On Wednesday, multiple outlets reported that Kanye West is
the richest Black person in America, worth as much as $6.6 billion. The news
comes after Bloomberg reported that his sneaker brand, Yeezy—as well as Yeezy
Gap, which has yet to sell one stitch of clothing—have a combined value of as
much as $4.7 billion. The publication
mentioned, without going into full detail, an additional $1.7 billion in
assets.
It’s not true, based on our calculations. Forbes estimates
he’s worth less than a third of that, or $1.8 billion. That’s a big jump from
last May when Forbes first pegged his net worth to be $1.3 billion, but nowhere
near as much as the purported $6.6 billion. Vista Equity’s Robert F. Smith
remains the richest Black person in the U.S., worth an estimated $6 billion,
while Aliko Dangote of Nigeria, worth $11.8 billion, is the richest Black
person in the world.
The sky-high estimate
is the latest of West’s attempts to inflate his net worth—in the past he’s said
that Forbes was “purposely snubbing me.”
In actuality, it’s nothing personal. The Bloomberg story
cites a UBS report on his businesses—the same document Forbes saw earlier this
month. The bank made a number of assumptions based on projected future
earnings, particularly for Yeezy Gap, which hasn’t even launched yet. Bank
documents like this are well-known for painting best-possible-scenario future
valuations.
Forbes’ much more grounded number is based on that
old-fashioned idea of current revenues—not theoretical future expectations.
Yeezy Gap has brought in no revenue, let alone any 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 thinking goes
for Yeezy Supply, West’s e-commerce platform. He has high hopes to turn it into
a fashion destination—as of now, it just shills his shoes.
As for Yeezy sneakers, they’re selling crazy well. The
company’s revenue grew 30% last year. and its most recent limited drop, the 450
in Cloud White, sold out in under a minute. Analysts with who we spoke agree
there’s growth left in the business, and if that occurs, his net worth will
continue to climb. But even that’s not 100% certain, so for now, we are
sticking with 2020’s numbers.
Forbes is treating West the same way we do everyone else
with similar royalty-based businesses: We take the most recent year’s licensing
income and apply a multiple to it to account for the fact that this is an
ongoing revenue stream. This is exactly how we value Donald Trump’s licensing
businesses and Jay-Z’s music catalogue.
West’s wildly optimistic approach to his net worth mirrors
the approach used by Donald Trump, who insists the value of his name be
included in any net-worth estimate. Trump, whom we value at $2.5 billion, says
his brand has an intrinsic value, regardless of actual revenue. West and his
camp are making a similar argument for businesses attached to the Yeezy name.
Here’s a breakdown of Forbes’ estimate of his net
worth—which is quite impressive, even if it’s not as high as he wants (or
thinks) it to be:
Yeezy: $1.5 billion
Still the crown jewel of his fortune, sales of West’s
sneaker brand, which has a ten-year-long production deal with Adidas, climbed
to $1.7 billion last year, up from $1.3 billion in 2019. As a result, West
earned $191 million in royalties last year. It’s impressive growth. While UBS
predicts the brand will reach over $3 billion in sales by 2026, and valued it
accordingly, we went with 2020 numbers: The operating income of Yeezy, which is
100% owned by West, was $214 million in 2020. With a nine-times multiple and
20% private company discount, Forbes calculates that the Yeezy business with
Adidas is worth $1.5 billion, about $250 million more than it was a year ago.
Cash and other assets: $160 million
Thanks to the millions he’s made from Yeezy and his music,
West has accumulated a nice-size pile of cash, as well as homes and toys. He
owns more than $100 million in real estate—including multiple ranches in
Wyoming and homes in the Los Angeles area. According to a balance sheet sent
over by his team, there’s also $9.3 million worth of artwork, $7.6 million
worth of jewelry, $5 million worth of vehicles, $3.4 million worth of furniture
and $1 million worth of livestock. Along the way, he has also racked up a
significant amount of debt: $56 million. We couldn’t track down every horse,
chair and necklace, so again applied a discount to the numbers provided. We
also didn’t include any value for the website Yeezy Supply, which West’s camp
claims is worth $1.5 billion. Forbes counts its value via royalties of the
Yeezy shoe sales made through the site in the Adidas deal.
Music catalogue: $90 million
While he may make most of his money as a fashion mogul, West
started out as one of the world’s most popular rappers, and his catalogue of
songs still brings in millions in royalties each year. Just like with Yeezy, he
could cash out on that royalty stream, as musicians from Shakira to Bob Dylan
have in the last year.
Skims: $64 million
West and his soon-to-be ex-wife Kim Kardashian West may have ended their marital relationship, but they maintain certain business ties. West has a small stake in his ex’s shape wear and loungewear company Skims, which has grown during the Covid-19 pandemic.
Yeezy x Gap: $0
While West’s team insists the Yeezy x Gap deal is worth
about $1.5 billion and the Bloomberg story says it could be worth as much as
$970 million, Forbes isn’t giving this any value until the products start to
sell. The deal, announced in June, sent Gap’s stock soaring, and CEO Sonia
Syngal spoke of its “big potential” in
an earnings call earlier this month. But the line hasn’t sold one piece of
clothing yet. -Forbes
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