Monday , January 17 2022

No, Kanye West is not the richest black person in America – here’s why


Reports that the celebrity is worth nearly $ 7 billion are based on the magical sales thinking that doesn’t yet exist. That’s why it’s currently worth less than a third.

On Wednesday, several outlets reported that Kanye West is the richest black person in America, worth up to $ 6.6 billion. The news comes later Bloomberg reported that his sneaker brand, Yeezy, as well as Yeezy Gap, which has yet to sell any garments, have a combined value of up to $ 4.7 billion. The publication mentioned, without going into all the details, an additional $ 1.7 billion in assets.

It is not true, according to our calculations. Forbes it is estimated to be worth less than a third of that amount, or $ 1.8 billion. This is a big leap since last May Forbes it first set its net worth at $ 1.3 billion, but no less than the supposed $ 6.6 billion. Robert F. Smith of Vista Equity remains the richest black person in the United States, valued at $ 6 billion, while Aliko Dangote of Nigeria, worth $ 11.8 billion, is the richest black person in the United States. rich in the world.

Sky’s highest estimate is West’s latest attempt to inflate its net worth; in the past he said so Forbes it has been “spit on purpose to me.”

It’s really nothing personal. He Bloomberg the story cites a UBS report on its businesses: the same document Forbes seen earlier this month. The bank made a number of assumptions based on the expected future profits, especially for Yeezy Gap, which has not even launched. Bank documents like this are well known for painting future valuations with the best possible scenario.

The much more grounded number of Forbes is based on this old idea of ​​current income, not on theoretical expectations for the future. Yeezy Gap has not brought in any revenue, let alone profits. Who knows if the line will be popular. Maybe another hip-hop star will create the next trendy sneaker in a year or two, and Yeezys will be old news. The same thought goes with Yeezy Supply, West’s e-commerce platform. She has high hopes of making it a fashion destination; for now he only wears his shoes.

As for Yeezy sneakers, they sell crazy. The company’s revenue grew 30% last year. and its most recent limited fall, the Cloud White 450, sold out in less than a minute. Analysts we’ve talked to agree that there is business left to grow and, if it occurs, its net worth will continue to rise. But even that is not 100% certain, so for now, we stick with the 2020 numbers.

Forbes treats the West the same way we do with everyone with similar royalty-based companies – we take the license revenue from the most recent year and apply a multiple to it to keep in mind that this is a flow of continuous income. That’s how we value Donald Trump’s licensing business and Jay-Z’s music catalog.

West’s savage and optimistic approach to his equity reflects the approach used by Donald Trump, who insists that the value of his name will be included in any estimate of equity. Trump, who we value at $ 2.5, says his brand has intrinsic value, regardless of actual revenue. West and his camp make a similar argument for companies linked to the Yeezy name.

Here is a breakdown of Forbesestimate of your net worth, which is pretty impressive, even if it’s not as high as you want, or think, to be:

Yeezy: $ 1.5 billion

Still, the crown jewel of his fortune, sales of the West sneaker brand, which has a ten-year production deal with Adidas, amounted to $ 1.7 billion last year, above the 1.3 billion from 2019. As a result, West earned $ 191 million in royalties. last year. It’s impressive growth. While UBS predicts that the brand will reach more than $ 3 billion in sales by 2026 and valued it accordingly, we continued with the 2020 numbers: Yeezy’s operating revenue, which is 100% owned by West, was $ 214 million in 2020. With a 9-fold multiple and a 20% discount on the private company, Forbes estimates that Yeezy’s business with Adidas is worth $ 1.5 billion, about $ 250 million more than a year ago .

Cash and other assets: $ 160 million

Thanks to the millions he has made from Yeezy and his music, West has amassed a lot of good-sized cash, in addition to homes and toys. He owns more than $ 100 million in real estate, including several ranches in Wyoming and homes in the Los Angeles area. According to a balance sheet sent by his team, there are also works of art worth $ 9.3 million, jewelry worth $ 7.6 million, vehicles worth $ 5 million, furniture worth $ 3.4 million, and cattle worth a million. Along the way, it has also accumulated a significant amount of debt: $ 56 million. We were unable to track all horses, chairs and collars, so we re-applied a discount to the numbers provided. Nor did we include any value for the Yeezy Supply website, which the West camp claims is worth $ 1.5 billion. Forbes counts its value through the copyright sales of Yeezy shoes made through the site in the Adidas deal.

Music catalog: $ 90 million

While he can make the most of his money as a fashion mogul, West started out as one of the most popular rappers in the world, and his catalog of songs still brings in millions of royalties each year. As with Yeezy, he could take advantage of this stream of royalty, just as Shakira’s musicians have done to Bob Dylan over the past year.

Skims: $ 64 million

West and his ex-wife Kim Kardashian West may have ended their marital relationship, but they maintain certain business ties. West has a small stake in the clothing and salon clothing company Skims, which grew during the Covid-19 pandemic.

Yeezy x Gap: $ 0

While the West team insists that the Yeezy x Gap deal is worth about $ 1.5 billion and the Bloomberg history says it could be worth up to $ 970 million; Forbes gives you no value until the products start selling. The deal, announced in June, saw Gap shares grow and CEO Sonia Syngal spoke of its “great potential” in a profit call earlier this month. But the line has not yet sold any garments.

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