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Kanye West was swimming in debt four years ago after pouring money into his fashion company, Yeezy. He revealed his financial woes on Twitter, followed by a plea to Mark Zuckerberg to invest $1 billion in the rapper’s “ideas.”

While the Facebook Inc. co-founder never took him up on the invitation, West has managed to do just fine on his own: Bank of America Corp. valued the sneaker side of the business alone at as much as $3 billion last year, according to a document reviewed by Bloomberg. That was before the Covid-19 pandemic devastated the fashion industry.

But West, the brand’s sole owner, is undaunted. He’s now looking to bring the Yeezy name into other realms, including architecture, hospitality and even urban design. He calls it the “next frontier of living for humanity.”

“All of this is Level 2,” West said of Yeezy’s evolution when reached by phone on his ranch near Cody, Wyoming, where his family is riding out the Covid-19 pandemic. It’s also one of the places he’s considering building an entire city from scratch — Yeezy City.

“It’s time to go to Level 3,” he said.

For now, though, the sneakers are the engine that keeps the brand humming. Yeezy was on track to generate $1.3 billion of shoe revenue in 2019, a 50% increase from a year earlier, according to Bank of America. West would earn $147 million in royalties from those sales.

Vogue magazine calls the sneakers the “real heroes of the Yeezy empire.” They’re released in heavily hyped, limited-edition drops, with shoppers clamoring to snag a pair online before they sell out, typically in minutes. They often sell on the secondary market for several times the original price.

Pink Fur

The saga of West’s finances — revealed in bits and pieces over the years through his tweets, lyrics and rants — is complicated and predominantly punctuated by debt.

In 2015, the entertainer told BET that he was $16 million in hock because of Yeezy. The following year, he tweeted that his debt had ballooned to $53 million, while also announcing the release of his seventh studio album — “The Life of Pablo” — on which he raps about the likelihood of dying broke and dressing his toddler in pink fur.

The $53 million debt “was Jordan losing to the Pistons,” West, 42, said in a text message, referring to basketball legend Michael Jordan’s storied rivalry with the team from Detroit.

Alexandra Fletcher, a Bank of America spokeswoman, confirmed the authenticity of the document reviewed by Bloomberg. Prepared in September, it hasn’t been updated since the coronavirus pandemic began. The valuation of “future royalties generated in the footwear category is estimated from $1.75 billion to $3 billion,” according to the bank’s preliminary analysis.

Yeezy is West’s largest asset by far. His personal accountant, David Choi, provided an unaudited balance sheet that pegs the rapper’s net worth at $3.15 billion and lists more than $200 million of other assets. They include four houses in California — two in Hidden Hills, one in Thousand Oaks and another in Calabasas — as well as properties in Wyoming and his native Chicago, Choi said.

Separately, his entire music catalog — from “The College Dropout” to “Jesus is King” and everything in between — is worth about $110.5 million, according to a valuation by the Valentiam Group.

Creative Control

The rapper is married to Kim Kardashian West. His wife’s sister, Kylie Jenner, became the youngest self-made billionaire last year after her cosmetics company struck an exclusive partnership with Ulta Beauty Inc. Jenner, 22, later sold a majority stake in her Kylie Cosmetics to Coty Inc. for $600 million.

West’s partnership with Adidas AG, which manufactures and distributes the shoes, is more of a profit-sharing agreement than a typical licensing deal. He retains creative control over design, while Adidas handles fulfillment and production. The agreement is set to end in 2026.

The fashion industry has struggled throughout the pandemic, stung by mass store closings and dwindling demand for non-essential items, which could dent Yeezy’s business. April U.S. sales for apparel, accessories and footwear retailers are expected to plunge 79% from a year earlier, according to Forrester Research.

Still, the brand has managed to avoid some of the most dire consequences, as it’s sold almost entirely online, and Adidas handles the logistics. While concerns about consumer demand for discretionary goods will grow the longer the health crisis persists, Yeezy footwear continues to sell out, according to a person familiar with the business.

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