Jay-Z's Empire Taking Some Hits As Losses Mount In His Business Portfolio

Jay-Z is on his A game right now. Everything the rap superstar touches turns to gold. At least on the surface that's how it appears.

Take a peek beneath the surface and there you will see a few flaws in that Roc diamond.

The New York Post is reporting the rapper's business portfolio has take some hard hits recently.

Jay-Z's 40/40 Club franchise has suffered during this economic downturn. Hov had big hopes he would be able to expand into other markets successfully. However, expansion isn't going well.

A Chicago club that was supposed to open in 2009, hasn't. And the 80,000 square-foot Las Vegas club complete with 80 plasma TV's totally flopped. Closing in 2008 after only being in business eight months because people in the 'City That Never Sleeps' just weren't interested in it.

Jigga, Will Smith and Jada Pinkett invested $1 million into the Broadway musical 'Felal' which has yet to turn a profit.

Then there's his stake in the lowly New Jersey Nets. Jay-Z was among a group of investors that bought the club in 2004 for $300 million. As it stands now six years later the club is worth only $269 million.

In August 2007 his portfolio took another hit, a company he controlled borrowed $52M to purchase a piece of real estate between 21st and 22d streets in order to develop a luxury J Hotel. He walked away from the project and loan during the recession and has recently filed suit against the lender, Highland Capital, for "bleeding" him of interest payments.

In another failed real estate project, Jay-Z and a group of partners spent $30 million for 345 W. 14th St. in 2007 with plans to turn it into a hotel. Then the recession hit, and Jay-Z and his partners defaulted on the $24 million mortgage and tried to stick their lender with the property.

So all in all he lost a total of $76 million just on his real estate deals not even counting the lose he took on his failed 40/40 club in Vegas

He also found himself caught up in a potentially messy scandal involving New York Governor David Paterson. Jay-Z's friendship with the Governor came into question after he invested $2 million through his company Gain Global Investments Network LLC, into the development of a "racino" at the Aqueduct Racetrack.

The Feds started to investigate after rumors started to circulate that Jay-Z was given special favor by Aqueduct Entertainment Group, the company picked by Governor Paterson to turn the aging track into a slick gaming venue. Jay-Z eventually walked away from the investment completely.


Things aren't all bad for Jay-Z though, he still controls a reported billion dollar empire. His deal with Roc Nation has been a winner and Roc-A-Fella clothing line is still doing well.

Jay-Z Inc.’s winners

* Live Nation deal
Cuts deal with concert-promotion company valued at roughly $150 million over 5 years, which includes funding for Roc Nation — a music development, promotion company for Jay-Z. Roc Nation and Live Nation will split profits on album and concert revenue. The deal includes funding for Jay-Z music, acquisitions and investments.

* Rocawear
Co-founded the apparel company in 1999 with Damon Dash. Bought out Dash’s 25% stake for $30M in 2005. Grew sales to roughly $700M by March 2007, when he sold it to Iconix for $204M.

* Real Estate
314 West 11th St.: Owns the building that houses The Spotted Pig.

TriBeCa Penthouse: Paid $6.85M for 8,000-square-foot home in 2004. Patio where Jay-Z married Beyonce.

Jay-Z inc.'s mixed bag

* 40/40 Club:
• Clubs in NYC, Atlantic City. The Las Vegas club, at 24,000 square feet, opened in the hotel-casino Palazzo in January 2008, with more than 80 plasma TVs. It closed eight months later when, after disappointing traffic, Jay-Z sold the lease back to the hotel. It was tuned into a race and sports book, with a specialty restaurant.

• Plan to open clubs in Chicago, Tokyo and Macau. Chicago location is 15,000 square feet and was first expected to open in 2009. The club’s Web site now says a 2010 opening is in the works.

Jay-Z Inc.’s losers

* NJ Nets:
• Paid $4.5M in December 2004 for a minority stake in the team. Sale price of $300M means he owns 1.5%. Forbes valued the team at $269M this season, down 9% from the previous season. Operating deficit of 13.9M. In 2004, Team owner Bruce Ratner said he wanted to have team in Brooklyn for the 2006-07 season but 2012 looks more promising.

* Gain Global Investments Networks:
Company owns a 7 percent stake in the group that was chosen and then lost a deal to develop a Racino at Aqueduct Racetrack. Jay-Z owns a 28.6 percent stake in AEG.

* NYC Real estate:

• 345 West 14th St.: part of a group that borrowed $30M to buy Meatpacking District building for development. Plans went south during recession. Sold loan for $19.5M.

• 510 West 22nd St.: In August 2007, a company he controlled borrowed $52M to purchase the land in order to develop a luxury J Hotel. Walked away from the project and loan during the recession. Sued lender, Highland Capital, for “bleeding” him of interest payments.