My appointment to speak to Santa arrives on a cold and rainy December afternoon after The Gateway team have enjoyed a particularly long and lavish celebratory seasonal lunch. As I dial the number I’ve been given and listen to his holding music – carols, of course – I consider the achievements of this highly respected yet notoriously secretive business mogul.
On Christmas morning every year for as long as any of us can remember, billions of children in not just Britain but right across the world have woken to find a stocking at the end of their bed filled with toys, games, sweets, tangerines and (Santa is famous for his sense of fun, after all) the occasional lump of coal or Brussels sprout. Every delivery is made by him and his team without fail between bedtime on 24 December and the break of dawn on Christmas Day. His business has to deal with a seasonal peak in activity without parallel in the corporate world and he seems to have been able to steer his sleigh through war, financial crisis and any number of snowstorms without a hitch. The Father Christmas brand is one of the strongest in the world, rarely touched by controversy, enjoying near-mythical levels of loyalty from its dedicated and specialist workforce and beloved everywhere. How does Santa do it all? I’m determined to find out.
After a couple of minutes, I’m finally put through to the man himself. Just as cheery and jovial as you’d imagine, he greets me warmly and wishes me all the best for the festive season to come – “It’s still my favourite time of year!” Before we get down to the nitty gritty, I ask him how the weather is in the Arctic circle. “Snow, snow, snow!”, he chuckles.
I want to find out about the basics of his business so I start by asking Santa about the capital structure of his Christmas-focused corporation. First of all, the equity side – who are the shareholders in the business? “I own it all myself! I’m lucky enough to have plenty of resources – you might call it Christmas magic – to draw on so I’ve never felt the need to get external investors involved.” Analysts have consistently valued Santa’s business as worth hundreds of billions of pounds – is Santa never tempted to cash in through an initial public offering of shares on the financial markets? “Never!” he laughs “– we are a pretty unique organisation, and I’d be reluctant to reveal all the details to the investor community! All I’ll say is that we do things a little differently in what I like to call the polar bear market!”
He’s making a list, and checking it twice
Nevertheless, Santa does have some dealings with the banking world. When I ask him about the other side of his capital structure – debt financing – he admits that his business does use corporate loans to provide working capital and manage cashflows: “We make all our profits at the end of December – all those carrots, mince pies and glasses of mulled wine left out for us really add up! But we have costs throughout the year – for example, we have to pay for the materials we use to make our presents, hay for the reindeer, and wages for the elves! So I like to borrow money to make sure that we have access to the cash we need for our expenses. We always pay our loans back on time though – we’re never naughty here, unlike some of those bankers!”
But I want to press Santa a little further on one point – is it true that his business has dabbled in the murky world of derivatives? “Well, we buy a lot of commodities – for example, gold leaf to decorate our toys, fuel because it takes more than a few reindeer to get round the world in one night, and coffee – I drink an awful lot of it to keep me going on Christmas Eve! And as many other businesses find, it’s helpful for us to know how much we’re going to have to fork out for these products in advance rather than just paying market price on the day we need them. So we buy options and futures, which are derivatives products which allow us to set the prices we’ll pay for our commodities over the coming months and years. They’re jolly good!”
Derivatives products played a big role in causing the problems experienced in the banking world in the past few years, and I wonder if Santa’s business has been affected by the ongoing economic turbulence? “We’re lucky enough to not have suffered too much – demand in our market has remained steady – everyone loves Christmas! But like lots of businesses, we are seeing more growth in key emerging markets! For example, Christmas is becoming more popular all the time in China!”
I wish it could be…
Although Santa’s business is undoubtedly enjoying steady year on year growth, there are some challenges to tackle. Intellectual property issues are a consistent problem: “Imitators!” shouts Santa “– some people seem to think that Santa is just a person in a red suit with a fake beard!” And he gets even angrier when I ask whether it’s true that he adopted his trademark scarlet outfit just to fit in with a Coca-Cola sponsorship deal: “It’s not true! – I’m all about Christmas spirit, not a sweet, carbonated drink!” To calm him down, I ask him why he thinks he and his team have consistently outperformed their only real competitor in the global holiday treats supply sector – the Easter Bunny conglomerate: “We’ve got them on the hop! They might rabbit on about coloured eggs, but we provide a much broader range of products and a better service – I hear they’re so inefficient that children have to hunt around to find their chocolate at Easter!”
I also want to ask Santa about some big picture issues. Corporate social responsibility is a huge issue for companies everywhere today – what does it mean to his business? “It’s very important to us! We’re all about peace on earth and goodwill towards all men, and women – my wife, Mrs Claus, is a keen feminist and she always makes me add that! So we take our duties towards our employees, the children we send presents to, and the whole world very seriously! We treat the elves who work for us as well as we can – they get a long holiday in January and over the summer, and we make our workshops as clean and pleasant as possible – we call it our “elf and safety policy”! Everything we make to put in children’s stockings is made from non-toxic and ethically sourced materials. And we’re always thinking about the planet – as we’re based at the North Pole, we’re seeing the effects global warming is having on the environment at first hand, so we’re doing all we can to recycle and reduce our emissions. We thoroughly approve of re-gifting (we’ve even been known to do it on occasion ourselves), and we have adapted many of the machines in our factories to run on reindeer dung!”
Right now – late December – is the busiest time of year for Santa’s business, so how are things going in the run-up to the big night? “The team are all working very hard at the moment – but we try to make sure everyone keeps a good work/elf balance!” And what is he looking forward to about Christmas – and the calmer period afterwards? “We have a company party once we’ve finished our work for the year, just like everyone else – the elves organise a secret Santa and then we all do some Christmas carol karaoke! Once the weather gets better here in the Arctic as spring approaches, it’ll be time for some blue sky thinking as we start to plan how we’re going to do it all again in 2012!”
By now my time with Santa is drawing to a close – and he’s being called away to deal with some urgent high-level issues over the currency in which his chocolate money for children across the eurozone should be denominated. But before he rings off, he wishes me and all readers of The Gateway – those who’ve been good boys and girls at least – a very Merry Christmas, and a Happy New Year!