Catalog cover

Bruce Springsteen, Sony In Catalog Sale Talks – Billboard

When music sales last boomed in the 1980s and 1990s, with many fans buying CD versions of the albums they already owned on cassette and vinyl, record labels quietly offered a rare concession to some of their best-selling stars of the 70s and 80s in order to re-sign them: they granted artists ownership of their previous albums. Now, as streaming fuels another boom, major labels are paying handsomely to pick up those classic albums.

The latest such pending purchase involves Sony’s negotiations to acquire Bruce Springsteen’s album catalog, sources say. While it’s unclear what the asking price is for Sony to acquire full ownership of its masters – which could mean no longer paying Springsteen royalties depending on the structure of the deal – Billboard estimates that the albums are worth between $145 million and $190 million.

Sources say Springsteen is also buying his publishing catalog, with some of those sources adding that Springsteen’s camp is looking for over $350 million for publishing and recorded master catalogs.

Springsteen’s catalog of albums, which has sold 65.5 million in the United States according to the RIAA site, and which includes the platinum disc 15 times Born in USA and the quintuple platinum Riverstill has plenty of firepower, as his music has generated 2.25 million album consumption units in the United States since the start of 2018, according to MRC Data.

While Springsteen has long been associated with Columbia Records and Sony Music, he was one of a handful of superstar artists like Garth Brooks, AC/DC, Pink Floyd and fellow Sony artists Neil Diamond, Bob Dylan and Michael Jackson who all succeeded in regaining ownership. of their recorded masters in the last decades of the 20th century.

But the time now seems ripe for artists who own their copyrights to cash in and sell them and the income streams they generate, especially older artists who need to start thinking about estate planning. In recent years, music assets have generated the highest multiples in history, with catalogs of iconic songs selling for 25 to 30 times publishers’ net share (gross profit), while recorded masters of superstar are selling for a multiple of 15 to 20 times net. tag share (also gross profit, but with cost of goods expense deductions more complicated than publishing).

On top of that, with Democrats in power in Washington, there is a movement to raise capital gains taxes well above their current level of 20%. So despite widespread fear that any capital gains tax increase will be retroactive, many sellers are scrambling to close deals before the end of the year in the hope that the increase will only apply. ‘ in 2022. It looks like Springsteen is about to accomplish that – at least for his master recordings.

Billboard estimates that the Springsteen Catalog generated approximately $15 million in revenue in 2020 in a year that saw its catalog business buoyed by a new release – last October letter to you — and the postponement of 3 albums released in 2019: western starsthe western stars soundtrack and Blinded by the light soundtrack.

By averaging the last three years of financial statistics from the Springsteen Catalog – a common strategy used to determine valuations – Billboard estimates that Springsteen’s catalog of master recordings averaged around $12 million in sales. After deduction of production and distribution costs of 20% of turnover, Billboard estimates that the Springsteen catalog generated a gross profit of $9.6 million. At a multiple of 15 times, that would suggest a valuation of $145 million; at a multiple of 20 that would put the valuation at around $190 million.

Further away, Billboard estimates that Springsteen’s publishing catalog brings in about $7.5 million a year. Therefore, the estimated value of Springsteen’s publishing catalog is between $185 million (at a multiple of 25) and $225 million (at a multiple of 30).

However, it is unclear whether Springsteen has chosen a buyer for his publishing catalog. Some sources suggest Sony is acquiring the publishing catalog along with the master recordings; others say that the publishing catalog could still be in play. According to these latest sources, the publishing catalog is being scrutinized by one or more of the major publishing companies backed by private capital.

In any event, sources claim that Springsteen’s camp was very selective about who he bought his rights from and, in fact, some suggest that major private equity firms might have been approached so that they can be used as a workhorse to achieve the desired price target. from Sony.

In total, if Springsteen sells all of his rights, that means his payday could be between $330 million and $415 million, according to Billboard estimates.

Sony declined to comment, while a representative for Springsteen could not provide information.