Lionel and AF?

Lionel Corp. purchased the American Flyer train line (tooling, most of the remaining stock of trains, and the name) for $150,000 at the end of May, 1967. Gabriel had first right of refusal, but they picked up Erector and some other toy lines. Although it was indicated at a Lionel stockholders meeting in June, 1967 that it was the intention to continue the manufacturing and sale of American Flyer trains, no AF S gauge was made and sold by Lionel (MPC) until 1979 ... three freight cars.

Bob

Bob, given the desperate financial situation Lionel was in at that late juncture, why'd they spend on buying Flyer then do nothing with it? Was it that cheap, they had big plans that fell through, or something else?

I forgot to include in my post above that Lionel spent $150,000 for the acquisition of American Flyer. Of course, owning AF prevented any other firm from competing with Lionel by marketing S gauge, but now that they owned AF, why not make S gauge trains and sell them to the faithful? Lionel Corp. was making/marketing HO. Why not S? This was the stated intent at their stockholders meeting in 1967. Whether or not the management actually intended to remove AF as a competitor or not, Lionel Corp. itself and train sales were in such decline at this point in time, that they were not in a position to revive the line, regardless.

Bob

quote:

 Lionel Corp. was making/marketing HO.

While there were HO trains in the Lionel 1966 catalog, they did not even put out a catalog in 1967. And 1968's catalog only had one set, two engines, the ballast tamper, and a few cars.
How could it have possibly made sense for them to activate the "S" gauge line? They'd have been competing with themselves.

It would be interesting to know what they got in the way of finished goods. I have some Lionel paper that offers American Flyer merchandise at deep discounts. 
Vince Amato, from Hobby Surplus sales got their parts department. Here is a story he penned. But Vince wrote that he made the deal in 1968. So was he buying the A.F. stuff from Lionel?

I actually have a Gilbert American Flyer bench top arbor press. It was mixed in with the presses that LTI sold off in their factory liquidation.

Not necessarily. Not if one thinks of it as servicing an additional segment of the total market. The rationale for buying AF, as presented to the Lionel BOD, was to make and market Flyer as an added line. But, as I have already posted, because both the train market in larger scales and Lionel's fortunes were at their nadir, they were not in a position to make and market AF regardless of intent ... which is saying what you are saying in another manner. One might also help one's thinking by addressing the purchase as a business decision (good or bad) and not necessarily through the prism of the "train wars".

Back to the original question .. the Lionel L.L.C. time line is incorrect as regards to the acquisition of AF.

Bob

Train Wars or business decision, Lionel, though all its management changes over time, has never really succeeded with anything but 3-rail O gauge.

Rusty

... and Standard gauge in its day. OO is an interesting what if.

Bob

I know there are a few books on the subject already, but I'd love if someone wrote a truly in-depth history of Lionel that covered all these things. Not the coffee-table-sized picture books with some great photos we so often get, but a true corporate history.

I have not looked at my copy in a long time, I don't recall whether the author covered the purchase of American Flyer.

Here is a book on the history of Lionel.

I just finished reading 'All Aboard!: The Story of Joshua Lionel Cowen & His Lionel Train Company' and it is in line with the information Bob Bubeck has posted here. 1967 was the year Lionel obtained American Flyer according to the book and the first AF items produced under Lionel were years later.

It covers mostly the time JLC was at Lionel from beginning his to end when Roy Cohn took over Lionel and basically finished it off. The book was written in 1981 which is where it ends. I have the 1st edition and there have been other editions since. I don't know if the later editions have been updated to cover Lionel past 1981 or not?

It was a fun read and does cover Lionel's history fairly well, however I am no Lionel or JLC expert by any means so I don't know how in depth it was. Lots of interesting things about JLC himself as well. I'm sure a more in depth book could be written by a Lionel historian, but this one is pretty good and covers a lot of ground. It is a good read and I would recommend it to anyone interested in Lionel or JLC.

I got out my copy of "Inside the Lionel Fun Factory".
It does have a little information on Lionel's acquisition of American Flyer.

According to the book, Lionel did not pay any cash for American Flyer. They got the tooling, molds and such in exchange for helping to liquidate American Flyer stock.

If I have an extra moment, I will try to find some of the service station paper in which they offer American Flyer goods on clearance.

Found one sheet, it looks like it was copied on a mimeograph machine.

Looks very interesting. Thanks for selecting that for me, my next book to read.

I finally found from where I was recalling my posted information...

Some of the details of the end of Gilbert, the purchase price by Lionel, a brief summary of the Lionel BOD meeting, etc. were reported, originally in the Baltimore Evening Sun, February 19, 1968 and in Toys and Novelties, June 15, 1967, as reproduced on pages 21 and 22 in "American Flyer Features",  Heimburger House Publishing Co. 1985. Some of you may have a copy of this tucked away somewhere and may find it interesting to peruse (again).

Page 110 in Robert Osterhoff's "Inside the Lionel Trains Fun Factory" offers an alternate story. Walter Heller, the financier of the A. c. Gilbert Co., sought and obtained assistance of the disposal by sale of $300,000 to $400,000 worth of AF trains. In return for the cash, Lionel obtained the tooling and original artwork. As CW has posted, Lionel did handle the resale of AF train items. So, presumably, cash in some amount did change hands (eventually). 

Interesting.

Bob

I have a copy of A.C. Gilberts Heritage, edited by Donald J Heimburger. It has a small, undated news article reprinted on page 161. This article states AF was sold for "an undisclosed sum" and that Lionel would be making AF trains.

I guess I'll have to keep an eye out for "American Flyer Features". I have not read that book.

I've got a Pratt Library membership and they have a database of Sun and Evening Sun PDFs. I'll try to search for it and get a copy tonight