HYBE is accused of wasting 3.7 billion KRW on real estate rent for its US CEO. “A large number of artists are leaving” [Top Issue] Scooter Braun, CEO of HYBE America, is accused of purchasing personal real estate and receiving rent payments from the company since joining HYBE.
According to a DealSite report dated the 18th, HYBE spent 3.7 billion KRW on real estate purchases for another connected entity, ‘3355 BARNARD, LLC’ (hence referred to as 3355 Barnard), between last year and the third quarter of this year. In addition, HYBE spent 2.5 billion KRW last year and 1.2 billion KRW in Q3 of this year. It was also stated that HYBE spent 21.9 billion KRW last year to purchase additional intangible assets. However, the actual cost of 25.6 billion KRW has not been published.
After enlisting Scooter Braun as an internal director last year, HYBE purchased real estate through a limited liability company (LLC) called 3355 Barnard, which they planned to use as an artist exchange. However, HYBE America has continued to declare losses, and some industry experts believe the monies were used for Scooter Braun’s personal real estate.
According to foreign media, Scooter Braun paid $26 million (approximately 36.2 billion KRW) in March last year for a 4-story building with a total floor area of 2,230 square meters in the 3355 Barnard area of Santa Monica, Los Angeles. 3355 Barnard sold the property to Scooter Braun. Given the involvement of 3355 Barnard, it is assumed that the rent for using the property was paid to 3355 Barnard via HYBE America.
Scooter Braun intended to transform the building into a location where numerous musicians, including international stars such as Justin Bieber, Taylor Swift, and Ariana Grande, as well as HYBE’s own artists, could interact and exchange. According to reports, HYBE paid rent to Scooter Braun with the same objective.
However, immediately after the company was sold to HYBE America, a substantial number of its linked artists quit, causing the company to suffer losses. Notable examples include Ariana Grande and Idina Menzel, the musical actress best known for her role in “Frozen,” who are alleged to have terminated their contracts with SB Projects under Etica Holdings last year. Other singers, like Demi Lovato and J Balvin, are said to have parted ways with Scooter Braun.
In fact, by the end of last year, HYBE America had incurred a net loss of 142.4 billion KRW. After a loss of 8 billion KRW in 2021 and 74.8 billion KRW in 2022, the deficit has increased for three years in a row with no prospects of recovery.
In response, a HYBE official told DealSite: “This is an issue involving a US firm that is not subject to domestic disclosure rules. It will take some time to verify the details, so it is difficult to respond quickly to this issue.”
