The often controversial Kanye West broke the internet last week, when he tweeted the admission that he is $53 million dollars in debt and publically asked Mark Zuckerberg for a $1 billion investment. This resulted in all kinds of responses and questions. How could one of the most successful hip-hop artists of all time rack up so much debt? Why was he asking for more money? There’s actually a very good explanation if you look beneath the surface.
It’s important to note that Kanye West maintains he is still “personally rich” and “can buy furs and houses” for his family. The debt comes from his business ventures, which with smart accounting can be kept separate from personal finances. The vast majority of this debt appears to have come from failed attempts to launch fashion brands; an industry that requires massive investments up front, and poses many obstacles to turn a profit.
So fear not: it appears this massive debt is unlikely to affect Kanye’s standard of living too much. It’s estimated that his last tour grossed $1 million per show, so he’s not destitute or without a revenue stream. The real issue is the limits his ability to make additional forays into fashion, art, and other ventures outside his music career.
Strictly speaking in terms of finances, Kanye West would be best-served sticking to what brought him to the dance (music), and saving his money. Understandably, looking at the track record of profitability, Mark Zuckerberg is unlikely to write that $1 billion check anytime soon.