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Well, Santa's finally done it. He's bankrupt, thanks to some rather dubious investments and some bad luck in the real estate market (a couple ice sheets he was renting out just melted away). Kris Kringle, therefore, has to appeal to us mere mortals, to find someone - preferably a private individual - who can finance his operations for one year while he tries to secure a better financial footing.

Santa has commissioned me to do a feasibility study - that is, to figure out if anyone would be willing to help him. I have to start by figuring out just how much it costs him to be Santa each year (and no, he hasn't told me, and probably won't - Santa's secretive), to within an order of magnitude.

I've identified some key places where Santa surely must be using money. They include:

  • Getting the raw materials to make toys.
  • Paying the elves to make toys.
  • Generating all of the energy he needs to run the North Pole.
  • Dealing with the reindeer.

Taking these - and anything I've missed - into account, how much does it cost to finance Santa's operations for one year?

Basic assumptions and clarifications:

  • Santa needs to deliver one toy to each of the roughly 2 billion children on his list.
  • He needs to do it in one night.
  • He has the entire year to make the toys, but he needs the elves to make them (and they need to get paid!) in his workshop. No subcontracting; having to get an investor is embarrassing enough.
  • Santa's workshop is at the North Pole, or thereabouts.
  • Santa still has his reindeer, workshop, etc. from last year. However, he'll still need to buy new raw materials, food, etc., as well as generate energy for this year. We're not starting from scratch.
  • The sled is reindeer-powered; when looking at the energies required for transportation, we'd have to look at what we need to feed the reindeer (I'm using a model like the one in How many calories must Santa's Reindeer consume?).
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  • Comments are not for extended discussion; this conversation has been moved to chat. – James Dec 23 '17 at 07:03
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    Actually Santa paying his elves could be a mistake, in much of European mythology paying creatures such as elves, brownies etc. for their help would cause them to revolt, they help for free not for payment. – Sarriesfan Dec 23 '17 at 08:39
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    And we better take into account the fact that not all children get Santa's gift. e.g. most of Muslim children don't believe in Santa and don't care about him. And as far as I can tell, none of them has received anything from Santa so far. Either Santa has a strong religious bias or there is something seriously wrong with his distribution system. – polfosol Dec 23 '17 at 09:57
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    Indeed this event already happened: Santa no longer delivers gifts, he left that duty to parents and only try to feed his reinders on his meager retiree pension. – mouviciel Dec 23 '17 at 10:18
  • @mouviciel underrated comment is underrated – Josh Part Dec 23 '17 at 15:51
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    The "north pole" part needs some double checking. According to several sources Santa lives and works in Lapland (Finland), thus he is under EU jurisdiction and all expenses are subject to VAT. – Andrea Lazzarotto Dec 23 '17 at 19:59
  • Well for one thing, does he have to invest in any R&D for his factories? Many younger kids spend hours trying to figure out how that works... – dalearn Dec 23 '17 at 21:26
  • It would need to be another anthropomorphic personification. Maybe ask the Soul Cake Duck to cover. If we ask Death he'll probably say something like AGAIN? SUSAN WON'T BE HAPPY COVERING THE DUTY... – ivanivan Dec 24 '17 at 15:09
  • Tag reality-check checks out. – AnoE Dec 25 '17 at 13:57

4 Answers4

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Pay for elves

Joe estimates that it would take 85,851 elves working 16 hours each day for 364 days to make roughly 2 billion toys. If Santa pays his elves about \$10.00 per hour (in US dollars), that costs $$85,851 \text{ elves}\times\$10.00\text{ per hour}\times5824\text{ hours per elf}=\$5\text{ billion}$$ Let's multiply that by 2 to take into account support staff and elves working in Santa's other departments (energy, farming, etc.). So paying the elves alone costs \$10 billion.

Nolo estimated an elf population 2-7 times that high. So we could actually be looking at \$20 billion to \$70 billion.

The cost of toy materials

Let's say each toy costs \$5.00 to make in terms of raw materials (if it takes an elf 15 minutes to make each toy, labor is \$2.50 per toy). The cost of the materials (and the cost of using tools for toy-making) then is $$\$2\text{ billion toys}\times\$5.00\text{ per toy}=\$10\text{ billion}$$ As expected, making toys is really, really expensive.

Energy

There has been quite a lot of dispute on the energy Santa needs to make his journey. I'm going to present several different results based on different calculations:

  1. Zoey Boles found that Santa's reindeer would need 1,324,819,748 pounds of oats to travel the world on Christmas. Walmart will sell me oats for \$3.42 for 42 ounces. I could then buy these oats for $$1,324,819,748\text{ lbs of oats}\times\frac{\$3.42}{42\text{ oz}}=\$1.7\text{ billion}$$ Santa could buy this much oats, or he could grow it himself, which might avoid suspicion (although he would need to annex Rhode Island to grow it all). computercarguy indicated that prices could actually be as low as \$3.00 per bushel, which would lower the price to \$100 million - one seventeenth my original estimate!

  2. A. C. A. C. used conservation of energy to get 12,000 times as much calories as Zoey did . . . just for the reindeer to propel themselves. This lands us in the range of tens of trillions of dollars. Taking gifts into account raises this by six orders of magnitude, meaning that Santa would be richer than many countries.

    The difference, I believe, is that A. C. A. C. took travel time into account; Santa must make his 200 million+ mile journey in 24 hours. For that question, though, reindeer can dilate time and can travel for what is, in their perspective, much more than 24 hours. For my question, A. C. A. C.'s method is, I think, correct; Zoey's is correct if the 24 hour limit is not in place.

The elves consume energy, too. The world average power consumption per capita in 2011 was 2,674 kilowatt hours per year. If we assume a cost of 12 cents per kilowatter hour, then the eleves consume $$(2\times85,851)\text{ elves}\times2,674\text{ kWh per elf}\times12\text{ cents per kWh}=\$55\text{ million}$$ I have no idea how much energy is needed to make all of these toys, or what the energy consumption for certain other parts of the infrastructure are.

The total so far.

At the moment, I've found that Santa must be spending tens of billions to many trillions of dollars each year. However, there are still some things I haven't been able to figure out:

  • How much energy does toy-making consume?
  • Can Santa recoup costs - for instance, through collecting cookies?
  • Does Santa have other costs - like, for instance, leasing his land? Is he a tenant toy manufacturer?

These are why I'm still looking for other answers.

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    Three Christmases of Santa questions culminated in this answer. – kingledion Dec 21 '17 at 16:04
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    As a former farm boy, you should be able to get the oats much cheaper directly from a local grain elevator (https://en.wikipedia.org/wiki/Grain_elevator) for probably 3 - 5 dollars a bushel, with a bushel roughly equal to 32 lbs of oats. Today's price per bushel of oats is $2.4575, plus some for the processing (drying, storage, etc.) the elevator does. – computercarguy Dec 21 '17 at 16:20
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    @computercarguy Thank you! I've revised my answer based on an estimate of $3.00 per bushel. You just saved me about $1.6 billion. – HDE 226868 Dec 21 '17 at 16:26
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    @HDE226868, you are welcome! What's my cut of the savings? – computercarguy Dec 21 '17 at 17:11
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    Those numbers for power consumption you found include infrastructure and industrial uses, so they would include the energy for toy making. For a quick sanity check to show this you can look at the tiers for Idaho Power. Teir 1 power goes up to 800 kWh for a month. The Wikipedia link you gave gives 4000 kWh per month for a family of four. An average family of four shouldn't be double the Tier 2 limit. – Erik Dec 21 '17 at 19:02
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    You need to adjust your numbers. Not all countries celebrate Christmas (check this handy map for details). Moreover, countries that follow Orthodox Christianity (or any other non-Western Christianity) will not welcome Santa as they have their own present-giving characters. In Russia, for example, it is Father Frost and his granddaughter (and the presents are given on the 31st of December; the 25th is a regular day). Some countries, like Japan, observe Christmas but do not give presents at all. It is a romantic holiday. – Olga Dec 21 '17 at 19:23
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    $10/hour? What? That's insane! You should be looking at third-world pay, not US minimum(ish) wage. Their cost of living should be close to nil anyway. – Roddy of the Frozen Peas Dec 21 '17 at 20:15
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    @RoddyoftheFrozenPeas: this line of thinking is what will get you an elf uprising. Trust me, you'll be paying them much more when they all become elf-employed and negotiate their wages... – Jeroen Mostert Dec 21 '17 at 21:59
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    Imagine if the US Minimum Wage was increased to 15.00 per hour. That'd be 2.5 billion more for those greedy little elves. – CodeLikeBeaker Dec 21 '17 at 22:02
  • @RoddyoftheFrozenPeas As Jeroen noted, low wages for the elves could lead to a backlash against Santa. I assume he has no desire to be assassinated in his sleep after a steep salary drop. Plus, the elves have been paid (roughly an equivalent amount, accounting for inflation) for a long, long time. Dropping that would absolutely result in problems among the workforce. – HDE 226868 Dec 21 '17 at 22:06
  • An elf uprising? What are they going to spend the money on anyway? What use is the money to them? Cost of living should be very low up there; wages should be comparably low. – Roddy of the Frozen Peas Dec 21 '17 at 22:27
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    Just imagine what something like a Netflix subscription would do to their productivity. – Phil M Dec 22 '17 at 00:00
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    I know that you are looking for reality based facts, but you can't really get around the fact that its physically impossible for the reindeer to travel the earth based on a calorie count. According to https://sploid.gizmodo.com/can-santa-claus-exist-a-scientific-debate-1669957032, he needs to travel 650 Miles Per Second vs standard run speed of a reindeer at 15 MPH. Therefore only magic can do it, and its currently impossible to calculate the cost (caloric or otherwise) of magic. – Phil M Dec 22 '17 at 00:12
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    Pretty sure Santa has the original claim to the North Pole. He was there long before anybody else. – jpmc26 Dec 22 '17 at 02:02
  • Was 24 hours used because he must deliver exactly at midnight? If he could deliver anytime on Dec 25 then it would be 48 hours. If delivering at night then it would be somewhere in between. – Acumen Simulator Dec 22 '17 at 12:46
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    Could Santa feed some of the cookies to his reindeer? That would save on the cost of oats. – Nosrac Dec 22 '17 at 13:33
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    If you are paying your elves a full working wage, you don't need to pay for their food and lodging. The farming elves would be paid from the wages of the elves, not from Santa directly, so most of the support elf wages are double counted. – wedstrom Dec 22 '17 at 18:43
  • What if Girl Scout Cookies were actually Santa's cookies that he is selling in an effort to raise enough money? – dalearn Dec 23 '17 at 21:31
  • Cost of living probably through the roof, given that all of the elves would like to live within easy commuting distance of one workshop. 2) You don't need to directly pay food and housing for the workers, but you have overhead for health insurance, 401k, payroll staff, and HR staff (especially after the unfortunate discrimination case with that reindeer with the birth defect).
    • – user3067860 Dec 24 '17 at 15:23