The sell­ing of a cham­pion

Finweek English Edition - - Companies & Markets -

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.”

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