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Copy linkWeird Assets on Lease
Assets come in many shapes and sizes. From Batmobiles to dairy cows; here are some of the strangest leased assets we’ve heard.
Less impact on cash flow, fixed term payments and negotiable terms, there are many reasons why companies chose to lease. Leasing can be the perfect alternative to buying and helps businesses get the assets they want and need, some stranger than others. With the freedom leasing allows, there are bound to be a few unusual assets appearing on some companies’ leasing portfolios. Here are a few of our favourites:
Pandas
Most Giant Panda’s hail from China, but did you know that they are also OWNED by China? For a zoo to get their hands on a pair of the endangered species, not only will they have to meet all the requirements for the privilege to look after an endangered species, but they will also need to cough up about $1million a year (which helps fund conservation efforts) and stick to all the (we can only assume) strict terms and conditions. Apparently, the lease schedule usually lasts around 10 years and comes with a renewal option for a second term.
Source: http://money.cnn.com/gallery/news/economy/2013/10/14/china-panda-business/
Old MacDonald had a Farm...
It is not uncommon for livestock to also be sold under a lease agreement. We’ve heard of one story where a farmer got his dairy cows from two different lessors to help spread the upfront costs of a herd. However, once his lease schedule was up, his cows’ tags had been mixed up and he had no idea which cows belonged to which lessor… There’s no use in crying over spilt milk, but surely you’re entitled to weep over the high costs of the legal nightmare of breaching these contractual terms.
The Queen’s Commute
Allegedly even the British Royal Family relies on leasing as a means of getting the assets they require. This summer, the Royals procured a chopper worth £8million to help them get around, spreading the cost of the asset across a lease agreement. With gardens to mow and plenty of rooms to maintain, leasing assets is a great solution for keeping control of the cash flow. We wonder if the Queen would benefit from consolidating all the royal leases on our lease management software LOIS?
Source: http://www.mirror.co.uk/news/uk-news/queen-leases-new-8m-royal-3735003
Roller Coasters
Roller coasters are huge, long term investment, making them a perfect asset for a lease agreement. It is less common for the established theme parks to trade off their rides, but the classic roller coasters that have a long history have definitely seen their fair share of owners. One example is the Giant Dipper in Chicago.
Built in 1925, the roller coaster’s leasing history has seen it catch fire, gather dust, nearly become a hotel and become a national landmark. One lessee of the coaster bought out the remainder of the lease from the previous owner and planned to demolish it after his 5 year lease ran out. However, public demand changed his mind and he retained ownership year-on-year, even after the park closed 7 years later and even campaigned for its protection. Leasing this ride was most definitely a roller coaster journey.
Wheelie Bins
“Where do they come from” is not an immediate concern for wheelie bin users so you’d be forgiven for assuming that councils just pay for them outright. However, providing bins for residences across the country as well as bins for factories, depots and other sites where people have rubbish to dispose of is an expensive and logistical nightmare. This is why, historically, wheelie bins were leased, allowing their cost to be spread across their economic life time and avoid leaving too large a dent in the cash flow. Whether bins for a town or independently bought by a company for their sites, the cost of bins can add up and leasing provides a suitable alternative – what a load of rubbish!
Trains
The second home of most commuters, trains are a staple of getting from A to B, but have you ever thought about who owns them? As you would expect, trains are very expensive and would put a huge dent in a rail company’s cash flow. This is why many of the trains we stare solemnly out the windows of are actually on lease. We’ve already seen how planes and airspace can be leased, but from the Eurostar to Japan’s bullet trains as well as freight trains, it’s actually a rather large industry for leasing – think of that next time you’re visiting your granny in Scotland!
The Olympics
Not only is the elliptical machine you force yourself onto most likely leased by the gym, but a large majority of the equipment at major sporting events, such as London 2012 Olympic and Paralympic Games are also procured under a lease schedule. A spokesperson from London 2012 said "All of our computer equipment is leased from a company ... It is a more sustainable way of doing things."
Almost all tech, from the huge electronic scoreboards to the miles of cables used to power them, was supplied through leasing deals to help spread the costs on the vast and varied asset procurement needs of such a diverse sporting phenomenon. Is there a gold medal in IT leasing?
Source: http://www.channel4.com/news/everything-must-go-london-2012-sell-off-begins
ACME, Batmobiles and More
All the world's a stage and pretty much every film, television show and plays’ set is dressed with a large majority of leased assets. From cereal bowls to sofas, these items are very rarely bought outright by the production company. Although iconic props and costumes may just be rented short term for one production, these companies also set up lease agreements for more frequently used items that sit in the background of our favourite TV shows and films. The owner of the famous prop rental warehouse Acme once leased his own four poster bed!
From a replica of the Batmobile for a department store display through to helicopters being repainted and used time and time again in action films, the prop leasing industry is booming and the perfect solution for funding the movie magic under reasonably priced and flexible conditions.
There are plenty of unusual lease agreements out there; headless mannequins, nuclear submarines and even decorative palm trees to name a few. All these leases act as a solution to potentially expensive asset funding. Generally the business does not want these assets forever – they last for a predetermined timeframe and by spreading the costs of these assets over the life of the lease, these companies are able to protect their cash flow and tailor their lease agreement for the length of time they actually need the assets, saving them money and hassle when it comes to giving them back at the end of the lease schedule.
Regardless of asset type, it is important that these leases are well managed and accounted for accurately. Whether it’s upholding the strict terms and conditions looking after a Panda or managing the extension on a roller coaster lease, it is vital that you are in control of your leasing portfolio to avoid any unnecessary costs and hassle.
