Glen Enlow Public Page: Eminem: From Celebrity Brand to Celebrity Bond

Eminem

Will the real P/E please stand up? Eminem is going from jail bond to Wall Street bond, and from 8 Mile to price-earnings with a new mini-IPO. The Denver-based Royalty Flow group is offering 3.3 million shares at $15 each to own part of the music catalog owned by Marshall Mathers, aka Eminem.

Share owners will reportedly be paid back with future royalties from the music in what’s called a “celebrity bond”—and while Eminem is hardly the first, the Slim Shady bond may be one of the riskier examples. Investors may want to “lose themselves” in his music, but they don’t want to lose their nest eggs either.

Royalty Flow’s mini-IPO has a minimum buy-in of $2,250 and it aims to raise nearly $20 million. Investors in turn will benefit from an Eminem catalog which saw royalties grow 43% in 2016. A NASDAQ listing is not out of the question.

The most famous success story of music securitization is David Bowie’s 1997 deal which netted $55 million. Despite the sexy nature of the product, Bowie Bonds, acquired then by Prudential Insurance, paid a reliable 7.9% over ten years.

Bowie wasn’t the only bonded musician. David Pullman, the banker behind the Bowie Bond, also securitized music from iconic Motown producers.

In 2011, Goldman Sachs attempted to “Bowie Bond” a music catalog that included Neil Diamond and Bob Dylan. That deal fell apart.

Of course, while rare cases like Bowie and Eminem have securitized their standalone catalog, plenty of other music is indirectly publicly traded. Music royalties are big bucks, In 2016, Sony bought the late Michael Jackson catalog for $750 million. Sony (ADR) is a publicly-traded company.

And one of the biggest music catalog battles of all time ended this summer when Paul McCartney came to an agreement with Sony about ownership of the Beatles catalog.

But a security is still a security and carries some risk. While Bowie Bonds turned out well for the singer and, ultimately, for investors, the bond did flirt with junk status a decade after its issue.

The Eminem bond, along with the rise in streaming services, is likely to once again create interest in packaging music catalogs into investment vehicles. Who will be next?

Teamed up with @stockx and few other well known folks to raise money for hurricane relief. Donate now: https://t.co/ckCXN3fjL8 pic.twitter.com/Uy7Hq1gM8M

— Marshall Mathers (@Eminem) September 20, 2017