It's been more than a year ago since I first wrote "3 Ballers Who Are Really Broke", and in that time I've probably recieved more hate mail about it than any other piece (except for maybe this one). So now that Forbes has released its annual "Highest Paid Hip-Hop Artists" list, I thought it'd be a good time to take another look at the other end of the financial coin.
Before I start, I know from experience that this disclaimer won't really stem the tide of hate mail, but I'm going to include it anyway for the small segment of the interwebs that actually read words. First, I obviously have no way of 100% knowing someone's financial status, so I'm relying on public information. Or to put it more bluntly, if some files for bankruptcy, I think we can safely assume they're not raking it in. Second, I take absolutely no pleasure in anyone's financial woes. I'm writing this not to exult, but as a warning for artists (or really just anyone) about how quickly you can go from millions to broke with a few bad financial decisions.
No one's finances are more mysterious and enigmatic than Mr. Dash's. In his Combat Jack interview he seemed to indicate that he was in good shape, or at the very least skated around reports that he was in serious financial trouble.
My quality of living has never been compromised. I got galleries all over the world. I did start Rachel Roy and sell half of it to Jones New York and I don’t see anybody else doing that right now. So I guess people’s perceptions are different but I just don’t care.
But...the legal system seems to say otherwise. This summer Dash was hit with a $2.8 million lien for unpaid taxes, and that was after he filed documents in May arguing that the government shouldn't garnish his wages because he needed the money, saying, “... I am currently over $100,000 behind in rent for the only home in which I live and at risk of being evicted.”
Only Dame and his accountants know what's really going on, but the crazy thing about being incredibly rich is that you can also be incredibly poor at the same time. You can drive a Lamborghini and owe the IRS millions simultaneously, go to sleep in a mansion that's close to being foreclosed on. There's only so much debt us normal folks will be in - no one will lend me enough money to get millions of dollars of debt. But, for example, when you've got $20 million, you can get backing to sink $25 million into a business venture, and if that venture fails, suddenly you're $5 million in the red.
If you're Dame Dash, maybe you sell your share of the Roc for $20 million, then you invest in some art galleries that don't turn a profit, and get nailed with a divorce and child support, and a couple other investments don't go your way, and....
Don't bet against Dame though, it's hard to keep a good hustler down for long, and he's one of the best.
Dame Dash is an example of what can happen when you've got millions and lose then, I wanted to include Young Buck here as an example of what can happen when you sign your money away before you even really get those millions.
When Buck signed to G-Unit he signed away all of his publishing, masters and intellectual property, including his name, to 50 Cent. In other words, Fiddy almost literally owned. So when things went South, 50 reportedly both demanded Buck pay back the nearly $10 million he reportedly owed G-Unit , while simultaneously blocking him from signing to a new label, selling his masters, etc. to pay back that loan. Bad time.
But things are finally looking up for Buck, even though he is currently in jail on weapons charges. A bankruptcy judge has wiped his debt to 50 clean, meaning once he's released he might finally be able to get back on track.
The lesson? What looks like it might make you rich today could keep you in debt tomorrow. Keep the long term in mind at all times.
I'll use Fat Joe as the real tax warning story because he's one of the more recent to go to jail, but this could really apply to about 100 artists. Off the top of my head, Lauryn Hill, Method Man, Nas and any more have all faced some serious tax related issues.
In Fat Joe's case, he racked up approximately $3 million in unpaid taxes, and ended up in jail for four months over it. The short story is, no shit, pay your taxes. Just do it. The IRS does not fuck around, and they gun for high profile topics. But the deeper lesson is to make sure you can truly, truly trust everyone around you. According to Joe, his shady accountant is the reason he ended up in jail; he had no idea he owed so much until it was essentially too late.
Sorry to make it rain on your dreams of rap wealth, but the truth is that for every rapper who becomes Jay Z, there's a thousand who never even manage to make a living, and a hundred more who make it, only to lose it all again. For those who haven't seen it, ESPN's "30 for 30: Broke" breaks down how someone goes from $100 million to broke far better than I ever could. Just substitute Bernie Kosar for Young Buck and boom, it's the best documentary ever made about rap finances.
So by all means people, go get that money. Just make sure you keep it.