Legendary Rock Band Dire Straits

Invest in a unique manager’s share of sound recording royalties generated by the entire epic catalog of rock legends Dire Straits, as well as the solo catalog of former members Mark Knopfler and John Illsley.


Offering Summary

Unit Price $3,645
Available Units 925
Last 12 Months Earnings* $296,992*
Growth over prior 12 months: 8.42%*
Projected 10-year annualized IRR: 12 - 15%*
Carry: 7.5%
Distributors Multiple
Royalties Included Sound Recordings
Interest Included: Management Commissions
Track List: View Full List
Distribution Frequency: Quarterly 
First Distribution: Nov. 30, 2018

*Past performance and future projections are not guarantees of future results


What Rights Are Included?

Composition Sound Recordings
Copyrights Included? - No
Rights N/A Sales
N/A Streaming
N/A Sync
Sources N/A Internet Streaming, Non-U.S. Terrestrial Radio, Satellite Radio, Digital Downloads, CD Sales, TV/Film/Commercial Placements & Performances, Samples, etc.

This does not constitute an offer to sell or a solicitation of an offer to buy the securities, and no offer will be made except pursuant to a private placement memorandum provided by us.

No Longer Taking Indications

This offer is full and we will not take any more indications of interest

About the Offering

This Private Syndicate investment opportunity features access to the manager’s commission of sound recording royalties earned by the complete recording catalog of legendary British rock band Dire Straits, as well as certain solo releases from band members Mark Knopfler and John Illsley.

This includes all six studio albums (most notably, the smash Brothers In Arms), hits like “Sultans of Swing,” “Money For Nothing,” and “Walk of Life” (along with their music videos), live albums, and any existing or future best-of compilations.

It also includes solo work of frontman Mark Knopfler, which among other releases includes soundtracks to movies like the beloved classics “The Princess Bride,” “Local Hero,” "Wag the Dog," and others.

Click here for a list of the full catalog

Popular songs come and go, but classics like those in the Dire Straits catalog have uncommon longevity. As you’ll see in the Financials section below, this catalog’s earnings are not only still growing, but are outperforming the growth of the broader music industry. 

Buying units of this Syndicate entitles you to these growing earnings generated from an epic music collection that stands the test of time. We are projecting a 10-year annualized IRR between 12%-15%.*

Financials


*Past performance and future projections are not guarantees of future results 


Based on analysis of the Dire Straits catalog history over the years, combined with industry projects for the growth streaming activity, sound recording revenue and various other factors

Royalties Included

Royalties generated by this catalog include the sales (physical and downloads) and streaming of any song or album included in the catalog listed above, as well as uses like terrestrial (non-U.S.), Internet, and Satellite radio play; sampling activity; video streams, production credits, and TV/Film/Ad placements. It even includes royalties generated from any reissues or remastered versions of any of the albums listed.

While the Syndicate cannot claim royalties from any new Dire Straits albums or solo projects released in the future, new music invariably draws additional attention to and use of the prior catalog, which could benefit you as an investor. The same can be said for any future solo tours, documentaries, or other career retrospectives and overviews that may be released in the years ahead.

Unique Earnings

These earnings have several unique elements worth noting.

First, they take the form of the manager’s commission earned by Dire Straits’ and Mark Knopfler’s former manager Ed Bicknell. Unlike typical manager agreements, where commissions expire in the early years after the management contract ends, Mr. Bicknell’s commission lasts for the perpetuity of the copyright — the lifetime of the author plus 70 years. This management agreement has been updated to ensure the Private Syndicate receives these commissions going forward, per an amendment signed by Knopfler and Illsley.

Under this scenario, the Syndicate will own 85% of all payments collected through this agreement as of July 1, 2018.

Second, the catalog collects public performance royalties on the sound recording from terrestrial radio airplay (called neighboring rights) outside the United States. The U.S. is one of the few countries that does not pay public performance royalties on terrestrial radio airplay, and as such U.S. recording artists don’t receive the same for radio airplay outside the U.S. But since Dire Straits is a U.K. act, it receives this royalty for radio airplay outside the U.S.

This is significant because Dire Straits is proportionally more popular outside the U.S. than it is domestically. According to an analysis by ChartMasters.org, the band's European sales alone are nearly triple that of its U.S. sales, which speaks volumes to international demand.  

Key Drivers

According to the IPFI, sound recording royalties industry-wide increased 8.1% in 2017, and 5.9% the year before. Driving this music business rebound are streaming revenues, which increased industry-wide 60.4% in 2016 and another 41.1% in 2017.

As noted earlier, the Dire Straits catalog is already outperforming these growth trends, and we expect it will continue to. That’s because this catalog benefits from the industry’s streaming trend in several ways.

Sound Recordings: The streaming format benefits sound recording royalties over composition royalties. For example: Spotify pays around 60-cents of every dollar it makes to sound recording rightsholders (which labels share with artists based on their contract), but only 10 cents to composition rightsholders. 

Record labels are seeing significant benefits as a result. According to an analysis of publicly-stated financial results by Music Business Worldwide, labels Universal, Sony and Warner jointly turned over just over $6 billion — approximately $1 billion a month — between them in the first half of 2018 on a global basis. Streaming contributed over half this total, with over $3 billion in the same period.

As you can see in the distributor pie chart above, record labels sources alone contribute over 80% to this catalog’s earnings. This means you as an investor may benefit from the industry macro trend of rising label streaming royalties.

Catalog Music: Proven older hits, like that of the Dire Straits catalog, drive streaming activity.

According to a BuzzAngle Music report released last year, over half of the music streamed via services like Spotify is classified as Deep Catalog music… music released more than three years ago. When combining both audio-only and video streams, that percentage increases to 65.9%

While streaming platforms may be a great discovery vehicle for new music, their foundation remain timeless classics like this. This puts the owners in a powerful position to negotiate higher rates in the future (which as an investor you too would benefit from).

Continued Relevance: Any new activity from a classic act like Dire Straits tends to drive fans to streaming platforms to revisit old favorites, or learn more about the source of older music recently discovered. While Dire Straits broke up in 1995, and it is highly unlikely they’re getting back together, there are some known upcoming developments that should generate renewed interest in the band’s back catalog:

  • New Mark Knopfler album: Frontman Mark Knopfler is perhaps the most well-known member of Dire Straits, and he continues to release new music (and tour). He is expected to release a new album this fall. New music, even a solo effort from a former member like this, tends to drive interest in back catalog. And should he tour in support of the new music, only better.

  • Mark Knoplfer Tour: While tickets have not gone on sale yet, Knopfler is preparing to tour extensively trough UK, Europe, and North America next year in support of the new album. These performances will almost certainly include his older Dire Straits songs, breathing renewed interest among existing and new fans alike. 

  • “Local Hero” Musical: Mark Knopfler wrote the soundtrack for the film “Local Hero.” It’s so popular that one of the tracks from that soundtrack “Going Home” is the walkout anthem for the Newcastle United soccer team. A musical stage adaptation of the movie is scheduled to debut in early 2019, which may drive renewed interest in both the soundtrack itself (as well as Knopfler’s work with Dire Straits).

About Dire Straits

The Band

Formed in 1977, Dire Straits is a British classic rock band with estimated worldwide record sales surpassing 140 million.

The band’s most successful album is 1985’s Brothers In Arms, with more than 35 million copies sold. It reached No. 1 on both the Billboard 200 and UK Official Album Charts, and is the eighth-best-selling album in UK chart history. UK newspaper The Guardian ranked the album 38 on its list of the top 50 key events in rock music history. Q magazine ranked it 51 on its list of 100 Greatest British Albums Ever. And Rolling Stone placed it 351 on the list of 500 Greatest Albums of All Time.

Collectively, the group’s catalog has spent more than 1,100 weeks on the UK albums chart, with four No. 1 charting albums. Thirteen songs broke the Billboard 100 in the U.S., including a No. 1 peak for “Money For Nothing.”

The band has four Grammy Awards, three Brit Awards (UK version of a Grammy), two MTV Video Awards, a Juno Award (Canadian version of a Grammy), and multiple critical and commercial accolades...

Awards

Grammy Awards

  • Best Rock Performance by a Duo or Group with Vocal — “Money For Nothing” (1986)
  • Best Engineered Recording, Non-Classical — Brothers In Arms (1986)
  • Best Music Video — Brothers In Arms (1986)
  • Best Surround Sound Album — Brothers in Arms: 20th Anniversary Edition (2006)

Brit Awards

  • Best British Group (1980)
  • Best British Group (1986)
  • British Album of the Year — Brothers In Arms (1987)

Rock and Roll Hall of Fame

Inducted in 2018

About the Seller

Ed Bicknell is a veteran artist manager and talent agent. He began managing Dire Straits upon their signing with Phonogram records in 1977, and continued to manage both the band and Mark Knopfler’s solo career through the mid 2000s. Other clients included Gerry Rafferty , Bryan Ferry (of Roxy Music), songwriter Paul Brady, and producer Neil Dorfsman. 

Over the years, Ed has remained closely involved with music industry issues. He founded and is the former Vice-Chairman of the Music Managers Forum, which has a membership of over 800 managers representing some 6,000 artists. He appeared before the UK House of Commons Select Committee on National Heritage during a hearing on the pricing of compact discs. He also appeared before the Mergers and Monopolies Commission during an inquiry into price fixing in the record business.

From 1983 - 1997, Ed served on the Prince’s Trust Committee, and was a member of Sir George Martin’s Music for Montserrat Committee. In 1998, he was presented with the prestigious Peter Grant Lifetime Achievement Award at the International Manager’s Forum annual British Music Roll of Honour event. And from 2006 - 2009, Ed led the International Office in London for the world’s largest talent agency—William Morris (now WME).

Distribution Schedule & Documentation

The Syndicate expects to distribute revenues to shareholders quarterly on the dates below. The first expected distribution is Nov. 30, 2018 (on royalties earned from July 1 - Sept. 30 2018).

  • February 28 | Pays earnings from October 1 - December 31
  • May 31 | Pays earnings from January 1 - March 31
  • August 31 | Pays earnings from April 1 - June 30
  • November 30 | Pays earnings from July 1 - September 30

Download: Operating Agreement (PDF)

Download: Subscription Agreement (PDF)

Download: Private Placement Memorandum - Revised 9/25/2018 (PDF)

DISCLOSURES
THIS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE SECURITIES, AND NO OFFER WILL BE MADE EXCEPT PURSUANT TO A PRIVATE PLACEMENT MEMORANDUM PROVIDED BY US.
THIS SUMMARY CONTAINS STATEMENTS WHICH CONSTITUTE “FORWARD-LOOKING STATEMENTS.” THESE STATEMENTS APPEAR IN A
NUMBER OF PLACES IN THIS SUMMARY. THESE FORWARD-LOOKING STATEMENTS INCLUDE, BUT ARE NOT LIMITED TO, STATEMENTS REGARDING PLANS, INTENTIONS, BELIEFS, EXPECTATIONS, PROJECTIONS, ASSUMPTIONS, DESCRIPTIONS OF POTENTIAL FUTURE EVENTS, AS WELL AS OTHER STATEMENTS THAT ARE NOT HISTORICAL FACTS. THE COMPANY AND ROYALTY EXCHANGE USE WORDS IN THIS MEMORANDUM SUCH AS “ANTICIPATES,” “BELIEVES,” “PLANS,” “EXPECTS,” “PROJECTS,” “FUTURE,” “INTENDS” AND SIMILAR EXPRESSIONS TO IDENTIFY FORWARD-LOOKING STATEMENTS. ALTHOUGH THE COMPANY AND ROYALTY EXCHANGE BELIEVE THAT THE EXPECTATIONS REFLECTED IN THESE FORWARD-LOOKING STATEMENTS ARE BASED ON REASONABLE ASSUMPTIONS, YOU ARE CAUTIONED THAT FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND INVOLVE RISKS AND UNCERTAINTIES. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE IN THE FORWARD-LOOKING STATEMENTS DUE TO VARIOUS FACTORS, INCLUDING THOSE DESCRIBED IN THE “RISK FACTORS” SECTION OF OUR PRIVATE PLACEMENT MEMORANDUM. FORWARD-LOOKING STATEMENTS SPEAK ONLY AS OF THE DATE OF THE DOCUMENT IN WHICH THEY ARE CONTAINED, AND THE COMPANY AND ROYALTY EXCHANGE DO NOT INTEND TO UPDATE OR REVISE ANY FORWARD- LOOKING STATEMENTS, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.