Godfather of Soul James Brown has inked a deal with the Pullman Group to create bonds backed by the singer’s future song and music publishing royalties, in a package valued at $100 million.
The deal, which closed Friday, will earn Brown (who turns 67 today) a $35 million to $55 million payday. The bonds will be backed by royalties earned on his more than 750 songs.
It is the music industry’s largest securitization pact to be inked since the format was developed nearly three years ago by David Pullman with the offering of $55 million worth of bonds backed by the future music royalties of entertainer David Bowie.
The pact spawned the term “Bowie Bonds,” which has become industry shorthand for asset-backed securities — bonds that are sold to investors.
“An artist like Brown is ideal for this kind of deal, because his catalog is so diverse and spans more than 40 years,” Pullman told Daily Variety. “There are just a handful of performers in the world whose holdings are so extensive.”
Pullman also noted that Brown’s “sound is more influential now than ever; his voice and rhythms are sampled on rap and hip-hop recordings today and his catalog is never without a new audience.”
Asset-backed bonds allow artists to get funds up front rather than selling their song catalogs or waiting years for royalties to be calculated and paid.
Though the deals tie up the rights to the collaterialized property, they eventually revert to the artist once the bonds are paid off.
Brown — who has the second most No. 1 hits in recorded music history, including such perennials as “I Got You (I Feel Good),” and “Papa’s Got a Brand New Bag” — is among a handful or acts of that stature who have retained many of the rights to their songs.
There have only been a handful of these kinds of deals since they came into vogue three years ago, partly due to the paucity of available and valuable catalogs.
Many artists — and their reps — also do not understand the concept and are reluctant to put up years, often decades, worth of work in exchange for a quick cash infusion.
The bonds’ sale date and price have yet to be determined. But such securities are typically purchased by institutions, not individual investors, because of their large pricetag. Prudential Insurance Co. bought the Bowie Bonds.
In addition to Bowie, Pullman last year inked a $30-million deal with Motown-era songwriting trio Holland-Dozier-Holland and multimillion dollar deal with songwriters/performers Ashford & Simpson.
Power to the people
“James wrote these songs, and it was the American people who bought them and gave them their value,” said Jeff Allen, Brown’s agent at Universal Attractions. “Now, through doing this deal, he is giving people the opportunity to buy into the success of these records. So in essence, he’s sharing the wealth.”
Over a 40-year period, Brown has amassed 98 top-40 R&B singles, which makes him the most charted artist alive.
Brown is also credited for leading two musical revolutions: turning R&B into soul in the ’60s and soul into funk in the ’70s.