Sunday, 28 June 2009

Pop star's debts alone could run into $500 Million

As Hollywood reacted with sadness and shock to the death of Michael Jackson, Sony executives in New York were on the phone all night with advisers to Jackson trying to understand the financial morass the pop star is leaving behind.

“It’s all a mess,” said one executive involved in Jackson’s financial affairs who spoke on the condition of anonymity out of respect for the entertainer’s family. “No one really knows what is going on, but these are early days.”

Jackson’s business life, like his public life, was a perplexing mass of contradictions. Unlike many performers, he was a keen negotiator and shrewd investor — in 1985 he pulled off one of the great deals in music business history when he bought the publishing rights to the Beatles catalog for $47.5 million. Today it is part of a larger collection of songs worth more than $1 billion, and owned in partnership with Sony.

But his personal finances, at least in recent years, were perpetually in tatters, as he burned through millions of dollars to maintain his Neverland ranch, go on art-buying sprees and indulge in whimsies like traveling with a pet chimpanzee named Bubbles. And he burned through financial advisers almost as swiftly, with a revolving door of characters coming in and out of his life.

“Michael never thought his personal finances were out of control,” said Alvin Malnik, a former adviser to Jackson who is the godfather of Prince Michael II, the youngest of his three children. “He never kept track of what he was spending. He would indiscriminately charter jets. He would buy paintings for $1.5 million. You couldn’t do that every other week and expect your books to balance.”

The big question now is what happens to his assets. So far, that is unclear even to Jackson’s closest representatives, several of whom were hired only weeks ago, in Jackson’s latest round of managerial housecleaning. They say it could take years to sort through the financial and legal mess left after the singer’s death, not to mention millions of dollars worth of tickets sold for a series of 50 concerts Jackson had planned in London.

Malnik, for example, said that in 2004 he agreed to be the executor of Jackson’s estate. “I said yes, but I never inquired further, and I don’t know what’s happened since then,” he said. Malnik said there was still a chance that he was an executor, but had not heard anything since the death. Other advisers said that Jackson left behind at least two wills.

It is also unclear how much would be left for any heirs. It has been estimated that Mr. Jackson earned about $700 million as a performer and songwriter from the 1980s on, much of it spent. And his debts have been estimated at $400 million to $500 million.

Source: TOI