Live Nation (LYV) is about to sign over $150 million to rapper and serial business start-up master Jay-Z. For the privilege the NYSE listed company gets a piece of all Jay-Z’s business enterprises over the next ten years.
According to The New York Times "the arrangement would position Live Nation to participate in a range of new deals with Jay-Z, one of music’s most entrepreneurial stars, whose past ventures have included the Rocawear clothing line, which he sold last year for $204 million, and the chain of 40/40 nightclubs."
The deal won’t work on a number of levels. Jay-Z is almost 40 which is ancient in the rapper world. His most recent albums could not be given away for free. Whether he has more successful business ventures in his pocket is an open question. But, if he is no longer a popular rapper he has lost the coin of the realm which makes new enterprises more easy to open.
Last year Live Nation made only $32 million on $4.2 billion in revenue. The firm has long-term debt of $822 million.
LYV has a Jay-Z-like deal with Madonna. They have locked her up for years. She is also as old has the hills, which probably does not work to her advantage since she is not the Rolling Stones, still touring although most of them a close to 100.
Shares in Live Nation traded at $24 last October. Bad numbers and nut-job deals with major artist types have bought that share price down to under $13.
Jay-Z should be paid in LYV stock. At least then he could lose money, too.
Douglas A. McIntyre
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