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Michael Jackson Leaves a Money Mess

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.

Debt: Celebrity destiny?
Perhaps Jackson's financial implosion was inevitable: Celebrity investment blunders certainly appear to be par for the course.

The list of famous folks turned financial train wrecks is long and illustrious (Mark Twain, Mike Tyson, Billy Joel, Buffalo Bill, Dorothy Hamill, M.C. Hammer). Yet so many of the high-and-mighty fall in the most pedestrian ways -- bad investments, brutal divorce, costly illness, and simply spending more than they earn. Hardly a spectacle to be had… until Michael.

But should we mere mortals really be so smug? Sure, we're not leveraging our Beatles catalog or calling in favors from billionaire bankers. But our collective behavior isn't that different from Michael's; we live on borrowed dimes, rely on leverage, and push the limits of plastic. And we, too, eventually have to pay up.

And we may even bear some of the blame for the fate of our icons, a point made eloquently by The Atlantic's Andrew Sullivan. In a brief tribute to Jackson, he writes: "I grieve for him; but I also grieve for the culture that created and destroyed him. That culture is ours and it is a lethal and brutal one: with fame and celebrity as its core values, with money as its sole motive, it chewed this child up and spat him out."

More tales of celebrity excess:

Dayana Yochim placed third in the editorial team's moonwalking contest. She owns several Michael Jackson singles on vinyl, but no company mentioned in this article. The Fool's disclosure policy is a thriller.

Read/Post Comments (14) | Recommend This Article (57)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 27, 2009, at 11:19 PM, madmilker wrote:

    "The lesson? Evidently, it's not how much you owe, but who you know."

    well, when God taps you on the you...

  • Report this Comment On June 28, 2009, at 10:48 PM, MyDonkey wrote:

    "The lesson? Evidently, it's not how much you owe, but who you know."

    e.g. Hank Paulson and the AIG/GS bailout

  • Report this Comment On June 29, 2009, at 1:55 AM, jeffmadigan wrote:

    I bet he had a brain bleed from the hit on the head. I know too many people and stories about the same situation. Hit on head by something and within a month or just days, they die. Get checked out at the hospital if you hit your head.......... Mandatory people.....

  • Report this Comment On June 29, 2009, at 10:12 AM, kellogg9 wrote:

    I always find it fascinating that the super rich can blow through so much in so little time. I recall Mike Tyson blew $300 million (yes 300) in one year! Do these people know anything about saving.


  • Report this Comment On June 29, 2009, at 11:50 AM, triggersdad wrote:

    I am never surprised by the amount blown away by stars.If they looked at their money they made and lived off it as if they were never going to make these sums again they would never be broke.What i mean is lets say you're an athlete or musician and you make 5 million a year odds are you have a certain shelf life be it injury or just age or lack of material.You can' t spend like water every year thinking your income will always be at those levels.But way too many do and thats why i see this all the time. They really have no respect for money or how hard it is to make in large sums.No matter how good it is in the good times spend half

  • Report this Comment On June 29, 2009, at 6:36 PM, Dannysea wrote:

    I think we all see people on every spectrum. How many people do you know who did the refi on their assets, multiple times no less?

    I also grieve for the same system we have put ourselves in; Just as I have come to conclusion not everyone should have home ownership, so not everyone can handle large sums of money.

    Have you ever witnessed where someone was given a compounded weeks income and see how they increase spending, with no thought for tomorrow?

    I have worked in the foreclosure business for 15+ years. At one time we would see about half the properties, where people would clean and vacuum their way out of the house they were losing. Now one in a hundred is thus. Mostly now, property is raped of any value.

    Yes. I agree. I also grieve.

  • Report this Comment On June 29, 2009, at 9:04 PM, Hopingitsadream wrote:

    This simply proves that very talented people lose out in other areas of thier brain. His skills were the best at what he did, they were also the worst when it came to kids. A boy that never grew up, too bad no one without greed could guide him. His Neverland Ranch named for Peter Pan's world, someone should have seen it coming from that very act...ain't hind site grand...but let us see him for his skills, elegance, friendliness, and talents that he shared so deeply with others that it took his very sole; he had none left for himself.... Elvis fell to teh same pressures of life...being the very best at what u do.... We must respect the ones that give so much of themselves that they have nothing left to keep them alive...for the very pressures of the up-coming concerts probably did him in...wanting to be a success once again...thus the pressures of 'us' put them in thier graves....

  • Report this Comment On June 30, 2009, at 12:53 AM, QwertyHero wrote:

    This just proves that God hates child molesters.

  • Report this Comment On June 30, 2009, at 11:04 AM, mayhem4masses wrote:

    Billy Mays is dead at 50 as well, coincidence? All I know is, Billy Mays had way more money then Jackson, and he (Mays) to the best of my knowledge was not a child molester .

  • Report this Comment On July 03, 2009, at 5:28 PM, jesse2159 wrote:

    Michael Jackson was many things, but at this point it doesn't matter, because the media will make him whatever they want to public to believe.

    He died too young, but so did over 4,000 service men and women in Iraq

    His life became a circus and he became a symbol of excess. It wasn't his fault. Like Elvis, he was uneducated and enablers allowed him to die for their own greed.

  • Report this Comment On July 04, 2009, at 10:50 AM, FogChaser wrote:

    This "article" marks a new low for MF. It is sad that a generally decent service has such ill taste when it comes to the commentaries it publishes. Dayana Yochim must have an equally poor taste and perhaps even worse self esteem to produce the above piece. What business is it of yours Dyana how MJ handled his personal finanial affairs? And what superb virtues do you possess that give you the moral superiority to publicly judge the deceased's way life?

  • Report this Comment On July 04, 2009, at 1:44 PM, thisislabor wrote:

    Why is this article beig published at the MF? I thought this was a newsletter that focused on investments?

  • Report this Comment On July 14, 2009, at 3:33 AM, karlegg wrote:

    A great article with many lessons for all of us.

    Budgeting and controlling spending is a first key in growing wealth and attaining financial independence.

    It is now how much money you make but how you manage it.

    Thank you for the excellent article.

  • Report this Comment On October 20, 2009, at 8:52 PM, Katie2009 wrote:

    How the HELL do YOU know what Michael Jackson's finances were; what he owed, didn't owe, had..didn't have? It's vultures like you who sucked the life right out of this man. I have simply had enough of this! You didn't know this man, see his finances, know anything about him. Nonsense and bulls_ _ t reporting like this that sucked the life right out of this man. Same nonsense about him being a child molester. I'm an attorney and read all the trial transcripts, everyone within my profession, and anyone with any intelligence and education who actually read the trial notes, knew and knows both these allegations against him were a lie, a pile of nonsense brought about by two sleazy families who had absolutely NO credibility. Like Michael Frickin' Jackson, the most recognized entertainer in the world, would molest a 13 year old CANCER patient. PLEASE! The most ridiculous allegations I have ever heard. The families of these children are the ones who exploited their kids, not Michael Jackson, took advantage of them, made them lie, gave them drugs to testify, went to attornies to try and get MONEY rather than to any police! It was disgusting.

    MJ's life was horrible, wouldn't wish it upon anyone. And we, this entire planet, are feeling his loss, as it cuts right down to the inner core and soul in all of us. It makes me sick!

    Don't YOU dare make another comment on him, a man you never knew and know nothing about.

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