Wentworth Plugs In, Introduces Rock-n-Roll Debt
September 13, 1999
When J.G. Wentworth throws its party to inaugurate the launch of the company's Artist's Advance Program, a new securitization program dedicated to financing small- to medium-market musicians and other artists by bundling their royalty streams, don't be surprised if the house bands providing the entertainment are part of the venture.
A source familiar with the situation confirmed that event headliners Jefferson Starship and the Dave Mason Band are participants in the company's new effort to make loans to artists who's chart-topping days occurred some years ago, and then offer the collateral to investors in the form of pooled, multiple artist-backed bonds.
The idea is to sign up working artists with a track record, said Michael Goodman, head of securitization at Wentworth.
"We're not worried about the getting just the one guy who's worth hundreds of millions of dollars," Goodman said, citing the David Bowie deal, the first music royalty securitization completed in 1997.
"We'd like to get the average guy who's had a few hits, has a predictable royalty stream, but isn't necessarily a millionaire," Goodman explained. "We want to be able to provide a service for that person who might really need it."
Goodman said his program will come with some twists conducive to pleasing the artists involved. The advance, for instance, wouldn't have to come in the form of cash or a check. It could be made as a purchase against the royalty stream, depending on the artist's needs.
"Similar to the way we do our structured-settlement business, we're going to do these individual transactions that are smaller, and then bulk them up into and move them out into the investor world," he said.
Goodman would not confirm that Starship and Dave Mason have been advanced money in lieu of a bond issue, but he did say that they represent the kind of artists Wentworth is targeting.
"I think that's a very typical type of artist," Goodman said. "A Jefferson Starship is not going to do a deal that David Bowie's going to do. They just aren't at that level. But it doesn't mean that creative financing won't work for them."
Goodman said the new program will cover a broad spectrum, and would not preclude modern independent labels or smaller market artists. However, he did say that "classic rock" acts would be easier to look at historically in terms of using royalties as a predictor.
The program will also include non-musicians, Goodman said, including authors, publishers and actors. A source close to the situation said large insurance companies familiar with this kind of esoteric debt, are being targeted on the buyside.
Goodman said Wentworth is in the process of obtaining artists and attracting investors. As such, he stressed that the program has just begun and he cannot determine when the company will build up enough volume to do a deal.
The kickoff for the program begins September 18 at Carnegie Hall in New York. The celebration also commemorates Wentworth's reaching the $1 billion mark in total purchases of cash flows over the years.