Three weeks ago, when Soulja Boy posted on his IG that he had just signed a $400 million endorsement deal, I was incredulous. Not because of any desire to see Soulja not reap the rewards of his cultural influence, and certainly not because of any hate. We had just written about how Soulja Boy deserves credit for being a founding father of hip-hop's internet age, and Soulja Hive was oh-so-recently singing my praises for pointing out that he could soon win a GRAMMY.
No, it was the principle of that number—$400 million—that set off alarm bells in my head. If it were true, that would not only be the largest deal in hip-hop history, it'd be the largest by a huge margin. Drake, who is without question the most popular rapper of his generation, recently signed deals with global giants Nike and Apple worth a reported $20 million and $10 million respectively. Going further back, Beyoncé's deal with Pepsi was for a reported $50 million, 50 Cent's legendary stake in Vitamin Water netted him about $60 million, Diddy's deal with CÎROC was worth approximately $100 million, and Jay Z' deal with Live Nation clocked in at about $150 million.
Or even beyond hip-hop, Justin Timberlake's endorsement deal with McDonald's was for $6 million, coffee maker Nespresso paid $40 million to George Clooney for some of the actor's promotional juice and Kevin Durant's recent mega-deal with Nike was for $300 million, a number based largely on the $175 million in annual sales Nike was already making from his signature shoe.
So what company was paying Soulja Boy 40 times what Apple paid Drake, three times what Live Nation paid JAY-Z and $100 million more than Nike paid Durant? I just couldn't recognize that as something that would happen in the real world I lived in. But I've also come to hate when writers make consequence-free claims and then if they bother to do anything at all, update an article with a single sentence when it turns out they were fundamentally wrong. [Update: Person we reported had been brutally murdered is, in fact, alive and fine.]
So I promised that if I was proven wrong and Soulja Boy was indeed looking at a $400 million boost to his bank account, I'd print out the article and eat it. I meant it. It would hold my feet to the fire, and since I'm a news-reporting adrenaline junkie, having some real stakes involved only increased my high.
Goddamnit. "Soulja Boy's $400 Million Deal Is With World Poker Fund Holdings," reported Billboard. "Soulja Boy's $400 Million Deal Has Been Confirmed," wrote Complex. "Soulja Boy Got A $400 Million Deal And You Didn't," taunted MTV.
Sometimes you win, sometimes you lose, and I had lost. It was paper eating time.
But if I was going to swallow some tree-pulp, I at least wanted to know about the specifics of the deal so I wouldn't make the same mistake again. And so I started to dig. I was by no means a big poker player or online gambler, I knew there was huge money in the industry, but I'd never even heard of World Poker Fund Holdings. Who was this company with enough cash to be doing $400 million dollar deals with Soulja Boy?
Looking at their site didn't help much. World Poker Fund seemed to own three poker-related ventures, one of which, Poker Tribe, could only be played legally in three U.S. states and another wasn't actually live yet.
Looking further, I found a press release from World Poker Funds Holdings in which they wrote that the deal is for five years, which would work out to $80 million a year, and that Soulja would be, "promoting World Poker Fund’s online gaming assets such as CelebrityWorld.com and its soon-to-launch 'in-flight gaming' platform." It was a step in the right direction, but also the kind of traditionally vague press release wording that felt like far more advertisement than fact. I still didn't have any better understanding of the mechanics of the deal. So I kept digging.
I quickly discovered that World Poker Fund Holding is a publicly traded company, and like any publicly traded company, are legally required to post annual reports detailing their finances. According to their December 2015 filings, they're seemingly not in any position to pay Soulja Boy $400,000, let alone $400 million. For the entire year of 2015, they made $150,000 (one hundred and fifty thousand dollars) in total revenue and their self-reported total current assets are listed as $8.6 million, weighed against $1.1 million in liabilities.
Now I was more confused than ever. How could a company that had made $150,000 last year be paying Soulja Boy $80 million this year? So I kept reading through the annual report and discovered something far stranger than I was prepared for. Not only was DeAndre Cortez Way a listed stockholder in the company, but he was a stockholder along with Floyd Mayweather, Disney star Kyle Massey, Justin Bieber, Tyga and whoever Poo Bear is (turns out he's one of Bieber's favorite songwriters).
Huh, I did not see that coming. As a general rule, you never see Tyga and Poo Bear coming.
Now the picture felt like it was finally coming into focus. Whether or not there was also some cash payment involved, and given the state of their 2015 revenue that didn't seem likely, they must be primarily "paying" Soulja Boy in stock shares, just like they'd "paid" those other celebrities. The deal wasn't for $400 million in the sense that he'd be getting $400 million deposited into his bank account, but that he'd been granted stock worth $400 million.
The problem though is that his shares in World Poker Fund Holding are not currently worth anywhere near $400 million. On Friday, May 20, the last day of trading as I write this, they were trading at $1.68 a share, which would place the worth of Soulja's shares at about $2.5 million. A huge win for Soulja Boy to be sure, far more money than I've ever seen, but a mere $397 million or so off the number being heralded in headlines.
Stocks by their nature as speculative. They could crash and Soulja's shares could end up being worth exactly and precisely nothing, or they could soar and he could net even more than $400 million, although it would take a stock price of more than $266 a share for that to happen. (By comparison, Apple is currently trading at $95 a share and Exxon Mobil at $89 a share, although that quickly gets into a world of stock splits that are way over my head.)
After all that, I still can't recognize any world in which Soulja Boy's deal with World Poker Funds Holdings could plausibly be said to be worth anything close to $400 million, and I wrote to World Poker Fund Holdings asking them to help me understand how they broadly arrived at that number. As of writing this, they have yet to return my email.
So the way I see it, there are currently three possibilities:
- That $400 million number has absolutely no basis in reality and is being touted as an eye-grabbing publicity stunt that relied on sites copying and pasting their press release without any fact-checking. If that's the case, I don't think I have to point out it's proven to be an extremely effective strategy.
- Some math I can't see makes the deal hypothetically worth $400 million, the same way an athlete will sign a deal for $50 million guaranteed, but then another $20 million in different bonuses and incentives (break the all-time rushing record, win the Super Bowl, play every game, etc) are also worked in. It's almost impossible that the athlete will be able to trigger every bonus possible and actually make $70 million, but the bigger number always wins, so it gets reported in the press as a "$70 million deal." In that case, that would make Soulja Boy's $400 million deal both "real" but also not particularly that real.
- I'll be proven completely wrong and I'll now be eating not one but two articles.
AND WAIT...WHAT'S THIS???? I want to shout "Stop the presses!" but this is the internet. I can't remember this ever happening before, you're witnessing my real-time reaction to breaking news. As I type this late at night on Sunday, May 22, Forbes has just posted an interview with World Poker Fund spokesman (and company advisor) Matthew Bird, who said the following:
“He really kind of jumped the gun” by using the $400 million figure. The deal is capped at $400 million, and it’s based on a forward-thinking valuation of the company. He’s young, he’s 25 years old. He got really excited, and he tweeted something he probably shouldn’t have tweeted. He was getting a lot of pressure from within the entertainment community, so he wanted to put a statement out. Obviously, the company’s market cap is at $51.8 million. There’s no way they could cut a $400 million deal. Endorsement deals are calculated on a lot of different factors. This is not a fully cash transaction.” —The Real Story Behind Soulja Boy's '$400 Million' Deal, Forbes
"There’s no way they could cut a $400 million deal." That sounds almost identical to a certain headline a certain writer posted three weeks ago.
Put in layman's terms, Soulja Boy has received and will receive, very little if any straight cash. Any money he does make will come in the form of stock value and a split of the revenue of the "in-flight gaming" company. For its part, that company may never launch for reasons involving the absurdly complex legal history behind gambling and Indian rights, but if it does and somehow becomes a huge success, he won't be able to make more than $400 million(the deal is "capped" at $400 million). And now, finally, I understand where that number came from.
As tempting as it is to drape myself in the DJBooth flag and take a victory lap, I'll refrain. I take no pleasure in bursting Soulja Boy's bubble, and the best possible ending to this story is that in five years Soulja's retiring off the soaring stock price of the world's most profitable in-flight gaming company.
I just wanted to find the truth, and now that it's been located, I can sleep soundly; although I'll admit that it's nice to be able to sleep without a wad of paper lining my stomach.