Michael Jackson lived like king but died awash in debt
AP Business Writers
LOS ANGELES (AP) – Michael Jackson the singer was also Michael Jackson the billion-dollar business.
Yet after selling more than 61 million albums in the U.S. and having a decade-long attraction open at Disney theme parks, the “King of Pop” died Thursday at age 50 reportedly awash in about $400 million in debt, on the cusp of a final comeback after well over a decade of scandal.
The moonwalking pop star drove the growth of music videos, vaulting cable channel MTV into the popular mainstream after its launch in 1981. His 1982 hit “Thriller,” still the second best-selling U.S. album of all time, spawned a John Landis-directed music video that MTV played every hour on the hour.
“The ratings were three or four times what they were normally every time the video came on,” said Judy McGrath, the chairman and CEO of Viacom Inc.’s MTV Networks. “He was inextricably tied to the so-called MTV generation.”
Five years later, “Bad” sold 22 million copies. In 1991, he signed a $65 million recording deal with Sony.
Jackson was so popular that The Walt Disney Co. hitched its wagon to his star in 1986, opening a 3-D movie at its parks called “Captain EO,” executive produced by George Lucas and directed by Francis Ford Coppola. The last attraction in Paris closed 12 years later.
One of Jackson’s shrewdest deals at the height of his fame in 1985 was the $47.5 million acquisition of ATV Music, which owned the copyright to songs written by the Beatles’ John Lennon and Paul McCartney. The catalog provided Jackson a steady stream of income and the ability to afford a lavish lifestyle.
He bought the sprawling Neverland ranch in 1988 for $14.6 million, a fantasy-like 2,500-acre property nestled in the hills of Santa Barbara County’s wine country.
But the bombshell hit in 1993 when he was accused of molesting a 13-year-old boy.
“That kind of represents the beginning of the walk down a tragic path, financially, emotionally, spiritually, psychologically, legally,” said Michael Levine, his publicist at the time.
He settled with the boy’s family, but other accounts of his alleged pedophilia began to emerge.
When he ran into further financial problems, he agreed to a deal with Sony in 1995 to merge ATV with Sony’s library of songs and sold Sony music publishing rights for $95 million. Then in 2001, he used his half of the ATV assets as collateral to secure $200 million in loans from Bank of America.
As his financial problems continued, Jackson began to borrow large sums of money, according to a 2002 lawsuit by Union Finance & Investment Corp. that sought $12 million in unpaid fees and expenses.
In 2003, Jackson was arrested on charges that he molested another 13-year-old boy. The 2005 trial, which ultimately ended in an acquittal, brought to light more details of Jackson’s strained finances.
One forensic accountant testified that the singer had an “ongoing cash crisis” and was spending $20 million to $30 million more per year than he earned.
In March of last year, the singer faced foreclosure on Neverland. He also repeatedly failed to make mortgage payments on a house in Los Angeles that had been used for years by his family.
In addition, Jackson was forced to defend himself against a slew of lawsuits in recent years, including a $7 million claim from Sheik Abdulla bin Hamad Al Khalifa, the second son of the king of Bahrain.
Memorabilia auctions were frequently announced but became the subject of legal wrangling and were often canceled.
Time and again, however, Jackson found a way to wring cash out of high-value assets, borrowing tens of millions at a time or leaning on wealthy friends for advice, if not for money.
Al Khalifa, 33, took Jackson under his wing after his acquittal, moving him to the small Gulf estate and showering him with money.
In his lawsuit, Al Khalifa claimed he gave Jackson millions of dollars to help shore up his finances, cut an album, write an autobiography and subsidize his lifestyle – including more than $300,000 for a “motivational guru.” The lawsuit was settled last year for an undisclosed amount. Neither the album nor book was ever produced.
Another wealthy benefactor came to Jackson’s aid last year as he faced the prospect of losing Neverland in a public auction.
Billionaire Thomas Barrack, chairman and CEO of Los Angeles-based real estate investment firm Colony Capital LLC, agreed to bail out the singer and set up a joint venture with Jackson that took ownership of the vast estate.
Barrack was unavailable for comment Thursday, but referred to the singer in a statement as a “gentle, talented and compassionate man.”
A final piece of the financial jigsaw puzzle fell into place in March, when billionaire Philip Anschutz’ concert promotion company AEG Live announced it would promote 50 shows in London’s O2 arena. Tickets sold out, and the first show of the “This is It” tour was set for July 8.
Jackson, who has won 13 Grammys, hadn’t toured since 1997. His last studio album, “Invincible,” was released in 2001.
But the opening date was later postponed to July 13 and some shows moved back to March 2010, fueling speculation that Jackson was suffering from health ailments that could curtail his comeback bid.
His death, caused by cardiac arrest according to his brother Jermaine, raised the question whether an insurer would refund money to ticketholders. AEG Live did not immediately respond to requests for comment.
Jackson was practicing for the concert in Los Angeles at the Staples Center with Kenny Ortega, a choreographer and director of the “High School Musical” movies, who has worked on previous Jackson videos like “Dangerous” in 1993.
“We had a 25-year friendship. This is all too much to comprehend,” Ortega said in a statement. “This was the world’s greatest performer and the world will miss him.”