Future!

(photo)
CEO Jeff at the LPS Press Conference explaining why LPS sold its Type-4 train to GW, another company controlled by him. CEO Henry of WR who was invited to this press conference was caught falling asleep.... hmm, was the Press Conference that boring?

The LPS announcement drove investors to quickly come onboard and LPS shares were fully subscribed. This provided more cash for LPS to begin its expansion in the southwestern map after acquiring the Type-5 train.

Jeff held another Press Conference where he explained that since GW will soon arrive at its destination city (Detroit), it will be able to access its escrowed capital and thus the temporary low cashflow situation should not be a concern as having two trains will more than double its revenue.

Due to its proximity with LPS, and the fact both were owned by the same CEO, GW were also enjoying a very profitable run with its Type-3 and Type-4 trains. This naturally attracted more investors, which brought in more working capital for GW. GW meanwhile were indeed doubling its revenue with both its trains fully maximized.

On the northern part of Canada, CPR was also growing very fast and CEO Ainul while maintaining a low profile has been laughing all his way to the bank. CA with its good and profitable central routes were maxxing out its Type-3 and Type-4 trains. CEO Heng instead of expanding CA's operations decided to diversify his holdings into rival railway companies including Jeff's GW. Very soon, Heng was the first to reach the investment limit of 10 certificates else with his financial might, he might buy up a few more shares in his rival companies.

WR were performing a series of tricky track-laying exercises around the Niagara Falls region, connecting Buffalo, Fort Erie, Welland and extending to Hamilton. Their CEO promised great riches once those tracks are completed... but investors were cautious and preferred to adopt a wait-and-see attitude.

WGB on the other hand were undecided whether it should expand northwest or go southeast towards Welland. Or maybe east heading for the rich market of Toronto. In fact, the growth of Toronto and the northeastern region was generally acknowledged to be CEO Ainul's good work with his CPR railway company. He has transformed Barie and Toronto from being out-of-the-way cities into one that's populated by the upper-middle market.

(photo)
Alan of WGB consulting with his largest investor, Aycee of WiiSe on his next expansion plan.

As the last Type-5 train was bought by WGB and with the imminent announcement of their newer Type-6 train and with an booming local economy that demands trains that can service longer routes, the rush to be the first few to acquire these powerful engines and thus hope to dominate the railway industry in Canada began!

CEO Jeff, who has delivered so far on his two companies GW and LPS, executed another questionable maneuver. He was moving trains (assets) between LPS and GW.... but since he managed to account for his previous maneuver and in fact delivered more profits for his stakeholders, the investors adopted a passive stance towards this restructuring.

(photo)
Heng thinking to himself, "Hmmm, this Jeff must be up to something..."

That's when it happened. The dreaded HotSun maneuver.

On the next stock round, Jeff promptly dumped 50% of his GW shares to the Open Market, making $600+ in the process...... Shares of GW had been pushed up to $125 through a series of continuous dividend payout, and bumping up due to it being fully subscribed. The consequence of this massive selling (which pushed GW share down to $90) resulted in Jeff vacating his CEO position for Heng to take over.

(photo)
Heng receiving the GW charter on being appointed as the new CEO

On completing his due diligence, Heng realized that GW has been stripped of most of its cash, has only a Type-3 train and a high level of Government loans. He has to think quickly how to salvage the situation without him getting his personal funds drained trying to help GW (if the Type-3 train becomes obsolete and he's forced to get a new Type-6 train). Some quick shuffling of assets between GW and his profitable CA seemed to have resolve the problem with GW now having a Type-4 train and CA running a Type-3 and a Type-5 train. The crisis is temporarily averted.

Jeff (still owning LPS) started his next railway company GT and immediately got down to negotiating some arrangement with CEO Ainul, who basically controls the northeastern part of Canada with his CPR. They quickly reached some mutually beneficial agreements and the development of the northeastern region began earnestly.

Investors were now more wary of Jeff's intention with GT... and only Aycee's WiiSe took up a share. Not to be daunted, CEO Jeff decided to fund GT himself by taking up the bulk of GT's subscription (to the max 60%) and proceeded to build up GT's operations in the northeast together with Ainul's CPR.

(photo)
Jeff starting his next company, GT

Alan of WGB then announced that his company will be the first to acquire the very latest technologically advance Type-6 trains. He has built up a good network around the central region to support the new engine. Annual forecasts for WGB were tripled and with its prospect looking good, share prices went up as more dividends were rolling out from WGB!

At this juncture, the Canadian Government intervened and forced all railway companies with Government loans to either repay their loans or join the national railway company - Canadian Government Railway (CGR). Some of the smaller railways were folded into CGR. Among the railway companies of the tycoons; only Heng's GW (formerly owned by Jeff) could not repay its loans and thus were absorbed into CGR, with a 1-for-2 exchange of existing shares with CGR shares. Heng was appointed its CEO due to his good record in running CA. Jeff, Henry and Aycee lost their investment in GW as they only held one share each which did not fulfill CGR's criteria for the share-swap exercise.

Heng promptly scrapped the existing Type-4 train and asked the Government to lend funds to "borrow" a Diesel train..... with unlimited capacity, Heng set up the diesel train to bring in the much-needed revenue to turnaround CGR, mainly running on the ex-GW's tracks which connects the busy western Canada with the lucrative central region.

(photo)
Heng working out his game plan for the new railway giant, CGR

Having to "borrow" diesel train meant CGR could not afford to pay out dividends (though due to Government intervention, its share prices do not fluctuate or change, remaining at $100). Investors in CGR were getting fidgety.... will they see their money back?

At this moment, most railway companies have upgraded to at least one Diesel train... and were running very long and profitable routes. With the competition for routes heating up, Jeff started to use GT to place station markers at strategic cities in an attempt to cut-off the lucrative cities from his rivals. Soon Henry's WR was adopting the same tactic to protect it's southeastern turf.

Heng's CGR would have done the same except that it's now in "recovery mode" having to prep up its financials to afford its own diesel train before it can focus on any market protection activities but with the CGR's huge number of station markers, the other railway companies would surely follow CGR's development in this area with some trepidation.

(photo)

>The game ended here as it was getting late (or early? 1am+) and some players have other commitments tomorrow morning. It was a very enjoyable game as we finally get to see CGR formed and running. We did not yet see how CGR will expand and its impact on neighboring railways.<

Names of the railway companies mentioned in this session, in order of appearance

CPR = Canadian Pacific Railway (par $80)
CA = Canadian Air Line Railway (par $80)
GW = Great Western Railway (par $70)
WGB = Wellington, Grey & Bruce Railway (par $65)
WR = Welland Railway (par $65)
LPS = London Port Sarnia Railway (par $100)
CGR = Canadian Government Railways (par $100)
GT = Grand Trunk Railway (par $100)

Note: We did not start any further new public companies after the CGR as time was running late (12+) and some players have to retire for the evening. We merely played for a few more rounds after the CGR and wound down the game.

--------------------------------------------------
Click here for this full gaming report complete with photos (recommended)
http://boardgamecafe.net/community/blogs/boardgamecafe_net/a...

For boardgaming activities in Malaysia, check out http://www.boardgamecafe.net
 
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Devin Smith
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A couple of comments: (yes, me again)

You mention in your intro that

Quote:
...not a lot considering the lowest par is $65 and the public companies will begin to operate as soon as the President's Certificate (two share) is sold. This means if no one else invest in your company at the start, it's likely to be cashstrapped!


Er. Yup. This is the primary reason why it is a terrible idea, in 1856, to invest in other people's companies in the early game: you're just handing them money to spend on trains, and definitionally they'll make more money off the company than you will. It is very, very hard to win at 1856 playing an investor strategy.

The other detail here is that while $145 might not seem like much, this is enough to start a company in the first OR: yes, it might be a bit broke at first, but the nice Government Loans will take care of that in short order---short enough to buy in your $100 private for $200, which you can then flip for 2-3 more shares, capitalizing the company. $140 in initial capital is enough for two 2-trains with a loan, for instance, though this might not be the best plan.

The whole early game in 1856 revolves around moving cash in and out of a company for maximum profit.


Comment two:
Quote:

On completing his due diligence, Heng realized that GW has been stripped of most of its cash, has only a Type-3 train and a high level of Government loans. He has to think quickly how to salvage the situation without him getting his personal funds drained trying to help GW (if the Type-3 train becomes obsolete and he's forced to get a new Type-6 train). Some quick shuffling of assets between GW and his profitable CA seemed to have resolve the problem with GW now having a Type-4 train and CA running a Type-3 and a Type-5 train. The crisis is temporarily averted.


Er. Huh? If you've got a company with a bunch of debt and a 3-train, this sounds about perfect. It is in fact much worse to have this situation without the loans, as then you might be forced to keep the company when the CGR forms: with debt on your hands the government will take it for you. This is one reason why dumping a company in 1856 is rare, and rarely profitable.

That being said, I'm generally for running more companies being better than investing....

Thanks for the session reports!

Edit: fail to preview formatting
 
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C.K. Au
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Excalabur wrote:

$140 in initial capital is enough for two 2-trains with a loan, for instance, though this might not be the best plan.


Getting two trains with internal cash is fine but adding a loan for it seems pricey. Yes I agree with you this may not be the best plan.

Excalabur wrote:

The whole early game in 1856 revolves around moving cash in and out of a company for maximum profit.


Yes, and how to do it again and again....

Excalabur wrote:

Er. Huh? If you've got a company with a bunch of debt and a 3-train, this sounds about perfect. It is in fact much worse to have this situation without the loans, as then you might be forced to keep the company when the CGR forms: with debt on your hands the government will take it for you. This is one reason why dumping a company in 1856 is rare, and rarely profitable.


Oh, that's partly becoz we played the Forced Train part wrong (see my other post on the Rule about this) where we played you need to get the Forced Train when your current trains are scrapped etc.

If we played it correctly, then yes, a company with debt need not worry coz it'll be absorbed into CGR before the owner need to do the forced train purchase.

But I do not agree that dumping company is rarely profitable. You do get a whole chunk of cash to reinvest.

Excalabur wrote:

That being said, I'm generally for running more companies being better than investing....


One of the players, Heng, is favorable to this approach.
 
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