White Elephant: Meaning, History, and Examples

What is a white elephant?

A white elephant is a burdensome asset whose cost of upkeep, operation, or maintenance far outweighs its usefulness or value. In finance and investing, the term typically describes property, equipment, or projects that are expensive to run, difficult to sell, and unlikely to generate a profit.

Key takeaways

• A white elephant is an asset that becomes more trouble than it’s worth due to high costs and low utility.
• These assets are often illiquid—selling them quickly usually requires taking a large loss.
• The term originates from a historical practice in Southeast Asia of gifting rare, costly-to-maintain white elephants.
• White elephants commonly appear in real estate and large public infrastructure projects.

Why assets become white elephants

Assets can turn into white elephants for several reasons:
* Demand assumptions were wrong (e.g., a factory built for a product that fails to sell).
* Technological or market shifts make the asset obsolete.
* Operating and maintenance costs are higher than expected.
* Poor planning, mismanagement, or politically driven projects with insufficient economic justification.

Because they tie up capital and often generate negative cash flow, white elephants can drain corporate or public resources and impede more productive investments.

Historical origin

The phrase comes from an old Siamese (Thai) custom: white elephants were sacred and symbolically valuable, but extremely costly to care for. According to accounts, a monarch might gift a white elephant to someone as either an honor or a burden—if no land or funds accompanied the animal, the recipient would be left with an expensive obligation.

Notable examples

Examples illustrate how white elephants can take different forms:

• Empire State Building — Initially costly to fill during and after the Great Depression, the building struggled to generate profit for decades. Over time it found diversified revenue sources (office leases, retail, observation decks, broadcasting fees) and became profitable, showing a white elephant can sometimes be rehabilitated.
• T-Mobile Center (Kansas City) — Built as a large multiuse arena, it opened without securing a major resident professional sports team. The high construction and operating costs relative to anticipated anchor tenants made it a public-finance concern for the city.
• Ryugyong Hotel (Pyongyang) — A massive pyramidal skyscraper started in 1987 but halted in the 1990s for lack of funds. Long periods of suspension and stalled completion turned it into a symbolic unfinished project and an example of an extreme white elephant.

How to spot and avoid white elephants

For investors, managers, and policymakers:
* Rigorously test demand and revenue assumptions before large capital outlays.
* Include conservative cost estimates for construction, maintenance, and operating expenses.
* Assess liquidity risk—how easy would it be to sell or repurpose the asset?
* Build contingency plans and phased approaches that allow scaling back if conditions change.
* For public projects, require transparent cost–benefit analyses and independent reviews to limit politically motivated spending.

Conclusion

A white elephant is any costly, low-value asset that burdens its owner with outsized upkeep and limited resale options. While some white elephants can be transformed through new revenue strategies or repurposing, careful planning, realistic assumptions, and strong oversight are the best defenses against creating them.