From the desk of Frank Kane: penguinomics

If you haven't heard of "penguinomics", Frank Kane is about to enlighten you.

How much is a penguin worth? Sarah Dea / The National

If you haven't heard of "penguinomics", you are about to.

It's a relatively new branch of the discipline of economics, in fact about 4 days old, ever since I took my 3-year-old daughter to see the cute creatures at the Mall of the Emirates snow dome.

Amira has been penguin-obsessed for about a year now.

There's something about the Chaplinesque waddle and black-tie plumage that sparks instant giggles and affection.

She has soft cuddly penguins, realistic-looking plastic penguins that swim in her bath, even mechanical penguins that draw concentric designs on a sheet of paper, or on a living room sofa.

But now her dad has caught it too. Since our visit last Saturday, I can't stop thinking about them.

The "penguin encounter" put on by Majid Al Futtaim, the mall's owner, gives children the chance to get up close and personal with the 20 penguins flown in a couple of months ago from SeaWorld in San Diego, California.

Our group went through the "oohs" and "aahs" of delight when the penguins appeared, and their handlers had to fight off the initial rush for fear of scaring the penguins.

Nothing worse than having a horde of toddlers descend on you, even in glee.

The main trainer, a soft but firm-spoken Scots lady, answered all the children's questions: Can they fly? Where do the eggs come from? What's that slimy white stuff on the floor?

Then one of the parents put up his hand to ask a question: "How much does one cost?"

The trainer gave him a look that suggested he had put in an offer for her newborn infant and told him frostily: "They are not for sale. They are priceless."

Well, the first part may be true, but the second certainly is not.

Mr Al Futtaim opened his wallet to get them from San Diego to Dubai, though I doubt he would share details of the transaction with me.

So I began to think about it from a different angle. If you could not easily answer the question "how much does a penguin cost?", it might be possible to calculate how much it is worth, ie, how much a working penguin could earn for you, or indeed for Mr Al Futtaim.

OK, so this is where I started to obsess. Working out the earning power of a penguin is tricky, but here is my best stab at it, simplified and back of the envelope.

There are 20 penguins, a mix of king and gentoo breeds, at the mall.

On view from midday at weekends (an hour later on weekdays), they are "earning" until 9pm.

That makes a combined penguin working week of 812 hours, assuming (as most HR departments do) that 30 per cent of the "staff" will be resting, sick or on holiday at any given time.

Groups of 10 visitors each pay Dh175 (US$47.60) for an "encounter", or groups of four for a "VIP encounter" at Dh500 a time each.

Shrewd bit of pricing here by Mr Al Futtaim: revenue from the VIP sales comes to about Dh117,500 per week, against Dh100,800 from the less expensive version.

That makes a total of Dh218,300 per week total penguin revenue. The birds are working, as far as I know, 52 weeks a year, which brings the total annual revenue to Dh11.4 million, or Dh570,000 per bird.

(The question of whether the kings are worth more than the gentoos, or whether the penguins in the VIP gigs deserve a bonus above their economy-class colleagues, is not relevant. There should be no fat cats in the penguin world.)

But what would it cost to buy that kind of revenue? Well, let's do it the way the investment bankers do.

Assume a net profit margin of 15 per cent (conservative for the leisure industry) and apply a price-earnings ratio of 23 times (the S&P 500 average for last year), and you get a value of Dh1.9m per bird.

That's over half a million bucks per beak.

That's penguinomics.

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