Will Robbie Williams tap the markets?
Something I like about writing for Motley Fool is the wide range of topics I get to cover, but I'd never have guessed that Robbie Williams would be one of them.
But he is, and the reason is that he's reportedly looking into selling the rights to half of his future earnings -- albums, tours, endorsements, T-shirts, the lot -- for a price of £50m. His £55m deal with EMI is due to finish shortly, so he is free to sell himself again.
Bowie bonds
It's been done before, of course; David Bowie started the trend in 1997 when he raised £33m selling bonds based on his next ten years' earnings. Initially sold with a 7.9% annual yield, they were all snapped up by Prudential Insurance in the US, who reportedly held on to them.
By 2004 they had been downgraded to just above junk status -- who in 1997 foresaw the rise of Napster and Pirate Bay? -- but as far as I know the bonds continued to pay out.
The brains behind the fund-raising, David Pullman, went on to sell similar securities on the revenue streams of James Brown, Ashford & Simpson (whose name always sounded more like a firm of solicitors to me), the Marvin Gaye estate, and others.
Not for average investors
The Robbie Williams deal is said to be equity rather than bonds, and would be sold to institutional investors rather than to the general public.
I'm no pop impresario, but I can't help thinking that shares in Robbie Williams would sell. In fact I could name several girls who'd like to own a piece of him, but I won't; they know who they are.
Like soccer fans who own a few shares in their favourite clubs for sentimental reasons, and often in certificated form so that they have a piece of paper to frame and their name on the register, I think Robbie fans would part with cash for a share of Robbie plc. It wouldn't be a real investment, just a novelty.
What's Robbie worth?
But for those more interested in financial return, we'd have to ask the question 'why is he doing this?'. It's not as if there's a huge investment required to churn out CDs or print T-shirts. Even putting on a tour could be funded pretty easily.
He is said to be raising £50m, while his personal wealth is estimated at £80m, down from £105m last year. Neither he nor his business 'need' the funds. So it seems that he is simply trading safe cash upfront in exchange for risky revenue streams over the coming years. Which is fair enough, but who do you think is in a better position to judge the riskiness of those future revenue streams, the investor or the guy on whose efforts the revenue streams depend, i.e. the same guy who's selling you the securities?
Even though he's only selling 50% of the rights, frankly, they just don't make barge-poles long enough.
Meanwhile, I'm thinking of selling the rights to my future revenue stream from Motley Fool [whatever that may be -- ed.]. Once I do that, I can put my feet up and the risk is all yours.
More (free content) from Padraig O'Hannelly:
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