Man at the Top: Lessons on Wealth Management from the Boss

By Gracestone | March 1, 2023

Lessons on wealth management from a rock and roll star? Really? If the rock and roll star is Bruce Springsteen, the answer is a resounding yes.

Nearly 60 years into his career, Springsteen and compadres the E Street Band recently embarked on yet another sold out world tour, this one expected to last at least a year. He is remarkably fit at 73 years old; his bandmates range from 69 to 73.

Keen Springsteen watchers know Bruce, Inc. always has a plan. “He’s not a businessman / He’s a business, man!” And the plan illustrates sound advice – whether applied to investment holdings or a career in music.

1: Buy low and sell high.

Springsteen started at the bottom as a young teenager playing in front of anyone who would listen. It was the American Dream: he bet on himself.

Flash forward to late 2021, when Springsteen sold his entire music catalog, including master recordings and publishing, for a reported $550 million to Sony Music and Sony Music Publishing. The sale exceeded earlier deals landed by Bob Dylan in 2020 and 2021, when Dylan sold his songwriting catalog and recorded music for a reported $400 million. Springsteen’s sale was the largest ever for the work of a single artist.

Based on Billboard’s report that the Springsteen catalog earns about $15 million per year, spanning 20 studio albums, boxed sets and live recordings, the premium for ownership and control was significant — a 33x multiple.

2: Beware the taxman.

“Should 5% appear too small / Be thankful I don’t take it all / Cause I’m the taxman / Yeah, I’m the taxman.”

Income taxes were apparently a foreign concept to Springsteen until the IRS introduced itself to him in 1975 … thanks to the attention given the release of Born to Run and dual appearance on the covers of Newsweek and Time Magazine.

“First of all, I never met anyone in New Jersey who paid their taxes,” Springsteen has joked. “The entire state wasn’t paying any taxes. So, years went by and all of this time went by. Nobody’s paying any taxes. Me, the band, no one I know … I didn’t pay those taxes.”

He’s come a long way. Flash forward 47 years to his strategic sale, banking on favorable tax treatment on the sale of musical compositions but threatened by pending legislation.

Royalties from music are treated as income; the sale of musical compositions can be treated as capital gains. Worst case scenario, Springsteen paid capital gains taxes of 23.8% on the sale of his master recordings. Had he continued to own the recordings and receive royalties, his tax treatment would have been significantly worse, approximately 47.5% in combined federal and New Jersey state taxes.

Equally importantly, Bruce, Inc. must have good tax lawyers. His sale took place as the Biden administration pushed a retroactive increase in the top tax rate for capital gains to a blistering 43.4%. Not Boss-friendly!

3: Diversify, diversify, diversify.

Springsteen’s career is a masterclass in diversification, from the traditional path of touring in support of new albums to his embrace of Broadway and strong partnerships with major streaming services.

Over the last ten years, from ages 63 to 73, Springsteen’s creative output is downright impressive. It encompasses the release of five studio albums (Wrecking Ball, High Hopes, Western Stars, Letter to You, Only the Strong Survive), and two world tours (Wrecking Ball, High Hopes) grossing a combined $400 million.

Not to be outdone, the release of his autobiography Born to Run (sold to Simon & Schuster for a reported $10 million) led to a one-man residency on Broadway lasting 267 shows, with gross revenues exceeding $400,000 per show and $106 million in total.

Springsteen embraced Broadway, and the feeling was mutual. The run set numerous Broadway records, including the record for highest average ticket price and highest ticket price ever recorded on the secondary market. It also spawned Springsteen’s sixth live album, Springsteen on Broadway.

Always looking ahead, Bruce Inc. has also partnered with major streaming services to distribute supporting content – Springsteen on Broadway was available on Netflix; Amazon Prime hosted the documentary movie Western Stars (after a limited theater run), Apple TV+ hosted the documentary movie Letter to You and HBO hosted Bruce Springsteen: The Howard Stern Interview.

4: Philanthropy matters.

Philanthropy is an essential component of Bruce, Inc. in terms of both time and money. Springsteen’s efforts primarily focus on two areas: support of veterans and service members and addressing food insecurity.

Springsteen has raised millions to support veterans and service members. As a singular example, he regularly performs at the Bob Woodruff Foundation’s Stand Up for Heroes benefit. The Boss typically sings a few songs, tells corny jokes and auctions an autographed guitar. A natural carnival barker, in 2014 he auctioned a signed guitar plus a guitar lesson, a ride in a motorcycle sidecar and dinner featuring his mother’s lasagna … to the tune of over $600,000 to the foundation.

Moreover, Springsteen has a long record of fighting food insecurity by supporting food banks. Concert goers are familiar with Springsteen’s nightly testimonials in support of food banks where he performs, and it’s not unusual for those food banks to receive large anonymous donations on the day of a Springsteen show.

5: Stay the course.

There will be hiccups. Tickets for Springsteen’s latest tour were sold via Ticketmaster’s controversial dynamic pricing model. Ticket prices on the initial sale fluctuated according to demand – some reached as high as $5,000 per ticket. Longtime fans were outraged. “First they made me the king / Then they made me pope / Then they brought the rope.” He stayed the course – ticket demand never wavered – and is now playing to sold-out arenas across the United States before heading to Europe this summer.

“Here comes a banker, here comes a businessman / Here comes a kid with a guitar in his hand / Dreaming of his record in the number one spot / Everybody wants to be the man at the top.”

Sources

Interview, Tribeca Film Festival (2017); “Taxman” lyrics by George Harrison © Harrisongs; “Bruce Springsteen is Boss with Music Catalog Sale at Half a Billion Dollars – or More?,” Variety Magazine, December 16, 2021; “Bob Dylan Sells Recording Catalog to Sony in Major Deal – One Year After He Sold Songwriting Catalog,” Forbes Magazine, January 24, 2022; “Bruce Springsteen Tells IRS Who’s Boss in $500m Sony Sale – Taxed as Capital Gain,” Forbes Magazine, December 21, 2021; “Bruce Springsteen Sells Publishing Catalog to Sony for $500 Million,” Rolling Stone, December 15, 2021; “Diamonds from Sierra Leone Remix,” © Jay-Z, Chrysalis Music; “Springsteen Sets New Broadway Record in Resale Market,” Forbes Magazine, November 25, 2018; “Local Hero” lyrics by Bruce Springsteen, © Sony / ATV Music Publishing LLC; “Man at the Top” lyrics by Bruce Springsteen, © Sony / ATV Music Publishing LLC.