Gulf’s vanity deals continue
As Qatar Holding helps knock over Miramax, and regional investors continue to eye the Detroit Pistons, Kipp is wondering whether these kinds of investments will ever pay for themselves.
December 5, 2010 4:42 by Sam Potter
But will it earn them anything back on the investment? “Harrods generates good and stable returns as a business, it will add much value to our international portfolio of investments,” said Sheikh Hamad bin Jassim al-Thani. All the same, Kipp can’t help but think that the prestige of owning Britain’s foremost luxury store was a bigger draw than the potential financial returns.
Qatar Holding was one of a number of investors behind the purchase of Miramax Films from Disney for a cool $663 million. It was joined in the investment by construction magnate Ron Tutor and the Los Angeles private equity firm Colony Capital. But according to the Washington Post, Disney has shut down much of the studio’s operation and has been hunting a buyer for months. It hardly inspires confidence in Miramax’s ability to pay for itself. And the film industry is notoriously fickle. Kipp thinks it’s likely that someone in Qatar decided they quite fancied being involved with a Hollywood movie or two.
Though the purchases themselves are grand, the extent to which they will pay remain uncertain. Kipp can’t help but feel dubious about the viability of purchases like a basketball team or an ailing film company, particularly when, as in the Miramax case, a film company is being sold by a media giant who should know exactly how to make it work.
We’ve written once before about how local money should be invested in local sports instead of mega-teams from abroad – with particular reference to the Detroit Pistons. We’re hopeful that Qatar’s World Cup project will show the way; perhaps the millions now going into Miramax and the likes of Harrods would be better spent at home, too?
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