Who Will be Hip Hop's First Billionaire?
Shortly after the release of Forbes’ first Hip-Hop Cash Kings package in 2007, the three top earners–Jay-Z, Diddy and 50 Cent–celebrated their financial victory over mortal rappers by recording a new version of 50 Cent’s “I Get Money,” dubbing it “The Billion-Dollar Remix.”
This week we’ve released a new list, one that measures rappers not by annual earnings, but by net worth. We’ve dubbed this select group “The Forbes Five.” Sure enough, our original holy trinity of moneymaking is present; their fortunes total just over $1 billion. And there’s plenty of room to grow, especially for Diddy, who leads the pack with $475 million.
Full Coverage: The Forbes Five — Hip-Hop’s Wealthiest Artists
The artist formerly known as Puff Daddy amassed his fortune chiefly through clothing line Sean John, record label Bad Boy and, most of all, Ciroc vodka. Television shows, acting gigs and lucrative guest appearances add have added to his coffers. Back in 1999, he told Forbes that one day he’d be “bigger than David Geffen.” Diddy isn’t there yet, but with a little bit of luck, he could be hip-hop’s first billionaire. Here’s why.
Diddy’s ten-figure dreams hinge on a lucrative partnership with Diageo’s Ciroc vodka. Diddy teamed up with alcohol conglomerate back in 2007 with the aim of perking up sales for the fledgling spirit. Diageo agreed to split any profits with him; if the company ever sold Ciroc, he’d be entitled to a share of the proceeds. The rationale: Why not? The brand wasn’t selling, and Diddy was always known for having a flair for marketing.
“The product is important,” says Jack Russo, an equity analyst at Edward Jones & Co. “But the name on the product is about ten times as important.”
Even so, the executives at Diageo could never have expected just how much Diddy’s presence would boost sales. In 2007 sleepy Ciroc was moving cases at a rate of 60,000 per six months, or 120,000 per year. In 2009 Diddy’s second year with the brand, Ciroc moved 400,000 cases. This year Ciroc is on pace to sell more than 1 million cases. The boom was fueled in large part by Diddy’s diligent shilling—on billboards, in lyrics, on Twitter and even through a self-proclaimed nickname, “Ciroc Obama.”
These days, Diddy’s interest in Ciroc is worth somewhere in the low-to-mid nine-figures by our estimates and makes up the largest chunk of his net worth. To give an idea of Ciroc’s value: parent company Diageo also bought a 50% stake in Ketel One for $900 million in 2008; Ketel One moves about 2 million cases a year. Ciroc is halfway there. To be sure, there are differences. Ketel One has a long history as a family-operated distillery, while Ciroc more room to grow and sells for a higher per-bottle price. Still, the comparison provides a rough yardstick for determining the value of Ciroc—a value that continues to rise.
“Ciroc is a very popular brand, and it’s been growing,” notes Russo. “It has that cache. It’s in the right spot in the right sector.”
As the vodka’s value grows, so, too, does Diddy’s fortune. It’s conceivable that Ciroc could someday be worth as much as Ketel One, and in that case, Diddy’s interest could be worth somewhere in the mid-to-high nine figures in the event of a sale. Add in Diddy’s other companies, which include Sean John clothing, Enyce clothing, Blue Flame marketing and his Bad Boy Worldwide record label–Diddy’s interest in those companies adds up to well over $100 million–and a billion-dollar net worth doesn’t seem so far away.
Not to be discounted, of course, is Diddy’s ability to constantly reinvent himself, to come up with new ventures and ideas that will keep adding to his coffers.
“He makes his lifestyle coexist with everything else he’s doing,” says Fred “Fab 5 Freddy” Brathwaite, the artist and hip-hop pioneer who served as longtime host of Yo! MTV Raps. “The broad scope of his career and how he’s been able to stay relevant is one of the great examples of personal brand-building.”
Jay-Z and 50 Cent have already sold their biggest ventures–Rocawear and Vitamin Water–to Iconix and Coca-Cola, respectively. Neither should be discounted, and both have plenty of other tricks planted firmly in their sleeves, but right now Diddy has the edge in the race to a billion.