The Darden School of Business at the University of Virginia has released a new case titled “Shamrock Capital: Pricing the Masters of Taylor Swift.” It provides a thorough analysis of the commercial and human aspects that investment firm Shamrock Capital, who paid $300 million for Swift’s older music, had to take into account while deciding whether to buy Taylor Swift’s Masters in 2020.
The case centers on a widely reported scandal that started in 2019 after Scooter Braun bought Swift’s first record label, Big Machine Records. The label still controlled Swift’s performance recordings, but she kept the publishing rights to her songs. Swift was outspoken about her displeasure with Braun’s control of her masters throughout the scandal.
“This is my worst-case scenario,” she said to Variety. This is what happens when you sign a contract at the age of fifteen with a person for whom “loyalty” is obviously merely a contractual idea.
A MASTER RECORDING VALUATION STUDY
The new example is essentially an introduction to firm valuation utilizing discounted cash flow (DCF), market multiples, and the perpetual model for estimating terminal value. It will be taught at Darden as part of the standard finance curriculum.
Four main learning goals were considered when creating the case:
1) Explain approaches for valuing businesses using a straightforward DCF model or market multiples.
2) Foster understanding and enjoyment of the perpetual model for calculating terminal value.
3) Calculate the cost of capital using benchmarks from the industry.
4) Develop an intuitive understanding of how firm development, operating profitability, and value generation are related.
In addition to learning the fundamentals of firm valuation techniques, students studying the case will investigate financial decision-making under uncertain circumstances. For Darden’s course Valuation in Financial Markets, the case will serve as the first exercise.