Check out this WSJ article by Margaret Coker about the price of vanity license plates (or tags) in Abu Dhabi, UAE. Last month, business man Saeed Khouri set a record when he spent $14 million for the tag: “1”. His cousin, a stockbroker, spent $9 million for “5”.
My favorite part of the article is where a 15 year (who can’t drive yet) spends $530,000 for “29”. From the article:
Soft-spoken and modestly dressed, 34-year-old Mr. Al-Mannaei says he closely controls supply, releasing low-digit plates “almost scientifically.” The result, he says, is a frenzy for even mediocre numbers. In the last two auctions, three-digit plates fetched between $123,000 and $150,000 each, more than double the prices last fall. In the 10 auctions held so far, buyers spent roughly $120 million for 900 plates; the government plans to use the money to build a new trauma hospital for traffic-accident victims.
Mr. Al-Mannaei, who declines to provide his remuneration, spices things up from time to time with plates that match popular luxury-car series. The brother of Talal Khouri, the stockbroker who shelled out $9 million for “5,” paid just over $120,000 to furnish his red Ferrari F430 with a “430” plate. (The car itself lists for approximately $180,000.)
Indeed, the extended Khouri clan, which earned its fortune from the stock market and land development, is one of the license-plate market’s biggest players. Talal, 35, displays his “5” plate on his cabernet-colored Rolls. He’s also bought “55” and “55555,” among others.
The “1” tag bought by Saeed, 25, was a coup for the family, says his 21-year-old younger brother Hamdan. “We are lucky. We have the money to get what we want. We want to be the best,” Hamdan says. For his own car, a Land Rover, Hamdan is eyeing “494,” the number included in his Hotmail user name. Although Hamdan has an order in for a Ferrari F149, set to hit the market next year, a cousin has already snapped up plate “149.”
I was part of the internet frenzy when Business.com sold for something like $15 million, but that was an asset… on par with real estate.. with a path to cash flows (though not easy or guaranteed). But this license plate things seems more like tulips, an artificial market, where the buyers and sellers are blinded by irrationality and the mania of crowds. This to me is a signal that oil has jumped the shark!