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Iver Scott, ASA

 (424) 355-5346

Smart. Inexpensive. Expert Valuations.

Complex Securities & Financial Instruments

• Profits Interests Monte Carlo simulation
• Preferred/Common
• Interest rate derivatives
• FX derivatives
• Convertible debt
• Fixed income securities
• Exotic derivatives

Financial

Reporting Valuation

• ASC 805/IFRS3/ASC 350
• ASC 350 Impairment
• Equity consideration
• Earnouts
• Risk-neutral GBM Monte Carlo simulation
• Portfolio valuation
• 409A stock comp

Tax & Intellectual

Property Valuation

• Estate & Gift valuation
• IP Valuation
• Music Catalogs & Music Copyrights
• Technology & Patents
• Brand & Trademarks
• Film Libraries & Film Rights
• Image & Likeness

Money Don't Matter

When the musician Prince died in 2016 – from an accidental fentanyl overdose at his Paisley Park home – he left behind a massive estate. His assets included his record label NPG Records, NPG Music Publishing, his “writer’s share” of songwriting rights, an extensive vault of unreleased music, image and likeness, and various properties including Paisley Park itself. 

During his lifetime, Prince took great care to control his music, and it’s the reason that his intellectual property (IP) formed a vast portion of the estate. He battled record labels for that control, acquired the rights to his masters, and drew attention to music artist rights. Because of this, many music industry watchers found it shocking that Prince left no will or estate plan to select heirs or to plan for the posthumous control of his music. The result was a very public and costly probate process that turned Prince into a cautionary tale about the perils of not creating an estate plan.

Valuing A Musical Empire

Music IP assets are complex to administer and to value. Comerica Bank & Trust, the estate administrator, valued the Prince Estate at $82.3 million, but the IRS disputed the estate’s valuation, asserting that Prince’s assets were worth $163.2 million, nearly double.

If this sounds familiar, it should: a valuation dispute played out with the Michael Jackson estate too (which I wrote about in an earlier newsletter). Both cases even landed before the same US Tax Court judge. But where the Jackson Estate chose to litigate to the end, Prince’s estate settled with the IRS, agreeing to a valuation of $156 million. Judge Mark Holmes finalized the settlement in August 2022, six years after The Artist’s death.

The complicated probate process, disputed valuation, and myriad disagreements among Prince’s heirs took a stunning financial toll. Court filings retrieved by the Daily Mail revealed that by 2019 Prince’s heirs had already incurred $45 million in legal and probate related fees. And these costs undoubtedly grew by the time the settlement was approved 3 years later, 

A $35 Million Encore

Given the high costs to settle the Prince Estate – along with the 40% federal estate tax and the 16% Minnesota estate tax – it might seem that there was little left. But Prince’s assets remain an earnings powerhouse. Forbes estimates that the Prince Estate made $35 million in 2024, making him the 6th top earning dead celebrity last year.

These earnings stem from music royalties, licensing of his right of publicity (name and likeness), and visits to the Paisley Park estate, which has become a museum. Since his death, the Estate has periodically released music from his massive vault of unreleased recordings and also re-released hits. Only Michael Jackson, Freddie Mercury, Elvis, and The Cars’ Ric Ocasek earn more from beyond the grave. 

The earning power of music IP can last decades. If you ever want to chat about pop stars, music royalties and other intellectual property, business valuation, complex financial instruments, or anything else on your mind, please give me a call at (424) 355-5346.

Thanks,

Iver

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Photo Credit

• Prince (cropped).jpg. 26 August 2014. (Image cropped from Levi and Price). Levi Seacer, CC BY-SA 4.0 via Wikimedia Commons. Image link.

Sources

• Donahue, Bill. "Prince Estate Civil War: Heirs Battle in New Lawsuit Over Alleged Company Coup.” Billboard. 11 Jan 2024.
• Erskine, Matthew F. "The Battle for Price’s Estate: Unending Conflict, Legal Drama and Lessons for Family Business. Forbes. 16 Jan 2024.
• Newman, Melinda. Inside Prince's Career-Long Battle to Master His Artistic Destiny. Billboard. 28 Apr 2016.
• Sisario, Ben. "I.R.S. Says Prince’s Estate Worth Twice What Administrators Reported." The New York Times. 3 Jan 2021.
• Spargo, Chris. "A Prince's Ransom: Singer's Heirs have Paid $45M in Legal Fees and Owe $31M in Estate Taxes Three Years after his Death.” DailyMail.com. 26 Apr 2019.
• Voytko-Best, Lisette. "The Highest-Paid Dead Celebrities Of 2024." Forbes. 29 Oct 2024.
• Wood, Robert W. "Prince’s Estate Settles IRS Tax Case." Forbes. 6 Dec 2021.