The selling of a champion
THE FIRST-EVER black president of the United States. . .The first-ever black Formula One world champion driver. Who says the world doesn’t make progress, even if all too often it’s a case of two steps forward, one step back?
However, there’s one big difference between them: you may soon be able to buy shares in Lewis Hamilton. It’s reported that he and his manager – his father, Anthony – are considering listing the Hamilton brand on London’s AIM.
Hamilton, who went into tax exile in Switzerland last year – one of the reasons he’s not as universally popular in Britain as you might expect – is estimated by the British magazine Auto Trader’s Motoring Rich List to already be worth £15m. But that’s just a drop in the ocean compared to his potential.
Hamilton’s existing five-year contract with the McLaren team is thought to be around £15m/year, with another £3m to £5m or so from endorsements and sponsorships from the likes of Reebok sportswear and Tag Heuer watches. But the status of world champion could have a significant impact on both of those, especially the latter.
One estimate is that Hamilton could gross £500m over the next decade and speculation is that he could sell off a 10% interest in that to outside investors. Just what would that be worth? One London newspaper suggested it could be US$100m, allowing him to pip golfer Tiger Woods as sport’s first dollar billionaire.
I’m not so sure. It was pop stars and songwriters who pioneered the securitisation of future earnings, one of the first being David Bowie, if I remember correctly. But they have a big advantage, in that performing and composing royalties have a long shelf life. Elvis Presley and the Beatles still figure prominently in annual lists of top-earning musos.
That may not be true of racing drivers. How much value would an endorsement by, say, Damon Hill or Jacques Villeneuve have? They were both world champions – once. I’d think Hamilton needs to show the staying power of an Ayrton Senna or Michael Schumacher before he’ll be a floatable asset – and even then it would be prudent to treat a large percentage of any dividends received as a return of capital.
But as the plutocrats who’ve poured endless billions into the bottomless pit of English soccer have shown, investments in sport aren’t always made for economic reasons.
I must admit it would be fun to drop into a dinner table conversation a remark like: “Of course, I own part of Lewis Hamilton Enterprises plc.”