The easiest way for Elon Musk to raise money for SpaceX might be tourismSeptember 19, 2018
Before Japanese billionaire Yusaku Maezawa can fulfill his dream of seeing the Moon with an artist collective, SpaceX still needs to finish the rocket that will take the group to space. The company needs more money to fund the development of the vehicle, dubbed the BFR, and more wealthy patrons may be SpaceX’s best funding option.
On Monday, Musk estimated that the total development cost of the BFR would run around $5 billion, costing no more than $10 billion but no less than $2 billion. Musk also said SpaceX is spending about 5 percent of its resources on creating this new vehicle at the moment.
Musk maintains that the BFR can ultimately be funded through SpaceX’s existing projects. Those include launching satellites — both for commercial customers and the Department of Defense — as well as cargo and astronauts to and from the International Space Station for NASA. Revenue from those ventures just doesn’t seem like it’s going to be enough to get SpaceX all the funding it needs quickly, though. It’s likelier that SpaceX will need cash infusions, either from people like Maezawa who are interested in riding on the BFR or tourists who might want to fly to the International Space Station. Otherwise, the BFR probably won’t launch for the first time in the next couple of years, as Musk currently predicts.
SpaceX has increased its annual launch pace, which will help bring in more money. But the company is still only launching a couple dozen payloads annually. Last year, SpaceX launched 18 Falcon 9s; this year, it’s expected to launch more than 24. “Certainly, they have a really good business going, and they’re already able to capture the majority of the commercial space launch business,” says Greg Autry, an assistant professor at the University of Southern California who specializes in new space companies. But the Falcon 9 rockets start at $62 million per mission, making it significantly cheaper than rival vehicles. That selling point also means SpaceX isn’t making the kinds of margins on the sales that could easily fund the BFR.
The most recent rollout of the upgraded Falcon 9 Block 5 should help, though. The Block 5 is supposed to be even easier to reuse. SpaceX is already decreasing the turnaround time between re-flights and doing less refurbishing of the rockets between launches. That should help lower the cost of manufacturing new rockets for each trip to space. Still, if SpaceX’s costs routinely drop by $25 to $30 million per flight, for example, the company is making tens of millions per launch. Best-case scenario, that roughly translates to half a billion dollars a year for 20 launches.
SpaceX has to employ about 7,000 people to make the rockets. Generally, one pays employees. The more people who work on the BFR, the more money SpaceX spends paying them. “The primary cost is the people,” says Charles Miller, president of NexGen Space LLC, a space consulting firm, and a former member of the Trump administration’s NASA transition team. “It’s not the materials he’ll need to buy. The primary cost is the large world-class rocket team he has working on [the BFR].”
It’s not like the BFR is the only major SpaceX initiative, either. The company plans to build a massive satellite internet project called Starlink, a constellation of thousands of space probes that will beam internet down to Earth. SpaceX received approval from the FCC to send up these satellites after successfully launching two test probes in February. However, SpaceX must launch at least half of its first 4,425-satellite array within the next six years in order to keep its license. That’s expensive; SpaceX estimates it’ll cost $10 billion to develop all of Starlink, which will equal nearly 12,000 satellites total. So the company is going to need to sink a lot of its revenue into Starlink, too, and that initiative has a hard deadline.
That makes private customers attractive as a source of cash for the BFR. Maezawa wouldn’t say how much he paid to reserve an entire BFR flight for himself and eight hand-picked artists. Musk said the amount was “non-trivial” and that it will have a significant impact on the BFR’s development. So how much is “non-trivial” for developing a rocket Musk expects to cost $5 billion to fund? It could run as high as hundreds of millions of dollars. “It actually gives me some confidence that this could be enough to propel the project forward,” Laura Forczyk, a space consultant and owner of space research and consulting firm Astralytical, tells The Verge.
If SpaceX decides to dabble in private space tourism to drum up funds for the BFR, the company has the means to do it. Currently, SpaceX is working on developing a passenger spacecraft called Crew Dragon to take NASA astronauts to and from the International Space Station as part of the Commercial Crew Program. SpaceX has received billions from NASA to help fund the development of this capability and pay for regular flights to the ISS once the Crew Dragon becomes operational.
NASA only required that SpaceX have at least four seats for the space agency’s crew members, but SpaceX can add three extra seats to the vehicle if it wants. Those seats could hold extra cargo or go to tourists who want to take a lengthy trip to the ISS. NASA administrator Jim Bridenstine has also discussed the possibility of opening up the Commercial Crew vehicles to tourism.
Very rich people have already engaged in space tourism, so though the idea is unusual, it has precedent. Singer Sarah Brightman put down $52 million to go to the ISS with Space Adventures, a tourism company that set up flights on the Russian Soyuz rocket. (She ultimately pulled out for personal reasons.) One Space Adventures customer, Charles Simonyi, even paid to go to the ISS twice. Space tourism venture Virgin Galactic has also sold up to 700 tickets for $250,000 a piece, just to send people into space for a few minutes.
Adding customers to an existing flight of the Crew Dragon could be a lot of easy money for SpaceX, and if Falcon 9 costs continue to go down, launching a Crew Dragon full of seven private tourists might be lucrative as well. Rich space tourists could expand SpaceX’s revenue base. “I think there’s a significant market for wealthy people who would like to travel to space,” says Miller. “It’s not as proven as launching commercial satellites, but there are a dozen people who have paid to buy tickets to orbit.”
It’s something to consider since SpaceX’s chances of getting substantial US government funding for BFR aren’t great. This trip is something of an advertising campaign for the BFR’s capability to send people to the Moon — just as NASA has become laser-focused on a return to the lunar surface. But NASA has its own rocket, the Space Launch System; it’s comparable to the BFR, and NASA has already paid billions for it. The SLS is also supported by Congress, especially those members whose constituents are building the rocket. Unless SpaceX can demonstrate that the BFR can best the SLS in some way, it’s unlikely that the company will receive government money. “[Musk] needs to be able to kick this off with his own capital,” says Miller. “If he gets future capital from NASA, that’s great.”
That suggests SpaceX may tap into the space tourism game since it’s the easiest way to make money quickly enough to fund its new projects. Otherwise, the BFR will be heavily delayed. Musk said the goal was to start major tests of the spaceship portion of the BFR as early as 2019, with high-velocity flights of the rocket booster in 2020. But a rocket as large and complex as the BFR is likely to put up unexpected challenges. (Try, if you can, to name one space project that’s come in on time and under budget.) If SpaceX doesn’t want to spend decades on the rocket’s development, finding more passengers like Maezawa who are willing to open up their wallets and wait patiently for a ride may be the key to the BFR’s timely debut.