A decade after his death in 2009, Michael Jackson's appeal shows no sign
of waning as he continues to rake in tens of millions of dollars in profits each
year, making him the top earning dead celebrity for the seventh year in a row.
However, although the Jackson's estate's profits are looking more fruitful than
ever, this is a stark contrast to Jackson's finances.
When the artist was alive.
Jackson's earnings were boosted significantly through royalties on his own
music, as well as his multiple revenue generating assets.
However, these assets were subject to a mounting half a billion dollar abyss
of debt, which he left when he died in 2009.
Banks and credit companies refused
to provide the King of Pop with any more cash loans after 2007, with nowhere to go.
Jackson effectively buried his head in the sand before being bailed out
by multiple billionaire friends and work associates.
But even those avenues ran dry eventually.
But for an artist that was so successful in his own right earning billions in his
lifetime, how did Michael Jackson ever accumulate such a huge amount of debt
that he was effectively tapped out and strapped for cash at the end of his life?
Here's the detail.
The story of Michael Jackson's financial demise starts with the bombshell hit
in 1993 when he was accused of molesting a 13 year old boy, Jordan Chandler.
Michael Levine, his publicist at the time,
has said that kind of represents the beginning of the walk down a tragic
path financially, emotionally, spiritually, psychologically and legally.
After months of 24/7 press speculation,
crippling legal fees and a tour cut short because of Jackson's deteriorating health.
Jackson settled with the boy's family in January 1994 for 23 million dollars.
It was at this time Jackson took out a 30
million dollar loan, a figure that would only continue to grow
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 receiving one hundred fifty million
dollars, along with a guaranteed six point five dollars million a year,
which had increased to 11 million dollars annually in 2008
after releasing his comeback album and worldwide tour for history.
Jackson's debt continued to grow to 140 million dollars by 1998.
The CPA testified that Jackson's tours in the 90s were not moneymakers.
Jackson reportedly broke even
on the dangerous tour and lost eleven point two million on the history tour.
Then, in 2001, he used his half of the ATV
assets as collateral to secure 200 million dollars 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 and Investment Corp.
that saw 12 million dollars in unpaid fees and expenses.
In 2003, Jackson was arrested on charges that he molested another 13 year old boy
during that trial, which ended in an acquittal.
Details of Jackson's finances were trawled
over one accounts and testified that he had an ongoing cash crisis and was
spending 20 to 30 million dollars a year more than he earned.
No one knows for sure what he spent his fortune on.
But there was a clue in Martin Bashir, his 2003 documentary in which the singer
splashed out six million dollars in a single store on a shopping trip
during forensic investigations into Michael Jackson's finances.
Michael's basic no frills, no luxuries or excluding other mortgages,
property taxes, loans, cost of living averaged an astonishing two
million three hundred thirty nine thousand three hundred dollars per month.
Jackson reportedly spent the majority
of his money on donations to charity gifts, travel, art and furniture,
his Neverland Ranch and its mini theme park with its maintenance staff.
Zoo and train that traveled around
the property was also a huge drain on his income.
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 out cash out
of high value assets, borrowing tens of millions at a time or
leaning on wealthy friends for advice, if not money.
Jackson was forced to defend himself against a slew of lawsuits in the final
years of his life, including a seven million dollar claim
from Sheikh Abdullah bin Hamad al-Khalifa, the second son of the king of Bahrain.
al-Khalifa 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 three
hundred thousand dollars for a motivational guru.
The lawsuit was settled in 2008
for an undisclosed amount, and neither the album nor book was ever produced.
Interest on the loans grew over the years,
ranging a little less than seven to sixteen point eight percent annually.
Consistently, Michael Jackson's largest expenditure was on interest for loans he
had, and Jackson had annual interest payments
of 30 million dollars when he died in 2009.
Jackson was said to have still been making an annual income of 19 million dollars,
but the singer had not released any new material since the album Invincible
in 2001, which had not been a success and had not performed live for over a decade.
A final piece of the financial jigsaw fell
into place in March 2009 when billionaire Philip Schultz concert promotion company
AEG Live announced it would promote 50 shows in London's O2 Arena.
Tickets sold out and the first show of this is it was set for July 8th.
Ultimately, though,
he left another financial mess at AEG, the owner of the O2 Arena in London.
According to Billboard magazine,
more than 85 million dollars worth of tickets were sold and AEG had already
spent 30 million dollars on the production.
Reports also suggested that the firm was only insured for the first 10 nights
of the residents, as insurers were wary of the singer being fit enough to play all
50 nights, leaving AEG with a potential insurance
liability of up to four hundred fifty million dollars.
Although Michael Jackson's This Is It
concert series was painted at the time as the biggest musical comeback
of the decade, Michael Jackson's last opportunity
to perform at his best and successfully take back his cronies, King of Pop.
It is now clear it wasn't a decision made for such noble artistic reasons
as Michael Jackson faced imminent and catastrophic financial ruin.
The concert series appeared to be Jackson's last opportunity to get him out
of the depths of debt he rapidly accumulated over his lifetime.
It was estimated that he could have made
up to 500 million dollars if he had completed the 50 shows in London and later
continue to take the show around the world.
Tragically, Jackson died on June 25th,
2009, mere weeks before his first show is scheduled,
leaving behind his immense mountain of debt, but also a priceless legacy.
That's universal appeal will continue to generate billions for many years to come.
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Thank you for watching the detail.
We'll see you next time.