Empire-Building State of Mind: How Jay Z Invests His Money

Jay Z and Warren Buffett may not end up in the same sentence often, but Jay Z and Warren B are more similar than you might think. Firstly, they’re two of the world’s wealthiest men. And like Mr. Buffett, Jay Z invests his millions wisely. Unfortunately, Buffett doesn’t dabble in Jay Z’s main profession. (But one can dream.)

Jay Z’s days as simply a Recording Artist are long gone. His business card may have read “Jay Z, Rapper” 20 years ago, but today it reads “Shawn Carter, Multi-Millionaire Investor.” He’s the creator and owner of his own (incredibly successful) business, and he continues to build his wealth by reinvesting his (very large) profits into a wide swath of industries.

In short, he’s built an empire and is the undisputed leader in his field. Remind you of anyone?

In case you need more convincing, and you have an hour to kill, check out this interview from Forbes wherein the two powerhouses run down their business philosophies mano a mano.  

Since we all know his lyrics by now, let’s go through some of the lesser known parts of Jay Z’s portfolio – his investments. Which ones earned him Buffett-sized returns?

Jay Z’s Billionaire Investment Portfolio

Roc-A-Fella Records

In true entrepreneurial style, Jay Z built Roc-A-Fella Records from the ground up. He, along with Damon Dash, started the label in 1995 after no one else would give him a record deal. While it must have been challenging to start off on their own, his talent quickly built an audience big enough to give him negotiating leverage when other labels started calling. Moving forward, he retained ownership rights of his entire catalog which, thanks to those of us still buying Jay Z’s early music, continues to pay dividends 20 years later.

In 2004, Roc-A-Fella Records was sold to Def Jam for a cool $10 million. What’s more, Jay Z stayed on as Def Jam’s CEO and President, continuing to grow his wealth while Def Jam’s other artists (Kanye West, for example) sold Platinum records of their own.

Rocawear

Just owning a record label isn’t enough for an empire builder. So Jay Z and Damon Dash expanded from just music and started their own clothing line: Rocawear.

Founded in 1999, it was sold to Iconix Brand Group just 8 years later for a whopping $204 million. As is his style, Jay Z retained his title of Chief Creative Officer for the brand. Seeing as Rocawear had $700 million in sales in 2007, I’m guessing that position earned him a decent payday as well.

40/40 Club

Jay Z invests in nightlife too. In 2003, he opened the 40/40 Club in New York City.  It’s a high end sports bar, which is why when you chill at the 40/40 Club there’s “ESPN on the screen.”  Cleverly, by owning a nightclub that he frequents, he’s now even making money when he’s spending money.

Like most other Shawn Carter ventures, the 40/40 Club has continued to grow.  Today there are multiple clubs, one even residing in another building Jay Z has an ownership stake in, the Barclays Center.

Brooklyn Nets

Which brings us to one of Jay Z’s more high profile investments, specifically to sports fans-  his ownership stake in the Nets NBA Franchise. His involvement became especially publicized during the team’s move to his hometown of Brooklyn. (Also, he reportedly had a hand in their new branding… so no wonder their new uniforms look so good.)

Even bigger headlines were made though, in 2013 when Jay Z sold his stake in the Nets. Forbes compared his return on investment to Warren Buffett type numbers, as he “turned $1 million into $2.35 million over the course of nine years, a gain of 135%.”

So, why did he sell his share of the Nets franchise? 

Because he had his eye on a bigger prize. After conquering music, clothing and nightlife, he decided to take his talents to sports. Jay Z launched Roc Nation Sports in 2013, a collaboration with CAA to represent athletes and handle their marketing.

Legally, once he moved into the sports agent world, he had to sell his stake in any professional sports franchises. While empire building is totally legal, monopoly building is not.

Barclays Center

If you hadn’t figured it out by now, Mr. Carter is pretty savvy with his investments. So when he legally had to leave the Brooklyn Nets business, he didn’t just cash out and walk away. Instead he shifted his stake over the Brooklyn Nets arena, the Barclays Center.

One of the world’s newest and most state of the art arenas, Barclays Center should continue to gain value not only as the Nets become more of a Brooklyn staple, but as it hosts high profile events. For example, tt served as the playground for the 2013 MTV Video Music Awards.

In their shared interview, Warren Buffett remarks that in business, “everything you learn is cumulative.” Investing successfully in one business has transference to other businesses as well. If anyone has practiced that wisdom, it’s Jay. After making his mark in entertainment, apparel, and now sports, we’ll all just have to watch and see what the Shawn Carter Empire will take over next.

In case you want to learn more about the leaders of investing, check out our course Investing Like the Greats

jay z invests

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4 responses to “Empire-Building State of Mind: How Jay Z Invests His Money”

  1. […] I’m not going to lie, I really want to be a member of this club. One of the webisodes even has an appearance by Warren’s old pal Jay Z! […]

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