Although Live Nation will not divulge the specific financials in its deal with Jay-Z that were leaked to the New York Times, reportedly by his handlers, the company did release some interesting information about the global arrangement. The Times said the 10-year deal was worth about $150 million compared to what Live Nation reported last October in regard to its first Live Nation Artists deal with Madonna, which was for 10 years and $120 million. Its 12-year deal with U2 had no dollar sign attached to it, but it was probably worth more than the Madonna contract, and perhaps a shade less, if not more, than the Jay-Z contract.
Jay-Z’s 10-year deal encompasses touring, ticketing, secondary ticketing, merchandise, sponsorship, endorsement, DVD, television broadcast, VIP, fan club and website, publishing and recordings.
Over the 10-year term of the arrangement, the company currently expects to generate more than $340 million in revenue and more than $38 million in operating income; and to achieve an approximately 11 percent margin as compared to the company’s current North American Music margin of approximately 4 percent on single concert rights. In addition, Live Nation hopes to yield approximately 21 percent of the total profit generated from the rights, as compared to approximately 10 percent from the company’s current model; and to advance Jay-Z approximately $100 million as the rights are performed, consistent with standard practice.
The current North American leg of the Jay-Z/Mary J. Blige co-headlining tour is expected to gross about $36 million.
The striking figure is the $340 million generated over the next 10 years. That is extremely low for such a lucrative contract considering that Madonna’s revenue stream will be way over $1 billion and closer to $1.5 billion. Consider that Madonna’s last tour grossed about $195 million, and The Police’s current tour has already grossed $212 million and will gross more than $340 million when it concludes in August. U2’s most recent tour grossed $389.4 million.
The Live Nation/Z deal is more about lifestyles than concerts. Considering that Jay-Z recently sold his Rocawear clothing line for $204 million, Live Nation hopes he can repeat that under its aegis once a non-compete, if there is one, is concluded.
