Gareth Bale quandary: how to invest £300,000 a week wisely
Buy offshore bond wrappers and shares in luxury goods firms: what the experts told The Week
HOW should Gareth Bale, the "beguilingly modest" 24-year-old Welshman who has signed on at Real Madrid for £300,000 a week, invest his money? This weekly salary translates into £15.6m a year - or something approaching £100m over the course of a six-year contract. And he'll be able cash in further on his celebrity status: he's already trademarked his "11 of Hearts" goal-scoring celebration for use on merchandise.
"Even with an incredibly extravagant lifestyle, he's landed a mind-boggling sum of money," says Rob Burgeman of private client investment specialist Brewin Dolphin. And there's not much evidence that he's a splurger. A devoted young father, teetotal to boot, he seems unlikely to emulate George Best's spending career - "I spent a lot of money on booze, birds and fast cars. The rest I just squandered."
If Bale decides to buy a house in Spain for his young family, it could take a big chunk out of his income this year. Although prices have fallen by 50 per cent in some regions, they've held up well in the tony neighbourhoods of Madrid where the /galacticos/ tend to live. He should probably expect to pay around E5m. So, at a conservative estimate, he'll probably still have at least £10m a year in investable capital.
Footballers, of course, don't have a great record in this department, demonstrating a particular weakness for getting caught up in dodgy property deals. Last month, the former England manager, Sven-Goran Eriksson, branded his former financial advisor "the only person on earth I hate" for allegedly losing him some £10m in investments.
Bale has taken the precaution of making his parents co-directors of his company, Primesure Limited. And, as a former Premier League footballer at Tottenham, "he will already be used to a high disposable income and a plethora of slick salesmen trying to get him to part with it in the name of tax avoidance and investment," says Danny Cox of Hargreaves Lansdown.
But tax saving should indeed be his priority. While every celebrity dreads being stung by a Jimmy Carr-style tax avoidance scandal, Bale is probably already invested in an array of investments, such as Venture Capital Trusts (VCT) or Enterprise Investment Schemes (EIS), that qualify for generous reliefs.
Cox reckons that as a non-UK resident, he should also put a sizeable wodge into offshore bond wrappers, allowing him to diversify across a range of cash, fixed interest and equity investments - and pay very little tax until profits are repatriated, which he could do in dribs and drabs to minimalise his final bill.
And when it comes to portfolio allocation, anyone Bale's age should be in equities not bonds - his cash will grow faster and he has time on his side to smooth out any market bumps.
Rob Burgeman agrees with Danny Cox, though he reckons that both Bale's character, and the size of his fortune, point to him investing conservatively. If you've got £10m a year, why risk losing £5m on the chance of making £20m, when you don't need the extra cash? "He'd be better off going for a low-risk, stable type of return."
On grounds that there may be mileage in putting cash into what he consumes, Burgeman thinks luxury goods companies might be good targets; ditto high-end estate agents and insurance companies. "Every time he goes onto the pitch he's only one tackle away from disaster. His premiums must be huge."
Of course, Bale is bound to have some ideas on his own. He might be patriotic and assign a chunk to some socially-worthy Welsh cause, blow the lot on a Greek island, or turn out to be a closet art fiend. With that sort of disposable cash, he could cause temporary havoc in commodity markets. The financial world, in short, is his oyster.
This week saw the unwelcome revelation that his girlfriend Emma's father face charges in the US for allegedly running a boiler room scam in Spain. He could face 30 years in the jug. We can assume that's one sector Gareth Bale won't be dipping a toe into. ·