The intangible asset value of the Monarchy is £26 billion and a tangible asset value of £18 billion according to a new study launched today by Brand Finance.
The Queen’s Diamond Jubilee celebrations in 2012 are due to give an estimated £924 million uplift to the Leisure, Tourism and Accommodation industry.
However, the extra Bank Holiday costs the UK Economy around £1.2 billion.
Brand Finance has launched a study on the Monarchy as a ‘brand’ to coincide with the Queen’s Diamond Jubilee celebrations. The latest report values the Monarchy from an economic perspective and as a brand with an impact of £44 billion on the UK Economy as well as assessing the emotional, political and constitutional arguments for The Royal Family. The Monarchy’s contribution to the UK economy is considerable and in this Diamond Jubilee year of 2012 Brand Finance estimates the revenue uplift to the UK economy will be £2.4 billion offset by costs of £1.4 billion giving a net uplift of £1 billion to GDP.
UK businesses also benefit from Royal Warrants and Brand Finance research has valued the scheme at £4 billion and there is also a significant reputational benefit to individual UK businesses from the Monarchy once they have been granted a Coat of Arms which Brand Finance valued at £400 million.
Brand Finance’s new study has also taken into account the costs of the Monarchy which in the long term are valued at £7.6 billion after including the Civil List (valued at £461 million), Property Maintenance (valued at £387 million) and Security for the Royal Family which is valued at £3.2 billion. However thanks to the Jubilee there will be an uplift to Leisure, Tourism and Accommodation in 2012 of £924 million (£600 million of recurring revenue from the Monarchy and £324 million specifically due to the Jubilee) which indicates that the Queen's Diamond Jubilee alone will instigate an uplift of nearly a billion.
David Haigh, CEO of Brand Finance, commenting on the latest findings stated: “The Monarchy is one of the most valuable of all British brands. Whatever one thinks about the constitutional principle, there seems little doubt that the institution of Monarchy adds significant annual earnings and long term economic value to the UK. For most of her reign, The Queen has managed the Monarchy expertly and she is currently doing a great job on an international stage. The Monarchy is a powerful endorsement for individual and company brands and for the nation brand and we believe that it is making a significant contribution to the task of driving Britain out of the recession.’
The Value of the Monarchy 'Brand'
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For the full Brand Finance Journal Special Jubilee Issue visit:
Brand Finance is the world’s leading brand valuation consultancy. Bridging the gap between marketing and finance, Brand Finance evaluates the strength of brands and quantifies their financial value to help organisations of all kinds make strategic decisions.
Headquartered in London, Brand Finance has offices in over 20 countries, offering services on all continents. Every year, Brand Finance conducts more than 5,000 brand valuations, supported by original market research, and publishes nearly 100 reports which rank brands across all sectors and countries.
Brand Finance is a regulated accountancy firm, leading the standardisation of the brand valuation industry. Brand Finance was the first to be certified by independent auditors as compliant with both ISO 10668 and ISO 20671, and has received the official endorsement of the Marketing Accountability Standards Board (MASB) in the United States.
Brand is defined as a marketing-related intangible asset including, but not limited to, names, terms, signs, symbols, logos, and designs, intended to identify goods, services, or entities, creating distinctive images and associations in the minds of stakeholders, thereby generating economic benefits.
Brand strength is the efficacy of a brand’s performance on intangible measures relative to its competitors. Brand Finance evaluates brand strength in a process compliant with ISO 20671, looking at Marketing Investment, Stakeholder Equity, and the impact of those on Business Performance. The data used is derived from Brand Finance’s proprietary market research programme and from publicly available sources.
Each brand is assigned a Brand Strength Index (BSI) score out of 100, which feeds into the brand value calculation. Based on the score, each brand is assigned a corresponding Brand Rating up to AAA+ in a format similar to a credit rating.
Brand Finance calculates the values of brands in its rankings using the Royalty Relief approach – a brand valuation method compliant with the industry standards set in ISO 10668. It involves estimating the likely future revenues that are attributable to a brand by calculating a royalty rate that would be charged for its use, to arrive at a ‘brand value’ understood as a net economic benefit that a brand owner would achieve by licensing the brand in the open market.
The steps in this process are as follows:
1 Calculate brand strength using a balanced scorecard of metrics assessing Marketing Investment, Stakeholder Equity, and Business Performance. Brand strength is expressed as a Brand Strength Index (BSI) score on a scale of 0 to 100.
2 Determine royalty range for each industry, reflecting the importance of brand to purchasing decisions. In luxury, the maximum percentage is high, while in extractive industry, where goods are often commoditised, it is lower. This is done by reviewing comparable licensing agreements sourced from Brand Finance’s extensive database.
3 Calculate royalty rate. The BSI score is applied to the royalty range to arrive at a royalty rate. For example, if the royalty range in a sector is 0-5% and a brand has a BSI score of 80 out of 100, then an appropriate royalty rate for the use of this brand in the given sector will be 4%.
4 Determine brand-specific revenues by estimating a proportion of parent company revenues attributable to a brand.
5 Determine forecast revenues using a function of historic revenues, equity analyst forecasts, and economic growth rates.
6 Apply the royalty rate to the forecast revenues to derive brand revenues.
7 Discount post-tax brand revenues to a net present value which equals the brand value.
Brand Finance has produced this study with an independent and unbiased analysis. The values derived and opinions presented in this study are based on publicly available information and certain assumptions that Brand Finance used where such data was deficient or unclear. Brand Finance accepts no responsibility and will not be liable in the event that the publicly available information relied upon is subsequently found to be inaccurate. The opinions and financial analysis expressed in the study are not to be construed as providing investment or business advice. Brand Finance does not intend the study to be relied upon for any reason and excludes all liability to any body, government, or organisation.
The data presented in this study form part of Brand Finance's proprietary database, are provided for the benefit of the media, and are not to be used in part or in full for any commercial or technical purpose without written permission from Brand Finance.