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Valued at £67 Billion, the Monarchy is Britain’s Greatest Treasure

20 November 2017
This article is more than 3 years old.

· Brand Finance estimates the capital value of the UK Monarchy as a business at £67.5bn

· Monarchy’s annual contribution to the UK economy in 2017 is £1.766bn

· Annual cost per head is less than £4.50 a year, equal to just over 1p a day

View the Brand Finance Monarchy 2017 report here

As the Queen and Duke of Edinburgh celebrate their Platinum Wedding Anniversary, leading brand and business valuation consultancy Brand Finance has estimated the total worth of the UK Monarchy. Growing every year since the inception of the study in 2012, the value of the British Monarchy now amounts to approximately £67.5 billion.

The Monarchy’s tangible assets – the Crown Estate, the Duchies of Lancaster and Cornwall, and the Royal Collection, including the Crown Jewels – account for £25.5 billion. The intangible value, understood as the present value of the benefits that the Monarchy is expected to bring the UK economy over the years, constitutes the remaining £42 billion.

Brand Finance estimates that in 2017 the Monarchy generated a gross uplift of £1.766 billion to the UK economy. The contribution includes the Crown Estate’s surplus as well as the Monarchy’s indirect effect on various industries. The respect for the institution boosts the price and volume premium of brands boasting a Royal Warrant or a Coat of Arms; the appeal of pomp and circumstance set in living royal residences draws millions of tourists; the mystique surrounding the Monarchy adds to the popularity of shows like The Crown and Victoria that offer a glimpse of the private lives of the Royal Family.

The economic benefits generated by the Monarchy come at a very low cost to the British nation, equal to only £4.50 per person per year or just over 1p a day. The total costs of the Monarchy, totalling approximately £292 million, include the Sovereign Grant, earnings from the Duchies of Lancaster and Cornwall ceded to the Queen and the Prince of Wales, and security expenses, among others. A significant proportion of these costs is in fact incurred by residence maintenance, staff salaries, and travel expenditures required by any head of state.

David Haigh, CEO of Brand Finance, commented:

“Exactly 25 years ago, the Windsor Castle fire marked the nadir of the Queen’s annus horribilis when scandals drove the Monarchy’s popularity down. Today, its universal appeal translates to the attraction of Brand Monarchy offering considerable commercial benefits to all businesses and institutions associated with it.”

“The Monarchy is Britain’s national treasure, both symbolically and economically. Especially in the age of Brexit, Britain can rely on royal diplomacy to facilitate trade relations with the Commonwealth and the rest of the world.”

ENDS

Note to Editors

For full findings, expert insights, and methodology, please consult the Brand Finance Monarchy 2017 report.

If you would like to learn more about the report’s findings first-hand, join our launch event at the City of London's Brand Exchange on the 20th of November at 6pm for 6.30pm. Speakers include David Haigh, CEO of Brand Finance; Clive Cheesman, Richmond Herald at the College of Arms; Ben Marson, Director of Partnerships at The Prince's Trust; and Professor Qing Wang, Professor of Marketing and Innovation at the University of Warwick.

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Media Contacts

Konrad Jagodzinski
Konrad Jagodzinski
Communications Director
Brand Finance
Florina Cormack-Loyd
Florina Cormack-Loyd
Associate Communications Director
Brand Finance

About Brand Finance

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.

Methodology

Definition of Brand

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

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 Valuation Approach

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.

Disclaimer

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.

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