Michael Jackson's life was a series of extreme highs and wrenching lows.
He had the best-selling record of all time (Thriller sold more than 104 million copies), yet he narrowly escaped foreclosure on the vast Neverland ranch funded by his string of hits. He showed a Midas touch in 1985 by shrewdly outbidding Paul McCartney for a catalog of royalty-rich Beatles songs. Then a decade later, according to Reuters, he was forced to merge ATV with Sony 's (NYSE: SNE) song library and sell its music publishing rights to raise some much-needed cash. And when that money was spent, he put up his share of the ATV assets as collateral in exchange for $200 million in loans from Bank of America (NYSE: BAC).
With Jackson's sudden death on Thursday, the billion-dollar boy king's musical contributions end, but, sadly, his legacy of debt will live on.
Comeback, unplugged
At the time of his death Jackson was readying for a 50-concert stint in London -- a sold-out extravaganza that would reportedly inject more than $50 million into his bone-dry bank account. Various media reports say that he owed between $400 million and $500 million.
Now ticketholders are left in the lurch and Jackson's heirs are stuck with a massive tab to pay. How his IOUs will be repaid is already up for speculation. Right on cue, just hours after Jackson's death, questions surfaced about the will: Does it exist? Is it up-to-date? Who gets what and how much (if anything)? Brace yourself for a repeat of the Anna Nicole Smith debacle.
Jackson's messy state of financial affairs should come as no surprise to anyone with just a passing familiarity with the singer's strange life trajectory.
Running up a tab in la-la land
The details of Jackson's financial woes were made public during a 2005 trial for child molestation charges (of which he was acquitted) where a forensic accountant testified that the singer suffered from a common money malady: Overspendingitus, also known as "spending more money than you make."
According to the accountant's testimony, Jackson blew through $20 to $30 million more per year than he brought in.
Of course, at Jackson's tax bracket, his rubber checks had a few more zeroes than most. Still, lavish shopping sprees and big-ticket lawn-care bills weren't the only reason Jackson was drowning in debt. His unpaid bills and unfulfilled deals brought on a constant stream of lawsuits -- nearly 20 -- from managers, lawyers, producers, financial advisors, and even a Bahraini sheik.
Publicity appeared to have little impact in his overindulgent ways. (At least Britney's parents stepped in after her spending got out of control.) Last March, Neverland was nearly nevermore. The bank threatened to foreclose the property until a billionaire real estate investment banking pal -- the CEO of Colony Capital LLC -- stepped in to bail him out.
The lesson? Evidently, it's not how much you owe, but who you know. Continued... |