By Joanne Bladd
Find out how music legend Michael Jackson blew a four-decade fortune - what happened to Michael’s millions?
He was an undisputed music icon, a multimillion-selling artist who changed the face of the industry. Yet his musical legacy is only matched by his mountain of debt. So what happened to Michael’s millions?
Racking up the bills proved as easy as 1-2-3 for music icon Michael Jackson. A star from the age of six, he amassed worldwide record sales of 750 million, cleared $400m in concerts, endorsements and videos alone, and fronted the biggest-earning tours on the planet. Yet at the age of 50 he died, mired in debt to the tune of $500m and on the cusp of a comeback driven by the need to chip back his dues. So how did the King of Pop blow a four-decade fortune?
Largely, it would seem, by shopping. Jackson was often described by industry insiders as a millionaire spending like a billionaire. Between his profligate shopping, streams of legal scandals and burgeoning bank loans, the 13-time Grammy winner moonwalked his way into the red as early as the 1980s.
That the King of Pop earned royal sums for his music is undisputed. His 1982 album ‘Thriller’, which is still the biggest-selling record of all time, netted him an estimated $125m. Five years later, ‘Bad’ sold another 30 million copies, while his eighth album ‘Dangerous’ came hot on the heels of a $65m signing with Sony Music; then a record-breaking deal. In 1996, Forbes magazine put Jackson’s annual earnings at around $35m.
At the time of his death, Jackson was still raking in a cool $19m-a-year income; $12m of which was generated from royalties for his back catalogue.
The entertainer also made some shrewd investments. In 1985 he paid $47.5m for ATV Music Publishing, whose back catalogue included 251 Beatles songs and went on to make him millions over the next decade.
But little else about Jackson’s finances was savvy. The same decade that witnessed the release of ‘Thriller’ also saw the star pay out $14.6m for the sprawling Neverland ranch at Santa Barbara, California. It would, he said, give him the childhood that fame denied him. “It’s like stepping into Oz,” he once said. “When you come in the gates, the outside world does not exist.”
The 2,500-acre property soon housed a zoo, fairground and miniature railway and ate up $5m annually. At one point, the estate had a staff of 150 — complete with an estimated wage bill of $10m.
Crucially, as Jackson’s hits thinned, his legendary spending habits didn’t. Standout sprees include a $4m splurge in one Las Vegas emporium, where he picked up a giant marble chess set and 10ft tall glass urns, and a failed $1m bid to buy the bones of the Elephant Man, John Merrick. One forensic accountant testified that the singer had an “ongoing cash crisis”, and was burning through $20 to $30m more per year than he earned.
Worse, dissuaded by Jackson’s increasingly bizarre private life, lucrative sponsorship deals from brand names such as Pepsi and LA Gear fell by the wayside.
By this time, Jackson’s spending woes were playing out against a background of costly court battles, which battered his finances and marked the start of his prolonged fall from grace. In 1994, the singer paid a reported $22m in an out-of-court deal to the family of Jordan Chandler, a 13-year-old who had accused Jackson of abuse. It was, said Michael Levine, his publicist at the time, “the beginning of the walk down a tragic path”.Five years later, he paid $8m to his second wife Debbie Rowe, in a divorce settlement that awarded him full custody rights of the couple’s two children. As part of the deal, Rowe secured an annual payment of $750,000. In 2004, the singer handed over $2.4m to the son of a Neverland employee who accused him of abuse. By the time of his heavily publicised 2005 court case on child abuse charges, where Jackson was acquitted of all ten counts, he was reportedly $270m in debt.
In a bid to plug the gap that legal bills had left in his bank balance, he sold Sony a 50 percent stake in ATV for $150m. The joint venture, Sony/ATV Music Publishing, now has an estimated value of $2bn, half of which is held in a trust created by the singer.
Jackson’s empire was in tatters. Strapped for cash, he repeatedly announced memorabilia auctions; but legal wrangling meant they were often cancelled.
From this precarious financial position, he began leveraging his royalties earnings as collateral for loans. The first, from Bank of America, began as a $140m handout but ballooned to $200m. When he defaulted on the loan in 2008, Fortress Investment Group, a specialist in distressed debt, bought the loan from BoA.
For the king of pop, help then came in the form of a real royal; Sheikh Abdulla Bin Hamad Al Khalifa, the second son of the King of Bahrain. In the wake of Jackson’s 2005 trial, he shipped the singer out to Bahrain, forking out millions of dollars to shore up his elaborate lifestyle.
Al Khalifa was keen for Jackson to record his self-penned ditty ‘He who makes the sky grey’, the proceeds of which would go to help victims of the 2004 Boxing Day tsunami.
The friendship eventually turned sour; last year Al Khalifa sued Jackson in a London court for $7m. The lawsuit claimed the star had reneged on a deal to cut a new album, an autobiography and a stage play, after accepting “substantial” advances.
According to the lawsuit, these included $35,000 to pay an outstanding utilities bill at Neverland, $300,000 for a “motivational guru” and $250,000 so that Jackson could “entertain his friends at Christmas”. He also picked up the $2.2m legal bill from the singer’s latest court appearance.
The lawsuit was settled last year for an undisclosed amount. Neither the album nor book were ever produced.
Wealthy benefactors have proved a theme in Jackson’s life. Last year, when the singer defaulted on a $24.5m loan against Neverland, the sprawling ranch was pushed into foreclosure. The star was narrowly saved at the eleventh hour by real estate investment trust Colony Capital.
Headed by billionaire Thomas Barrack, the firm snapped up the debt, bailing out the singer with a joint venture that took ownership of the multimillion-dollar retreat, but left him with a 50 percent share.At 50, Jackson was borderline bankrupt, living with his mother and fighting off creditors. So when Randy Philips, chief executive of AEG Live, approached him in 2007 with an initial offer of ten concert dates at the O2 arena, there was little doubt that the singer would sign up.
Billed as “the biggest comeback since Lazarus”, the ‘This is It’ tour was set for July 8, and to say demand outstripped supply would be an understatement. The ticket site received 16,000 hits a second.
The tour was quickly extended to 50 dates. Around 800,000 tickets were sold, with fans paying up to $2,500 a seat. Jackson, who hadn’t toured in 12 years, stood to net $50m from the sold-out shows, with a possible world tour to follow.
The singer’s shock death last month, from cardiac arrest according to his family, means AEG Live stands to lose as much as $40m if its insurance is not substantial enough to cover the money already spent on production. The firm has agreed to refund fans that bought tickets to the cancelled gigs.
For Jackson, he is likely to be richer in death than he was in life. Like the original king, Elvis Presley, he is once again set to become a moneymaking phenomenon, despite not having had a hit in years. Even as the first press reports of his death broke, Jackson’s record sales soared, with his titles taking the top 15 music spots on Amazon.com within hours.
Two days later, his music held the iTunes top spot in every country except Japan. In both the US and the UK, at least four of his albums are gracing the top 10, as shoppers clear record stores of stock.
Memorabilia sales are also soaring, as fans scramble for a piece of the singer. Just two days after his death, online auction house eBay.com had more than 16,000 Jackson-related items for sale, ranging from replica red ‘Thriller’ jackets, to copies of newspapers carrying the news of his demise.
Already, there are rumblings that Neverland could be the next Graceland. At the time of his death, Presley’s estate was valued at just $4.9m. In 2005, an 85 percent stake was bought for $100m. In 2007, his brand earned $52m; more than chart-topping performers Madonna and Justin Timberlake.
Meanwhile, AEG Live has floated the idea of a string of tribute concerts, using the costumes originally intended for Jackson’s comeback. Sony Music is also understood to be releasing a new compilation album.
As the dust settles around Jackson’s death, creditors, acquaintances and ex-employees are beginning to creep from the woodwork, with claims to his estate. The battle to control his fortune has already begun — his mother filed a claim four days after his death to be named the administrator of his estate. The stakes are high, and the list of players is long.
Still, as Jackson himself said when he announced his return to the stage in March; “When I say this is it, I mean this is it. It’s the final curtain call.”