72/jz2.jpgHaving retired a year-and-a-half ago from his day job as the greatest rapper alive (you can imagine how boring that could get), Shawn “Jay-Z” Carter has been putting his focus elsewhere of late. On top of his co-ownership of Roc-A-Fella Records, Rocawear clothing, the 40/40 Club and Armadale Vodka, he signed a major sneaker deal with Reebok and took a minority stake in an NBA franchise, the New Jersey Nets, which he plans to help relocate to his home borough of Brooklyn.

But early this year, the world got perhaps its best look yet at the intelligence that Jay-Z has. Folks have been predicting the dissolution of the Roc-A-Fella empire since 2002. That summer, while he was on a yacht in the Mediterranean—the first real vacation he’d ever taken, he said—his longtime partner Damon Dash fired a slew of staffers and announced the promotion of an old Harlem cohort, the rapper Cam’ron, to vice president. Jay vetoed the move when he got home, and the rift became public. Over the next year, rumors spread that Jay was leaving the Roc—and its joint-venture agreement with Def Jam Records—to start a new label, S. Carter Records, under Warner Bros. Music (Warner Bros. having recently been taken over by Jay’s friend and mentor, former Def Jam chief Lyor Cohen.)

72/jz1.jpgLast December, the gears went into motion. Jay, Dash and third Roc-A-Fella principal, Kareem “Biggs” Burke, sold the remaining interest in the company to Def Jam for $10 million. But in January, rather than joining Cohen at Warner Bros., Jay accepted a position as president and CEO of Def Jam. Reporting to Universal Music brass Doug Morris and L.A. Reid, Jay got an office at 825 Eighth Avenue, sole control of Roc-A-Fella—which would remain its own entity, in its own name—and, perhaps most importantly, the rights to the masters of the eight albums he released under Def Jam from 1997 to 2003. With this, he ushered in a new era. The Carter Administration, he calls it.

72/jz1.jpgIt was quite a coup. But did it come at the expense of Jay’s former partners? While they’ve started a separate company, the Damon Dash Music Group, also under Universal, Dash and Biggs told XXL that they were disappointed that Jay had kept the Roc-A-Fella name, and that he’d tried to use it as a bargaining chip to win full ownership of the masters to Reasonable Doubt, the one album they’d put out before entering their deal with Def Jam.

When we meet Jay in his private office at the 40/40 Club, he’s helping an excited employee choose tracks for a mixtape to introduce an artist he’s in the process of signing. They wrap it up, the mixtape maker excuses himself, and the savvy prez is ready to talk. As cool and controlled as ever, measuring every word, he breaks it down—all this stuff. And why he invited Cleveland Cavaliers star LeBron James to be on XXL’s cover with the rest of his, um... cabinet.

72/jz3.jpgXXL: Who’s your new artist?
Jay-Z: He’s out of Houston.

What’s his name?
I ain’t ready to disclose all that information.

Okay, so I guess the first question a lot of people are wondering about is: Why the split with Dame and Biggs?
I knew that was going to be your first question. Like, I’m not in the business to talk about guys I did business with—I want you to print all this—been real tight with, for over 10 years. But since there’s so much out there, so much has been said, I will say this one thing: I’ma just ask the people in the world to put themselves in my shoes. However the situation happened, whether we outgrew the situation or what have you, it was time for me to seek a new deal in the situation. While I was doing that, I was gonna leave Roc-A-Fella Records, and if anybody can imagine building something from nothing, and being the main driving force for that, and then having to leave all your legacy and everything behind, I know that’d be a tough situation for anyone. While I was seeking out another deal, whether it was with the S. Carter Records or what have you, there was a deal on the table to be the president of Def Jam, continue running Roc-A-Fella, CEO-president of Roc-A-Fella also, and get all my masters back. But since I was the one that wanted to leave, I was like, let me try to figure out some way where everyone can be happy. So I said, let me have Reasonable Doubt. It’s not a money thing. Reasonable Doubt, if you look at it, it sells, whatever it sells in catalog. Maybe a hundred thousand a year. It’s very little money, but it meant everything to me because it was my baby. It was my first one. And it was also more of a principle thing: Just give me something, something to walk. Something to hold on to. I don’t wanna walk away from Roc-A-Fella Records—if you can imagine that—with nothing... So I was like, let me get Reasonable Doubt and I’ll give up [the rest of] my masters. I’ll give up Roc-A-Fella, I’ll give up president and CEO of Def Jam Records—everything. Just give me my baby to hold on to so 10 years down the line, I can look back and I got something—I’m not empty-handed. And I was the one being offered everything. I thought it was more than fair... And when that was turned down, I had to make a choice. I’ll leave that for the people to say what choice they would’ve made. That’s about it. I don’t really wanna talk about Dame or Biggs. I don’t have nothing negative to say about them.

A lot of people look at the Summer 2002—when you were away on vacation and Dame brought Cam’ron into Roc-A-Fella and gave him the VP position—as the moment. Everyone went, “Uh-oh, here comes the split.” Is that legitimate? To see that as the moment when things crystallized?
Um...I would guess yes and no. I’m not a petty person, but I can say maybe it was one of those things. Just ask the question back: If you’re on vacation and you own a record company and someone makes, or says they’re making, a move like that... ’Cause if you ask Dame, I think he’d regret that. And I think what he was trying to say was—and I don’t really want to speak for him, he has to speak for himself—but what I think he was trying to say was, he wants everyone to be vice presidents. And then people ran with it and took it that way, and it really got outta hand for the most part. But for that to happen when you’re on vacation, you’ll feel a way. But to say that’s the direct reason for us going and doing different things? I just think that was inevitable. We all bosses. I like the analogy, although it’s petty, but it’s real: We all bosses, but there’s only one presidential suite. If we in a hotel, somebody gotta move to another hotel. It ain’t as simple as that, but it’s sorta like that. We all bosses. We have a lot of things to do. In the beginning it was one common thing. It was Roc-A-Fella. Now it’s so many different things. Rocawear. Armadale, It was so many different things that we had to focus on that it would naturally draw us apart to do different things.

You’re a boss, but you’re an artist, too. If you had to choose, how would you want to be remembered, as artist or businessman?
If I had to choose, that’s an easy choice: I’m an artist in my heart. I’m an artist first. Without my artistry, none of this would be current right now. No Reebok deals, no ownership of the Nets. It was all because of my artistry. I’m not a sneakermaker by trade. I don’t love that. I mean, I love being fresh, but I’m a artist by trade.

So when’s the next Jay-Z album? Are you going to make another one?
Naah. Hell nah.

So, you’re still retired?
Just from making albums. I still make songs. It bugs me when people say, “I thought you was retired.” I clearly said—and I also said that I’m human. So maybe one day if I’m on the corner and it’s calling me—I don’t wanna just box myself in where I can’t make another album—I’ll do it anyway. But it bothers me when people say, “I thought you was retired,” if I make a song or if I do a verse on somebody’s joint. I never said I wasn’t making anymore music. I should’ve shut up. That’s what I should’ve did. Me and my big mouth.

You said you wanted to find a different situation from Roc-A-Fella. What were you looking to find in a new situation?
I guess it’s a fresh start. Just a fresh start. To start all over without any complications, without anything. I’ll just say a fresh start.

Was it a matter of being unhappy with the way Roc-A-Fella was going?
I just wanna say we outgrew the situation. We all bosses. And as all bosses, we like different things. And it’s nothing wrong with that. Everyone’s doing wonderful, great. No one’s kicked out on the streets. No one’s starving, you know what I’m saying?

Was it a matter of wanting to get more into things like sneakers and basketball? Get away from music?
Nah. If it was to get away from the music,I would’ve just stepped away from the music. I’m not here...this isn’t paying my bills. It’s great money, but it’s not… I’ll probably, from what I do, I’ll probably lose more money here, ’cause it takes a lot of my time that I could be out doing other things. It was more so about… I don’t know. It’s just the next chapter. This insures the success of an artist through music—through not being able to get a deal, to having your own label, to running a major like Def Jam. Who knows what’s next.

And with Dame starting his own label, also under Universal—you’re cool with that?
I think that’s great. Like I said, no one’s kicked out on the streets.

I think there’s a perception that, at Roc-A-Fella, you were the artist, you handled the music, and Dame handled the business stuff. Is it a matter of trying to prove—
I don’t really have to prove anything. Dame is a great businessman. That doesn’t mean that I’m not a businessman because I’m a great artist, or perceived as a great artist. That’s for the people to say [Laughs]. I mean, I’ve been through a lot worse things in my life. I think I can sell CDs [Laughs]. I think I can do that. I think I know how to do that.