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Sean “Diddy” Combs.

Photo illustration: 731; Photo: Getty Images

Businessweek
Feature


THE DOWNFALL OF DIDDY INC.

After months in court, Sean Combs withdrew his racially charged lawsuit against
Diageo. A look inside that battle reveals the failed attempt of a fading hip-hop
mogul—who’s been buffeted by charges of sexual assault—to salvage a crumbling
business empire.

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By Devin Leonard and Dasha Afanasieva
January 18, 2024 at 11:00 AM GMT+1
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Even before four women accused him of sexual assault, Sean “Diddy” Combs was
having a bad year. He’d been on the verge of hatching “the largest Black-owned
cannabis company in the world,” promising he’d help Black people who’d been
disproportionately criminalized by harsh drug laws. But by July the $185 million
deal to acquire the operations of two large weed companies in several states had
fallen through. Around the same time, he explored making an offer for Paramount
Global’s BET, the first Black-owned cable network, as part of what a confidant
told Variety was “his strategy to build a Black-owned global media powerhouse.”
In August, however, Paramount pulled the network off the market, before
reportedly considering a sale to a management group a few months later for
almost $2 billion. The following month, Combs dropped The Love Album: Off the
Grid, his first solo record in 17 years, featuring Justin Bieber, the Weeknd,
John Legend and Mary J. Blige. “It’s the Super Bowl of R&B,” Combs told the
Today show. “One of the greatest combinations of talent put together on an album
in history!” But even with the parade of high-profile cameos, Love peaked at
No. 19 on the Billboard 200 album chart, making it the worst performer yet by an
artist many have long considered a second-tier rapper and mediocre producer. A
Guardian reviewer wrote that Combs’ album was “oddly dissatisfying” and called
his sultry patter with a female protégée on one cut “rather creepy.”



Still, if there was one gambit in 2023 that seemed to have the potential to
yield a payout worthy of Combs’ ambitions, it was the lawsuit he filed last May
against the world’s largest liquor company, Diageo Plc. After a phenomenally
lucrative run for more than a decade and a half as the face of Cîroc vodka,
Combs was suing its owner—and his longtime business partner—for being racist. He
accused Diageo of failing to devote sufficient resources to DeLeón, a tequila
they’d purchased together in 2013 amid their Cîroc success. As proof, he pointed
to DeLeón’s desultory performance compared with that of Casamigos, a tequila
Diageo had acquired four years later from actor George Clooney and his partners
in a deal worth as much as $1 billion. The reason, Combs argued, was simple: He
was Black, and Clooney was White. Combs said in his lawsuit that he was seeking
“billions of dollars in damages due to Diageo’s neglect and breaches.” But to
hear him tell it, he wasn’t merely waging a legal battle against the company—he
was on a crusade to get big corporations to do more than just pay lip service to
diversity and actually treat Black people fairly. “It is time that Diageo’s
actions match its words,” Combs said in his complaint.

Expand

Diddy with a bottle of DeLeón at a Met Gala after-party in New York last
May.Photographer: Shareif Ziyadat/Getty Images

By the time he appeared onstage a few months later at a business conference in
Atlanta, the record producer, rapper, fashion designer, liquor plugger, serial
entrepreneur and assiduous self-promoter was settling into a more recent
persona: social justice warrior. Combs was rolling out Empower Global, an online
market for Black-owned businesses, saying he wanted to “uplift Black
entrepreneurs.” In a year when Hollywood was roiled by an actors walkout, he’d
cast himself as Batman in an online short for Halloween, grabbing a fictitious
studio executive by the throat and forcing him to end the strike. He was in the
process of turning over his share of the music publishing rights to many artists
and songwriters formerly on the record label he’d founded, Bad Boy
Entertainment, some of whom had complained bitterly over the years about how
he’d handled their business relationships. Combs said in a radio interview he
needed to hold himself accountable before demanding that corporate America march
to his beat.

Now, standing onstage in sunglasses and a loose-fitting, beige, Nehru-collared
shirt with matching trousers, Combs told the 20,000-person Invest Fest audience
that the corporate world was still segregated. Just as there were once
Black-only bathrooms, companies pigeonhole products as primarily fit for Black
or White consumers, and this is what he’d experienced with Diageo. “They just
wanted to keep me in the colored section,” Combs told the largely Black crowd.
“I want to be treated equally like everybody else. That’s what this fight is
about, and it’s just not me fighting for me. I’m fighting for us.”



Few would argue that corporations aren’t plagued by persistent racial inequity,
and the liquor industry is no exception. According to Pronghorn, a Diageo-funded
company that invests in Black-owned spirits brands, Black Americans make up 12%
of the alcoholic beverage industry’s customers but only 2% of its executives.
Diageo, for its part, says 3 people on its 11-member North American management
team are Black. But the company, as Combs noted in his complaint, hasn’t been
without its own internal racial tensions. He cited a lawsuit by Eboni Major, a
Black whiskey blender, alleging numerous incidents of discrimination. Major,
hailed as the first African American to blend Bulleit bourbon, becoming a
“poster girl” for the brand, accused Diageo of underpaying her and crediting
White employees for her work. After she complained, Diageo eventually pushed her
out, she said in 2022. Diageo says Major later dropped her complaint. (Major
declined to comment.)

But in November, as Combs and Diageo were exchanging legal jabs in New York
State Supreme Court in Manhattan, the sexual assault suits against Combs started
flooding in. Former Bad Boy singer Casandra Ventura, better known as Cassie,
filed a complaint so lurid it was prefaced with a trigger warning. Among other
things, it alleged that Combs, whom she met in the mid-aughts when he was 37 and
she was 19, had beaten her and forced her to have drug-addled sex with male
prostitutes while he filmed the encounters and pleasured himself. The next day,
Combs agreed to settle the suit, with his attorney stressing this was “in no way
an admission of wrongdoing.” Over the next month, three more accusers stepped
forward. Combs denied all their accusations, some of which dated to the 1990s.
“Let me be absolutely clear,” he declared in an Instagram post in December, “I
did not do any of the awful things being alleged. I will fight for my name, my
family and for the truth.”

Expand

Former Bad Boy singer Casandra Ventura, known as Cassie, sued Combs for sexual
assault last November.Photographer: Johnny Nunez/WireImage/Getty Images

He might have also added for Combs Global, the empire under which his many
business interests rest. Combs’ musical talents have always been in question,
but his status as one of hip-hop’s savviest moguls has never been doubted. He
founded Bad Boy in 1991, in his early 20s; he created a clothing company, Sean
John, and later sold a majority stake, pocketing about $70 million; and in 2013
he started Revolt TV, a music cable network. His companies are private, but
Combs’ net worth was estimated in 2022 by Zack O’Malley Greenburg, a former
Forbes editor who tracks hip-hop’s wealthiest artists, to have reached $1
billion, largely thanks to the unprecedented Cîroc deal he struck in 2007. All
this has earned Combs a place on the Mount Rushmore of hip-hop moguls along with
Jay-Z, who sold his Rocawear clothing company for $204 million in 2007, and Dr.
Dre, who sold Beats Electronics LLC (with his partner, Interscope Records
co-founder Jimmy Iovine) to Apple Inc. for $3 billion in 2014.

But over the past decade, it seems as if Combs’ empire has been quietly
receding. Bad Boy is no longer the chart-dominating force it was two decades
ago. Its longtime partnership with Universal Music Group NV’s Interscope has all
but ended, though Bad Boy still has at least one artist affiliated with it:
Machine Gun Kelly, a heavily tattooed White rapper whose real name is Colson
Baker. (The Warner Music Group still distributes the label’s back catalog, but
the last active Bad Boy artist putting out new releases is critically acclaimed
actor-singer Janelle Monáe.) Revolt TV has struggled for relevance, largely
relying on lower-budget talk shows rather than the scripted and reality fare
that has driven more successful rivals. S&P Global Market Intelligence estimates
that Revolt had an average of 34 million subscribers in 2022, roughly half those
of MTV and BET, and a fraction of their operating revenue. “The cost to run an
ad on Revolt is less than on BET or MTV,” says S&P Global analyst Scott Robson.



A much-publicized attempt to resurrect Sean John has so far been a failure.
Global Brands Group bought a controlling stake in 2016, and its US subsidiary
later went bankrupt. Then, around two years ago, Combs snapped Sean John back up
for $7.5 million, saying he was assembling “a team of visionary designers and
global partners to write the next chapter of Sean John’s legacy.” Although you
can still find the label’s puffer coats and cargo pants deeply discounted on
walmart.com, not a single new collection has materialized, and its website and
Instagram accounts sit empty. Macy’s Inc., for years an important partner,
started phasing out Sean John early this past fall. Even Cîroc, for which Diageo
says it’s paid Combs almost $1 billion since he started working with the brand,
has been in decline. Annual US sales have tumbled from a high of 2.1 million
cases in 2014 to 1.6 million in 2022, according to the consulting company S&D
Insights.

When the racially charged lawsuit first hit, Diageo dismissed Combs’ allegations
as “baseless.” For months since, the company has argued that it no longer made
sense for the rapper to be the face of its tequila when he was accusing it of
being racist. Diageo terminated Combs’ deal with Cîroc, a move his attorneys
responded was “legally improper.” And the $79 billion company tried to take
advantage of Combs’ other legal woes. The day after Ventura filed her suit,
Diageo wrote to New York State Supreme Court Judge Joel Cohen, saying that
featuring Combs in DeLeón ads would potentially cause “devastating and permanent
damage to the brand.” (Both Diageo and Combs declined to comment to Bloomberg
Businessweek. This account of their relationship and legal battle is based
almost entirely on court documents.)

Meanwhile, the fallout from the sexual assault allegations has been swift: Combs
stepped down as Revolt TV’s chairman, and Hulu canceled his new reality show,
tentatively titled Diddy+7, starring himself and his seven children, a
now-failed attempt to cast his brood as a Kardashian-like dynasty. Companies
such as Rebecca Allen, a women’s footwear brand, and House of Takura, a handbag
and eyewear purveyor, bailed out of Empower Global, and a New York charter
school network he co-founded severed ties with him. The Love Album was nominated
for best progressive R&B album, but in January the Hollywood Reporter said Combs
wouldn’t be attending the coming Grammy Awards. Salxco, the company that managed
him as an artist, no longer lists him on its site as a client. If Combs’ empire
was teetering before, it now appeared to be totally collapsing.

Then by mid-January, there was no longer any doubt. Combs abruptly announced
that he was withdrawing his lawsuit and dropping his allegations against Diageo
as part of a settlement with the company that meant he’d no longer be involved
with either DeLeón or Cîroc. Whatever cash he got for backtracking on his claims
would likely have to go toward fighting the three other sexual assault lawsuits
awaiting him. Instead of walking away from Diageo a heroic scourge of corporate
racism, he looked in the end like a fading mogul waging a failing campaign to
extract a final windfall from what was once perhaps his most fruitful business
partner.

Expand

Combs at the conclusion of a Sean John fashion show in 2006.Photographer: Mario
Anzuoni/Reuters

In 2007 executives at Diageo’s London headquarters received an invitation to
attend a charity concert at Wembley Stadium in honor of the late Diana, Princess
of Wales. Among the headliners would be Elton John, Tom Jones, Rod Stewart and
Diddy, who was requesting their presence.

The Diageo people certainly knew who Combs—who’s dubbed himself at various times
as Puff Daddy, P. Diddy and, more recently, Love—was. He made his name in the
music business in the early ’90s as a label boss who had the good fortune to
discover Christopher Wallace, aka the Notorious B.I.G. Combs excelled at
churning out formulaic hits that often sampled recognizable artists such as
David Bowie and Tom Tom Club. In other words, if you liked a song from an
earlier time, you’d buy it again with someone rhyming over it. “He was like the
Henry Ford of hip-hop,” says Andrew DuBois, co-editor of The Anthology of Rap.
“He flooded the market with something that was standardized and reliable.”



Combs used his position to transform himself into a rap star. Nobody would have
confused his skills on the mic with those of Jay-Z, Snoop Dogg or Biggie, who
was gunned down in 1997. But unlike them, Combs didn’t necessarily need to write
his own lyrics, not when he had aspiring Bad Boy rappers around to pen them for
him. “He just didn’t have the talent,” says Mark Curry, a former Bad Boy artist
who wrote about working for Combs in his memoir, Dancing With the Devil: How
Puff Burned the Bad Boys of Hip-Hop. “Even though he can tell you what he wants
the song to sound like, he just didn’t know what to say.” (Former Bad Boy rapper
Drayton Goss says he wrote one of Diddy’s most famous lines addressing this
issue: “Don’t worry if I write rhymes, I write checks.”) It didn’t matter.
Combs’ 1997 debut album, Puff Daddy & the Family’s No Way Out, featuring a
tribute to Wallace built on a sample of the Police’s Every Breath You Take, rode
straight to No. 1, selling 7 million copies.

Along with schlocky music, there was something else Combs became synonymous
with: controversy. He made headlines in 1999 when he and three associates
assaulted an Interscope executive in a dispute over a music video. (Combs
apologized to the executive’s mother and agreed to take an anger management
class.) The following year he was accused of trying to pay his driver to claim
ownership of a gun after he and then-girlfriend Jennifer Lopez fled a New York
club where there’d been a shooting involving another of Bad Boy’s artists. He
was later acquitted of gun possession and bribery after a lengthy trial that the
New Yorker wryly noted was covered like Watergate. (Charges against Lopez were
dropped.)

Such brushes with infamy didn’t appear to sully the Bad Boy founder’s brand. He
introduced Sean John, catapulting himself into the pages of Vogue, where he
posed on the streets of Paris with Kate Moss. Acting roles followed, including a
stint in a Broadway revival of A Raisin in the Sun and parts in movies with
Vince Vaughn and Jonah Hill, where he tended to portray profanity-spewing
supporting characters. He was also featured in the MTV reality show Making the
Band, browbeating aspiring singers vying for superstardom.

“He’s taken the monies that he made from Cîroc and started Revolt and other
businesses. That was his funding stream.”

The rich and famous flocked to the annual White Party Combs threw at his home in
the Hamptons, where Jay-Z, Busta Rhymes and other hip-hop luminaries mingled
with the likes of author Salman Rushdie and future President Donald Trump.
“Everybody wanted to be at Puffy’s White Party,” says his friend Rob Stone,
founder of Cornerstone Agency, a marketing company that connects rappers and
alt-rockers with corporate brands. Another frequent White Party guest was
Jacquie Lee, then head of multicultural marketing for Diageo. She says she
thought Combs would be the perfect candidate to get clubgoers swilling Cîroc, a
vodka made using French grapes, the sales of which had been stuck at around
65,000 cases a year, according to S&D Insights. “He was a night crawler,” Lee
says. “He knew how to make people raise their glasses … dance and party.”

She arranged for Combs to meet Diageo’s top three North American executives in
New York. Lee recalls Combs grabbing a Cîroc bottle and saying, “Look, this is a
rocket, but I’m the fuel. I will grow this business beyond your imagination!”
The Diageo guys, all of them White, were smitten. The challenge was persuading
the leadership in London, who were aware of Combs’ less savory history, to sign
off. “There was a perception that he was a gangster rapper,” Lee recalls. In the
end, it was the invitation to the Diana tribute that convinced her London
bosses. “That’s what sealed the deal,” says Lee, who now runs her own marketing
firm in Rochester, New York.

Lee says it was crucial to her that Combs be treated fairly as a Black man. She
says she made sure Diageo gave him an endorsement deal lasting seven years
rather than the usual two, a separate marketing budget under his control and 50%
of Cîroc’s profits. Once he signed his contract, Combs was a whirlwind. It
wasn’t unusual for him to phone Diageo executives at 3 a.m. with promotional
ideas. He starred in a black-and-white ad in which he and a racially diverse
group of tuxedo-clad revelers cavort to Frank Sinatra’s Come Fly With Me like
members of a millennium Rat Pack. He appeared on the Ellen DeGeneres Show and
drank shots of Cîroc with the host, who downed hers with more aplomb than her
guest. “Are you drinking water?” Combs inquired suspiciously. “Let me smell
yours.”

At his office in New York, he pitched another idea to Diageo executives: Make
Cîroc the official vodka of New Year’s Eve. “It’s going to be a sonic boom,”
Combs said, according to someone who was there who asked not to be named because
they didn’t want to be dragged into the now-withdrawn lawsuit. “I can just shout
it from the rooftops.” Then Combs opened the window and yelled, “Cîroc is the
official vodka of New Year’s Eve! Hear me now!” startling passersby on Broadway.
It became one of the brand’s holiday marketing slogans for years. Armed with its
new spokesman, Cîroc’s yearly sales rose to 795,000 cases in 2010 and 2.1
million cases by 2014, according to S&D Insights. “He was doing billboards,
outdoor events. He was everywhere,” Stone says.

Flush with vodka dollars, Combs started his cable network and invested with
actor Mark Wahlberg in AquaHydrate, the two of them plugging the bottled water
as a hangover remedy on the TV circuit. “He’s taken the monies that he made from
Cîroc and started Revolt and other businesses,” says civil rights activist and
MSNBC show host Al Sharpton, a Combs mentor. “That was his funding stream.”

But there was still something missing. Combs had created so much brand equity
for Diageo in Cîroc, yet he didn’t own a nickel of it. So he and the company
began talking about developing a product in which they would be equal partners.
Perhaps a rum or a flavored spirit? They ended up settling on a brand that spoke
directly to Combs’ vanity: DeLeón Tequila.



DeLeón, a tequila aged in French wine barrels, was packaged in
perfume-container-quality decanters and sold for $125 to $825 a bottle. The
liquor was conceived as “the highest-end tequila in the world” by Brent Hocking,
a spirits entrepreneur in Los Angeles who introduced the brand in 2009. “I just
wanted to set myself apart and try to hit that 1% crowd,” Hocking says.

DeLeón’s slogan was “luxury with an edge,” and Hocking promoted it accordingly
with parties at celebrity watering holes such as LA’s Chateau Marmont, where
Courtney Love, Guns N’ Roses and other rock stars performed. Gossip columnists
kept track of not only who attended these events, whether it was Charlotte
Gainsbourg or Mark Cuban, but also who was turned away, like Lindsay Lohan, who
tried unsuccessfully to get into the brand’s second-anniversary celebration.
“Lindsay was not invited,” Hocking told the New York Post.

Along with the Hollywood frisson, there was something else about DeLeón that
appealed to Diddy: the large letter D sandblasted on the bottle. In 2013, Combs
and Diageo paid Hocking and his investors $30 million for the tequila. Almost
immediately, Diageo and Combs were at loggerheads. Diageo said in court papers
that it expected Combs to be an “equal partner” but that Combs refused to put in
more than $1,000 and still owes the company millions. Combs’ attorneys said he’s
satisfied his funding obligations. Nevertheless, Diageo says, it decided to go
forward with the awkward arrangement.

Combs tried to recycle some of the same marketing tactics he’d used with Cîroc.
He brought out a campaign for DeLeón featuring 15-second videos, the most
memorable of which was set to the sounds of another vinyl-era legend, bluesman
Muddy Waters. He made the talk show rounds, where his routine was becoming
familiar. “This is a sipping tequila,” Combs told The Tonight Show’s Jimmy
Fallon in 2015. “You take your time with it. I like to add just a little bit of
lime, little splash of water, and you—”



Fallon took a nip and smacked his lips. “This is phenomenal,” he exclaimed,
reaching over and shaking his guest’s hand. “I love you, man!” It was one of
those saccharine yet effective promotional moments that Combs had a gift for
sparking.

But the fumes of Diddy’s Bad Boy success, which he’d been riding for years, were
starting to dissipate. Now in his mid-40s, he hadn’t put out an album in a
half-decade. He soon sold his majority stake in Sean John, bagging a tidy sum
but getting out of the fashion game. His acting gigs had dried up; his last
dramatic role was a few lines as a glad-handing agent in a middling sports
drama. His bid to increase his cable footprint by purchasing Fuse TV, available
at the time in far more homes than Revolt, was thwarted when he was outbid by
NuvoTV, a Latino-oriented network backed by his ex-girlfriend JLo.

These factors made Combs’ financial relationship with Diageo all the more
critical. But the once-blistering vodka category was losing heat, and Cîroc’s
sales were slipping. DeLeón was in much worse shape. Diageo says the rapper
burned through his three-year, $15 million marketing budget for the tequila in
18 months without the sales to show for it. The company says Combs refused to do
additional marketing unless it put up more money and funded his personal
expenses and private plane travel. Diageo was willing to contribute if Combs
matched it dollar for dollar, but Combs, it says, was loath to open his own
wallet. The tensions might help explain why DeLeón’s annual sales have never
risen above about 100,000 cases—according to S&D estimates—a fraction of Cîroc’s
at its peak.

Expand

Combs with a bottle of Cîroc in 2015.Source: Alamy/https://www.alamy.com

This was the wrong moment for Combs to start bickering with such an important
business partner. Around the same time he and the liquor giant acquired DeLeón,
Clooney released Casamigos with restaurant promoter Rande Gerber and real estate
developer Mike Meldman. Clooney appeared in a charmingly naughty Casamigos
commercial where he wakes in bed to find Gerber’s wife, former supermodel Cindy
Crawford, lying beside him as if they’d imbibed several shots too many the
previous night. The spot achieved a level of virality that Combs’ sipping
contests on Ellen couldn’t rival.

Casamigos was on track to sell 170,000 cases in 2017 when Diageo acquired it in
a $700 million deal, with the promise of $300 million more if certain targets
were met over the next 10 years. This was the sort of outcome that got other
actors and athletes thinking, “Hey, maybe I can do this, too.” After all,
Clooney and his partners had demonstrated you didn’t have to be a master
distiller to make a fortune in the tequila business. “What Diageo bought was the
brand Casamigos,” says Clayton Szczech, author of A Field Guide to Tequila: What
It Is, Where It’s From, and How to Taste It. “There was no distillery. There
were no fields. There were no plants. There was no real estate.”



Within a few years, everyone including Kevin Hart (Gran Coramino), Dwayne “the
Rock” Johnson (Teremana) and Kendall Jenner (818) had a tequila brand. All it
took was some cash and a short commute to Mexico. Jose Villanueva, vice
president for sales at Casa Maestri, a distillery in the Jalisco region, makes
200 different brands, most notably former basketball star Michael Jordan’s
Cincoro tequila. For as little as $5,000 he’ll develop a flavor profile for a
prospective client, allowing them to determine the sweetness of their tequila,
with the right composition of highland and lowland agave; choose the barrels in
which it will be aged; and decide how long their liquid will sit there before
it’s happy hour. “People come to our distillery because we speak English,”
Villanueva says. “A lot of other distilleries, they Google-translate
everything.”

Combs had pulled off an impressive arrangement, putting up virtually nothing,
according to Diageo, and yet winding up with a 50% equity stake. But unlike
Clooney and his partners, he hadn’t reaped a Hollywood payout. Following the
Casamigos deal, Diageo said in court records that Combs began to accuse it of
racism, saying it would never have paid him, a Black man, what it paid for
Clooney’s brand.

Combs said in his lawsuit that he had plenty of evidence to support his claim.
He’d enthusiastically promoted a full spectrum of Cîroc flavors, including
pineapple and French vanilla, but said he’d been reluctant to sign off on Cîroc
Limited Edition Summer Watermelon because he was concerned about racist tropes.
(He eventually did.) In 2019, Diageo had presented him with watermelon again,
this time as a flavor for DeLeón, despite his misgivings. Diageo responded in
court records that watermelon Cîroc was Combs’ idea and that the watermelon
tequila was only one of many flavors it suggested. Combs also accused Diageo of
channeling its supply of agave to its other tequila brands during a shortage,
doing “slapdash” redesigns of its bottles without his input and suspending sales
incentives for both DeLeón and Cîroc. Diageo disputed these accusations.

Meanwhile, Combs alleged that Stephen Rust, Diageo’s president of new business,
had revealed the company’s “true attitude” toward the Bad Boy founder and the
Black community during a meeting in October 2019. He said that Rust told him
Diageo bosses resented him for making so much money, but the situation would
have been different if Combs had been Martha Stewart, that embodiment of White
suburban femininity. Diageo responded in court papers that it was Combs, not
Rust, who invoked Stewart.

“You never knew which Diddy you were going to get.”

Combs had always taken what might best be described as an eccentric approach to
doing business with Diageo, say three executives who worked with him but didn’t
want to be named because of the now-withdrawn lawsuit. Meetings tended to take
place wherever he happened to be—at his home in Beverly Hills, on a movie set,
or in Atlanta or some other city where he might be working on a project. Diageo
executives would arrive only to be told the meeting had been canceled or
rescheduled to the next day. When Combs did show up, often hours late, he might
retire to the pool for a leisurely drink before joining his guests. He might be
accompanied by other celebrities, high school chums and family members, who’d
offer their advice about the design of a new Cîroc bottle. One time, Combs
arrived with a large teddy bear he insisted take part in the meeting, according
to one of the executives. (Someone else who declined to be identified for fear
of violating confidentially agreements says this never occurred.)



Then again, he could be astonishingly creative and invigorating to work with.
“You never knew which Diddy you were going to get,” says one of the other
executives who attended these sessions.

But as Combs’ relationship with the company frayed, he often spent much of his
time at these meetings railing against Diageo and blaming it for the
shortcomings of his brands, say some of these same people. Diageo said in court
filings that Combs had threatened to go public with his racism allegations
unless the company poured more money into DeLeón in mid-2020—around the time of
George Floyd’s murder. Diageo said that when it informed Combs of its plan to
donate $100 million to help pandemic-devastated bars and pubs, he demanded the
company pay him the same amount and vowed to “burn the house down” if he didn’t
get a check.

Having invested heavily in DeLeón—the company now says the total exceeded $100
million—Diageo said it still hoped to repair its relationship with Combs and get
cases of the tequila moving. So, in late 2021, the two sides retooled their
joint-venture agreement. Diageo would “temporarily forgo” collecting his debt
from the initial purchase. It also agreed that DeLeón would be treated “at least
as favorably” as its other tequila brands, taking into consideration the
differences in their ingredients, packaging and sales volume.

Diageo said the sides agreed on a marketing strategy, including a $3.5 million
ad campaign Combs insisted on. Then, it said, Combs withdrew permission to allow
his image in the spots at the last minute. Diageo said it salvaged the
Diddy-free bits of the ads and increased its spending on the brand, which it
said performed better than ever without its spokesman. DeLeón’s sales volume
subsequently doubled, according to the company, and Combs sent Diageo a note
expressing his gratitude, cited by the company in court records. “I’ve been made
aware that DELEÓN appears to be turning the corner with distribution/velocity
growing,” Combs wrote. “This is great news and hope we can continue revising
upward.”

The optimism didn’t last. The two sides tried to negotiate a separation
agreement. But the talks went nowhere, and in May, Combs filed his racism
complaint against the company, accusing then-Chief Executive Officer Ivan
Menezes and Rust of “putting their feet on the neck” of DeLeón and Cîroc. Diageo
didn’t waste time responding. The following month, it informed Combs in a letter
that his accusations constituted a breach of the Cîroc agreement and that it was
terminating him as its vodka spokesman.

Cîroc sales may have been in decline, but it was still likely Combs’ most
lucrative source of income. According to one of his former executives, Combs was
making $30 for every case shipped in the US and a bonus if the yearly number
rose above 1.5 million. This executive, who spoke on condition of anonymity,
having signed a nondisclosure agreement, says Combs used the vodka’s marketing
budget to help pay for his exclusive Club Love parties, held at his Beverly
Hills home and his mansion on Miami’s Star Island, and provide cash to Revolt TV
in the form of advertising dollars: “Cîroc floated all his other companies.”
(The source who rejected characterizations of Diddy’s working style with Diageo
says this isn’t true.)

In May, Combs filed his racism complaint against the company, accusing
then-Chief Executive Officer Ivan Menezes and Rust of “putting their feet on the
neck” of DeLeón and Cîroc.

Combs had made it clear his battle with Diageo wouldn’t be restricted to the
courtroom. In June, Diageo said, Combs showed up with a 40-person crew from his
Hulu reality-TV series to meetings in New York with distributors and retailers,
trying to get their employees to say disparaging things about the spirits giant
on camera. When Diageo wrote a letter of protest, Combs’ attorneys dismissed its
allegations as “vague.”

Sharpton also rallied to Combs’ side. The civil rights activist said Diageo
stripped Combs of his Cîroc income in retaliation for the rapper having the
effrontery to raise questions about its handling of DeLeón. “It’s almost like
they’re going to whip him in line,” Sharpton told Businessweek in early
November, warming to the metaphor. “It’s like a slave master beating a slave.”
He said that he and Marc Morial, president of the National Urban League, and
Derrick Johnson, president of the NAACP, wrote to Diageo Chairman Javier Ferrán
and its CEO, Debra Crew, asking to meet to discuss Combs’ restoration as the
face of Cîroc. Sharpton warned of a boycott if they didn’t get results. “If they
close all doors, then we will start closing doors of their product in our
community,” he said. (The meeting with senior Diageo executives did happen, but
it was after Combs’ sexual assault allegations had come to light, and it shifted
from a combative tone to a discussion about their shared interest in diversity,
equity and inclusion.)

Combs’ second suit against Diageo was filed in October. In that suit he accused
the company of improperly withholding $15 million in marketing funds for DeLeón
because it didn’t want him to appear in ads for the brand. (This suit has also
been withdrawn.) Combs’ legal team argued this was absurd—the rapper was riding
high on his comeback: He had an album coming out and was appearing on talk shows
and magazine covers. He’d received the key to New York City from Mayor Eric
Adams. There’d been a tidal wave of social media hits. What business wouldn’t
want to be associated with Combs now?

Not Diageo. The company argued it didn’t make sense for Combs to appear in ads
when he was disparaging it as “malicious, racist and incompetent.” As for The
Love Album, Diageo noted it had been “tepidly received.” The company had enough
troubles already, struggling with a slowdown in US sales. In early November,
Diageo shares plunged 12% in a single day after CEO Crew warned of diminishing
growth in Latin America and the Caribbean.

But not even Diageo could have predicted how much of a liability Combs would
soon become. Days later, as a deadline loomed for the expiration of a New York
state law temporarily lifting the statute of limitations on sexual assault
claims, three suits were brought against Combs. Singer Cassie Ventura’s attorney
subsequently filed another on behalf of a fourth accuser under a New York City
law. Three of these cases also name Bad Boy and two, Combs Enterprises, the
precursor to Combs Global.



None of the lawyers on these cases would talk to Businessweek, but Ann
Olivarius, a senior partner at McAllister Olivarius who’s representing a woman
accusing Axl Rose of sexual assault in a separate New York case, says including
the defendant’s business interests is an increasingly common strategy for
victims, allowing them to potentially access a larger pool of assets for
compensation and hold to account those who allow abuse to happen. “It’s the way
that we’re bringing our cases now, too, because so often we have aiders and
abettors in the music industry, the film industry,” Olivarius says. (Rose’s
lawyer describes Olivarius’ client’s claim as “fictional.”)

Companies doing business with Combs fled. Suddenly the threat of Black activists
marching behind the rapper to make Diageo pay for depriving him of his vodka
income seemed ridiculous. A liquor company wanting an alleged sexual predator as
the face of its alcohol brands was even more absurd. The day after the first
lawsuit, Diageo said as much in its letter to the judge in the case, and after
more women came forward, it wrote again asking him not to compel Diageo to put
up more cash for ad campaigns featuring Combs, saying the mogul himself knew
these lawsuits “make it impossible for him to continue to be the ‘face’ of
anything.” Combs and his attorneys were uncharacteristically silent.

If Combs has been the master of anything throughout his career, it’s been
promoting his personal brand regardless of the circumstances. As recently as
November, his corporate website boasted that he’d “cemented himself as one of
the most successful entrepreneurs and cultural icons of all time,” despite Bad
Boy’s waning cultural influence. He showed up last spring to the Met Gala in a
gaudy outfit worthy of a modish Star Wars lord, and fashion bloggers swooned
that it was the rebirth of Sean John he’d promised, even though there was no
follow-up. Revolt was hardly the “driving force in music and culture” that Combs
Global described. Nor was Cîroc still “wildly popular.” As long as Combs said
things like this, people were inclined to believe them.

Instead of cashing out when he had the chance, Combs wagered that he might be
able to shame the company into a Clooney-size payout, while positioning himself
as a civil rights defender. Perhaps he miscalculated. Rather than knuckling
under, Diageo vigorously pushed back on his racism charges, and his reputation
crumbled at the very moment he most needed it intact. Now his name—all of them,
really—the thing on which his empire was built, may well have lost all currency.
Not even Sharpton, his longtime defender, sounds prepared to once again go to
battle. “I’ve not talked to him,” Sharpton told Businessweek on Jan. 16, the day
Combs withdrew the Diageo lawsuit. “He and I texted each other for the holiday,
and that was it.”

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