Last week, CTT posted an announcement that Round 2 intends to purchase Lionel LLC.
Lionel is 126 years old and as an icon in the hobby, hobbyists have questions and concerns about its future. I’ve put together some commentary on what might happen, given what I know about both brands. I’d love your input; please leave a comment below.
Note: The acquisition is not final and we expect more news in the coming weeks. Follow our news section and Facebook page to read releases as they’re sent to our office.
Why was Lionel sold?
In 2008, Guggenheim Partners acquired the majority stake in Lionel. Since Guggenheim is a privately owned global financial services company, we don’t have access to financial information. We likely will not know the answer to this question.
Will Lionel still release the products announced in their catalogs?
The answer likely depends on a number of factors: where the product is in the manufacturing cycle, how many preorders were received, and the budgeted profit/loss. If you preordered something six months ago, it’s a safe bet that you’ll still receive the product. If you ordered something recently, it’s difficult to say what might happen.
If you’ve recently preordered a product, I kindly suggest not reaching out to the hobby shop or retailer right now. The ownership announcement is not final, and retailers won’t have an answer yet. If a product’s status changes, the information will be disseminated to you and/or the retailer.
Will we see more licensed products?
Given the large number of IP licences Round 2 owns, I’d say yes. Name brands have their own collector market, and that means crossover sales. Some of these brands easily lend themselves to rolling stock (Gulf, Chevron, Goodyear) that hobbyists would love. Others (Yellowstone, Honda, Fender) are not hobby oriented, but the products would garner sales from collectors and enthusiasts.
Will we see more starter sets?
I think there’s an opportunity for Lionel to release entry-level starter sets, especially if they carry popular licenses. There are few manufacturers who sell starter sets today, and if they are sold in mass-market stores, that means more potential new customers (and hobbyists!).
Will we find more Lionel products in big box stores?
Maybe, over time. Some of Round 2’s products, like Johnny Lighting die-cast vehicles, are sold in big box stores. Others, like model kits from Polar Lights, are more often found in hobby/specialty shops.
Getting products sold in mass market stores like Target, Meijer, and Walmart isn’t an easy task. Shelf space is valuable, and Lionel product boxes aren’t small. Round 2 could test the market with starter sets during the holidays, for instance, as a trial. They could also try adding a few basic items like FasTrack, boxcars, or smoke fluid. While I’d love to see Lionel products in a big box store, I also understand the complicated logistics behind such a wish.
Round 2 owns some die-cast brands. Might we see more details for the O and S gauge market?
I’d say yes. Round 2 already owns Mini Metals, which makes vehicles and details for HO and N scales. It’s not a stretch for them to consider adding other scales to this line (or perhaps another one of their brands.)
What might happen with Lionel parts and service?
Round 2 will send replacement parts if the customer provides the instruction sheet and the UPC from the kit. They also have a database of model kit instruction sheets on their website. Of course, this is not on the same level as handling a defective locomotive with complicated electronics. It’s far too soon to know the answer to this question. We will provide information as we receive it from Round 2.
What does this mean for built-to-order or high-end hobby products?
I’ve been pondering this question since the announcement. While Round 2 owns a fair number of brands, handling expensive, high-end locomotives is new territory for them. It’s a far cry from a $20 die-cast model, that’s for sure. I’d guess they will approach this line with caution until they can gauge interest and profitability.
Will Lionel revive the American Flyer line?
Round 2 has a history of taking brands and reviving them, so I hope that’s the case. There is little new product in the S gauge world lately, and I know hobbyists would love to see releases. I’ll cross my fingers and hope that Round 2 will give the Flyer line a kickstart.
