[beck5]

Some of the franchises did make decent profits, westcost/virgin etc. This generally happens at the end of the franchise once most of the up front investment happened. A lot of other franchises make a loss so it isn't quite so black and white.

With the previous model a lot of the risk was on the private company, if times were good profits were there, in bad times they made losses. Now with the new model the risk has gone over to the UK government, for better or worse.

The new setup should guarantee a low level of profitability for private companies, with a theoretical lower max, what will be interesting is to see how many companies actually bid.

The private companies actually own very little when running a franchise, most things are leased, such as rolling stock which is largely owned by German funds if memory serves. Investments into stations/parking/ticketing etc is left in place for the next person to take the keys.