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Pink Floyd’s Catalog Payday Will Be Huge — But Will It Break Records?

Billboard analyzes the iconic band's catalog valuation, and why potential buyers want it.

The ongoing auction for Pink Floyd‘s recorded masters and other rights — but not publishing — could bring in one of the richest paydays so far for a music artist selling their catalogs. Press reports that the Pink Floyd master recording and song catalog could fetch upwards of £500 million ($612 million) are not exaggerated, according to Billboard‘s calculations.

Over the last three years, Billboard estimates the Pink Floyd master recording catalog generated about $29.7 million annually, boosted by a heavy component of high-priced vinyl. After deducting $4.5 million for distribution and production costs, that would leave the catalog worth $25.3 million. At a 20 times multiple, that would bring in about $505 million in a sale.

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But wait, that estimated total doesn’t include other elements that sources say are a part of the Pink Floyd offering, like another $3 million to $4 million or so in annual merch, plus a batch of Pink Floyd album and stage prop artwork created and designed by Hipgnosis — the iconic graphic album art house that inspired the name of the modern-day music firm started by Merck Mercuriadis. If the deal includes, say, likeness and image — in case the new owner wants to invest in a Broadway play, a movie, or a documentary — then it’s possible that this deal could boast a valuation of $600 million or more.

While some sources suggest that the deal could go for even higher than a 20 times multiple, other sources wonder if the 20 times multiple should be discounted considering Pink Floyd has an aging fan base. And one has to wonder: will fans keep buying vinyl once they have all the records? Probably not, which means the big vinyl chunk of revenue may eventually slow down. Beyond that, one source says Billboard’s revenue estimate is slightly inflated because it is based on sales across the catalog, while some of the early Pink Floyd releases are paid out on a royalty basis because they are not owned by the band. Finally, others point out that due to rising interest rates, with stocks under attack and uncertainty in the bond markets, escalating valuations of the past few years may not hold in this changing economic environment. Time will tell.

But if those doubts turn out to be unwarranted, and if a deal is indeed struck, it could put the Pink Floyd’s valuation in the same league as Bruce Springsteen and Bob Dylan‘s deals over the past couple years. The Springsteen deal with Sony Music for his publishing and masters was placed at about $550 million by most press reports, but Billboard hears that the deal carried about a $500 million valuation. The Dylan publishing deal with the Universal Music Publishing Group carried a valuation of $350 million $400 million, while Billboard estimated that his masters carried about a $200 million valuation. So combined, Dylan took in about $550 million to $600 million.

While sources say that publishing is so far not a part of the Pink Floyd offering, if it were Billboard estimates that over the last three years the catalog averaged $10.45 million. On the conservative end of estimates (for publishing), that would bring in about $210 million. When added to Billboard’s $505 million for the masters, that could have meant a $715 million payday — which would have made the Pink Floyd catalog deal potentially the richest one yet.

What makes the Pink Floyd deal potentially even more attractive to suitors is that there is a slate of planned yet-unreleased live albums and films, along with box sets, compilations and repackaged original recordings to drive overall Floyd revenue through the next 10 years, according to sources. It’s unclear if those recordings are a part of the offering, but if they are it easily will drive the valuation higher. Even if they are not, those new releases likely will serve as a catalyst driving attention, and thus incremental revenue, to the rest of the catalog.

Bloomberg was first to report that the Pink Floyd catalog was up for sale, while the Financial Times reported the deal potentially carries a £500 million-plus valuation. Sources have confirmed to Billboard that the Pink Floyd assets are on the auction block, and that Patrick McKenna of Ingenius Media is shopping the deal for the band.

It’s been well known for years that Pink Floyd owns its masters, because periodically the band shopped the catalog for licensing and/or distribution, looking for fat advance bids. In the past, the band’s albums have been distributed by Columbia, as well as EMI, which the group started out on back in the day. Currently, the catalog is distributed by Sony in the U.S.; Warner Music in Europe and parts of the Middle East; and by a patchwork of licensing deals in the rest of the world, according to sources.

Pink Floyd is known for infighting between the David Gilmour-led faction and Roger Waters, which according to sources has resulted in two separate corporate entities for the band involved in the deal. For convenience purposes, however, the parties have combined into one overall umbrella entity that’s being shopped to potential bidders.

While the Financial Times has reported that BMG and Warner Music Group are current potential bidders, it’s also very likely that Sony Music Entertainment is also looking at the catalog, along with the Blackstone-backed Hipgnosis Songs Capital and Primary Wave Music. On the other hand, it’s unclear whether Universal Music Group is eligible to chase the catalog of the band, a former EMI artist, as some sources think the company is precluded from doing so because of what they believe is a still-active regulatory agreement it had to enter into in order to win approval for its 2012 acquisition of EMI recorded music. But other sources dispute that notion, which, if correct, means UMG is also a likely potential suitor as well.

WMG, SME, UMG, Hipgnosis, BMG, Primary Wave, Ingenius Media and a Pink Floyd representative either declined to comment or didn’t respond to a request for comment.