The €10bn Dollar Man and Gold Hydrogen

Hamilton Joins Ferrari

You’ll come to learn in this newsletter that a passion Jack and I share is Formula 1. For me, not only is it the racing - which has been a little lacking in recent years - but the politics, the money and the drama that make it a sport like no other.

What’s happened?

Lewis Hamilton has ditched Mercedes and moved to Ferrari.

I could talk to you for hours about Lewis’ legendary status, his impeccable driving style or his name going down in the history books, but that isn’t what this newsletter is for. Instead, I think it’s interesting to look at the business implications behind this, and how sports stars are businesses themselves.

Lewis Hamilton is Formula One’s biggest star and has been driving for Mercedes since 2013.

That was until a few days ago when it was announced he would be moving to Ferrari. Immediately on this news Ferrari’s share price rose by 12%, which is equivalent to €10 billion. It’s fascinating that one man can cause such a massive valuation change - especially since he won’t even be joining them until 2025; just the expectation of the attention that he will draw to the Ferrari brand is worth in excess of €10 billion. To put this in perspective this is the same value as the entire company of Deliveroo.

In addition to making the Ferrari shareholders very happy, Lewis himself might be pretty happy to. He will be paid £100m per year as a base salary. That puts him as the 9th highest-ranking sporting person in the world and doesn’t even include his endorsements which could easily add another 50m to that. Lewis is a walking money-printing machine.

Not only is Lewis going to be raking in a boatload from his salary (which he’ll pay next to no tax on due to his Monaco residency), but his charitable foundations will also get renewed focus. It’s been learnt that a significant part of Lewis’ moving to Ferrari was that the Ferrari chairman agreed to fund Mission44 (Lewis’ charity)with over $250MN dollars.

Why does this matter?

This shows the power a person brings when the eyes of the world are on them. Sports stars have always commanded attention, with the likes of Muhammad Ali and Maradona being superstars, making fortunes while being the best in their respective sports many years ago.

But it appears now that if you mix sporting exceptionalism with social media stardom you create a mix that drives incredible brand value. Lewis Hamilton’s move to Ferrari, Ronaldo’s contract (over $200mn per season) with Saudi Arabia or Jon Rahm’s move to the LIV Golf Tour (see our article here) show these athletes are a business in themselves.

I personally think if you make it to be one of the best in intensely competitive environments, you deserve all the money you get! 💰

We need to burn more gas

So a few years ago Germany announced that it was turning off all of its nuclear power stations, for a variety of rubbish reasons. This meant that they then heavily relied on natural gas (primarily imported from Russia) and a few renewable sources. Then Russia’s invasion of Ukraine and they had to switch back on old coal power stations. While of course Germany cannot be blamed for Russia’s invasion, their energy policy is entirely of their doing.

But what happens if there is another way? A way to escape stupid squared. Well, there is good news for my German friends - it is called Gold hydrogen.

What is gold Hydrogen?

Gold Hydrogen is naturally occurring hydrogen gas that when burnt, only produces Evian. How is gold hydrogen different from other types of hydrogen? It doesn’t. Scientists use the color gold to indicate that it is naturally occurring. 

Hydrogen can also be made using electrolysis which, as the name suggests, involves electricity. This electricity predominantly comes from non-renewable sources (i.e natural gas and oil). So for Germany, this is not a good way to make clear fuels.

Why does this matter? 

The world is on the hunt for clean sources of energy (hello, Uranium) and Gold hydrogen could just be it. 

Gold Hydrogen is exciting because, for those of you who did GCSE chemistry, you will remember that hydrogen burns with a squeaky pop and just leaves water as condensation on the test tube.

It is extracted out of the ground the same way we pull out Natgas and oil forming in large subsurface reservoirs. The main outstanding questions are around how much of it is there. The world consumes 97 million barrels of oil a day, we would need a lot of hydrogen to replace that.

Luckily for Germany, according to a geologist called Geroffry, “the ‘most probable’ amount of gold hydrogen in the world is 5 million megatons. If just 2 percent could be extracted, then drilling could produce the amount of hydrogen needed to reach net-zero emissions for 200 years.”

Chart of the week: