One of the biggest music industry stories of last year was the majority-acquisition of Todd Moscowitz’s Alamo Records by Sony Music Entertainment.
New York-based Alamo was founded in 2016 and has broken artists including Blackbear, Lil Durk and Rod Wave.
At the time that deal went down, there were some conflicting reports from sources regarding the size of the transaction: Some sources suggested it could have been as big as $ 250 million in total, others said this suggested figure was significantly higher than the amount of money Sony actually paid.
Now, we have some confirmed clarity on the deal, which was announced in June 2021.
According to a line in Universal Music Group’s recently-issued annual fiscal report spotted by MBW, Sony Music paid Sony Music EUR € 102 million to buy UMG’s interest in Alamo.
At the average currency conversion rate for June 2021 (via OFX), that figure would have translated to USD $ 123 million.
This USD conversion is likely imperfect; if MBW had to bet, we would assume it indicates the 50% Alamo equity was acquired by Sony from UMG for USD $ 125 million.
Here’s where things get interesting.
In Sony Music’s announcement of the deal last summer, the company confirmed that it had acquired a majority stake in Alamo.
It’s understood that Universal held a 50% ownership stake in Alamo, with the other 50% being owned by Moscowitz in a joint venture agreement.
This must mean that Sony acquired the UMG stake, plus additional equity from Moscowitz himself.
With our reasonable certainty that Sony paid USD $ 125 million for the 50% stake, we can confidently slap a pre-transaction valuation on the whole of Alamo of $ 250 million.
What this consequently means:
- If Sony acquired an additional 25% from Moscowitz on top of the UMG piece (to take Sony’s total stake in Alamo to 75%), Sony’s overall spend on the deal would have been approximately $ 188 million.
- If Sony acquired an additional 30% from Moscowitz (to take Sony’s total stake in Alamo to 80%), Sony’s overall spend on the deal would have been approximately $ 200 million.
- And if Sony acquired an additional 40% from Moscowitz (to take Sony’s total stake in Alamo to 90%), Sony’s overall spend on the deal would have been approximately $ 225 million.
Sony and Alamo Records recently scored a major US hit with Lil Durk’s 7220 album, which hit No.1 on the Billboard 200 in March.
In its opening week in the States, the album shifted 120,500 album-equivalent sales, according to Billboard.
The album features guest appearances from Future, Gunna, Summer Walker, and Morgan Wallen.Music Business Worldwide