The Rich and Reckless

I am always interested in even how people in the very high income brackets can have low or negative wealth. The victim this time is Lady Gaga. Known for her craziness and extreme outfits Lady Gaga is anything but normal. Despite having 5 #1 hit songs and selling over 15 million records and 51 million singles Lady Gaga is still $3 million in debt. According to Forbes, “World’s Most Powerful Celebrities” Lady Gaga earned $90 million in 2010. Note some people don’t make this in an entire lifetime yet alone a year. I would be interested in seeing where all this money went for someone who has been broke four times. I looked up the Monster Ball Tour and found that 1,454,824 tickets were sold (99% attendance rate) with over $227.4 million in revenue. I imagine the rest of the revenue was from merchandise and other related items. The tour consisted of 200 shows.

One problem and something journalist forget to mention is that revenue – costs = profit. Even though the show brought in $200 million in revenue if the cost is even $201 million then that would still be a loss. Lady Gaga’s financial and tour managers probably want don’t agree with what is going on. It is ironic because Lady Gaga would actually be better off not going on tour since she seems to become broke when she does them. Either that or she needs to cut the costs of costumes, expensive equipment, cut labor costs (dancers and backup singers). Even one of the most successful bands of all time U2 in their 360 tour spent $750,000 per day since they had private jets, a production crew of 137, and hired an additional 120 people. Although, U2 is doing 110 shows they are said not to break even until towards the end of the show despite grossing $558 million in tour sales.

My main point in all of this is just because you earn an incredible income doesn’t mean you will be rich. At the end of the day if your costs are more than what you are selling your good or services for then by definition you are not creating value. I wish more people in the music/Hollywood world would understand this concept.