Richard Branson: Building an Empire on Other People’s Money

Richard Branson waves to the crowd after landing at the $209 million spaceport that New Mexican taxpayers are building for him in 2010. From left to right are then-New Mexico Gov. Bill Richardson, NASA Deputy Administrator Lori Garver, Apollo 11 astronaut Buzz Aldrin, and then-New Mexico Spaceport Authority Executive Director Rick Homans.

The Observer’s Richard Wachman asks an interesting question I’ve been wondering about a lot lately:

Virgin brands: What does Richard Branson really own?

The sprawling business empire that makes up Richard Branson’s Virgin investment group consists of about 400 operations, a tangled web of enterprises owned via a complicated series of offshore trusts and overseas holding companies.

Branson’s finances are difficult to penetrate because of their complexity and opaqueness, with few of his large companies wholly owned by Branson himself. His big-branded firms such as Virgin Atlantic, Virgin Money, Virgin Media and Virgin Trains have other major shareholders. In some cases, he simply licenses the brand to a company that has purchased a subsidiary from him, and these include Virgin Mobile USA, Virgin Mobile Australia, Virgin Radio and Virgin Music (now part of EMI). In return, as the licence holder of the Virgin brand, he receives annual or triennial fees that can amount to hundreds of millions over time.

By forging partnerships with cash-rich allies, Branson has established new businesses without depleting the group’s reserves and spending little to establish new ventures in sectors such as mobile telecoms. But initiatives come straight from Branson, who prides himself on his ability to spot a gap in the market. He is not a numbers or a details man and leaves the everyday running of his firms to a group of lieutenants.

Which brings us to Virgin Galactic. And the numbers there are really interesting.

We’ll start by taking a look at the big picture, investment wise.

2009Aabar InvestmentsAbu Dhabi royal family$280 million31.8 percent ownership share, Virgin Galactic
2011Aabar InvestmentsAbu Dhabi royal family$110 million37.8 percent ownership share, Virgin Galactic
2005-PresentNew MexicoNM taxpayers$209 millionspaceport, $1 million annual rent over 20 years, user fees
2004-PresentVirgin GroupRichard Branson??Two-stage-to-suborbit space plane, 62.2 percent ownership share
TOTAL:$599 million

So, Branson’s gotten investors and taxpayers to pony up just short of $600 million to make his dream of flying into space a reality. Since the Virgin Group is so opaque on its finances, precisely how much Branson and his company have put in is difficult to say.

However, thanks to statements by Virgin Galactic officials, we do a bit more about the cost side. We know that, as of October, that roughly $270 million has been spent on the program. And the most recent estimate on cost, as of about 10 months ago, was roughly $400 million. Now, let’s see how this stacks up against known investments not funded by taxpayers….

Aabar Investments: $290 million + $110 million = $390 million

WOW! That’s like really close. The Abu Dhabi royal family’s investment covers virtually the entire estimated development cost. And for that, they own only 37.8 percent of the company.

Now, there’s many unknowns here. Such as, what did Virgin Galactic spend between 2004 and Aabar’s investment in 2009? Have overall program costs risen above $400 million since last year’s estimate? How much of that investment is being spent on The Spaceship Company? Selling tickets? Customer relations? Licensing the technology from Paul Allen? Outfitting the Virgin Galactic Gateway to Space?

But, it does seem clear that Branson has succeeded in getting others to pay most of the cost of this venture. He’s got what’s most valuable: his name, the Virgin brand, and the rights to the technology.


  • Per the last census numbers, The median income for a household in Sierra County where Spaceport America is located was $24,152 , and the median income for a family was $29,787. About 13.80% of families and 20.90% of the population were below the poverty line. And they raised how much? Is more than one county helping?

    I think that the cost to lease the spaceport is low. $1M a year? Each flight, of which there may be several a day, will gross $1M at least.

    Perhaps they should put one NM resident on each flight to say thank you VERY much?

  • Urbanspaceman

    This is Branson’s usual MO, which is familiar to us here in the UK. He understands that the real value of these businesses is embodied in the Virgin brand, which he believes – with justification – to be elastic without limit: the brand has been extended to encompass cosmetics, bridal shops, trains, airlines, cellphones, music, vacations, financial services, etc. The finances of Branson and Virgin have always been opaque, but it’s clear that outside investors usually foot most of the bill.

    It may be helpful to regard Branson as more of a theatrical impressario – a sort of latter day Phineas T Barnum – rather than a conventional businessman. While many of his partners have walked away sadder but wiser men (see Tom Bowers’ hatchet job of a biography for more), it’s unarguable that Branson Gets Things Done.

  • I’m also confused about the $1 million per year figure, the way you wrote the article it looks like Virgin is being paid $1 million a year to be there? That doesn’t sound right? Also, I thought the spaceport was being partially funded by Virgin, not entirely funded by the taxpayers?

  • VG is paying $1 million in rent per year over a 20-year lease plus user fees. New Mexico taxpayers are picking up the full cost of the spaceport and infrastructure improvements (such as a paved road that will provide a more direct link from Las Cruces, bypassing Truth or Consequences from the south). VG is paying to outfit the inside Virgin Galactic Gateway to Space hangar, which was paid for by the state and designed by a famous architect to Virgin’s precise specifications.

  • Sierra County and Dona Ana County are helping to fund this with an increase in a sales tax. It’s a rather small part of the overall amount, which is largely being funded statewide.

  • I don’t understand how Branson’s “empire” is different than any other business. Most all large businesses and many small ones are built on investment from outsiders, i.e. “other people’s money”. Full ownership of large multi-hundred million dollar business by a single insider like the way Paul Allen owns Stratolaunch is uncommon. More common is the XCOR way of building a business with “other people’s money”, i.e. investors and partners like SXC. XCOR also relies on taxpayers to support Mojave, to pay for science & educational payloads, etc. Elon has put about $100M into SpaceX as I understand it. The rest has come from “other people’s money” and taxpayers. Virtually all of Lockheed-Martin’s money comes from taxpayers.

    I’m also mystified by your statements on the Abu Dhabi investment, especially “they own only 37.8 percent of the company”. So if I put, say, $400M into a start up over 5 years or so and then someone comes along who wants to put $400M into my company, they should get 100% ownership because that matches what I put in? If I have been building my company correctly, it will be worth a lot more than what I have put in, even if I haven’t yet gotten my product/service to market. Outside investors will value the company based on what they see as the prospects for the company to make profits in the future not on how much I have invested in the effort.

    As noted at the time, the Abu Dhabi investment gave VG a value of about $1B. That hardly seems out of line. The company already has about $100M in ticket sales before a single space flight.

  • FC

    What Clark said.

    I’ll add that Branson’s career fits economists’ definition of an entrepreneur: seeking new ways to make profits and being paid by investors and customers when he finds them.

  • Lee Valentine


    The Mojave Air and space Port( officially East Kern Airport District) is self funded. It receives no taxpayer support whatsoever.

    XCOR has received no taxpayer subsidies. All payments to XCOR from NASA, DARPA, USAF, the NRO, etc, have been in payment for specific technologies those organizations needed.

  • Public investment


    Keep in mind that like nearly ALL aviation/space infrastructure in this country, Spaceport America is financed 100% publicly. Tenants pay for their own improvements within their leaseholds, and repay the public trust through user fees, fuel sales, job creation, tax revenues, and facilitation of nearby transportation-related commercial development (which creates more jobs and local tax revenue).

    Mojave, whose infrastructure was funded by the Marine Corps, was no different. Today that airport is revenue self-sufficient, just as Spaceport America plans to be operationally self-sufficient from lease, user fees and other revenue. No one should build a spaceport or airport without the intention of it being profitable.

  • Hi Lee,
    Glad to hear that Mojave is self-supporting. Most big airports get at least some public support, directly or indirectly. However, as noted in the previous comment, it’s still true that Mojave was originally funded by taxpayer money.

    I was not referring to subsidies regarding XCOR income. Just pointing to the fact that when the government pays for products (e.g. DARPA piston pump) and services (e.g. CRuSR flights), the money comes ultimately from taxpayers. This seems perfectly fine to me and is a proper role for govt to play.

  • anon


    The observer leaves out some known investment.

    Branson announced at the X-Prize that he had put down $21Million to
    purchase the IP/naming rights/designs for SpaceShip 1.

    I suspect that was actually Virgin Group funds.

    Now the burn rate at VG was fairly significant between 2005 and 2009 when AAbar came on board. Persistent rumours had it that a consortium had put $300 Million into VG at that time.

    However as these are private investors and private funds, it’s none of my business.

    I wish them luck and hope they wildly succeed.

  • Alexandr Emelyanov