Michael Jackson leaves $1 billion in assets, $500 million in unpaid debts
Filed under: People
Michael Jackson died with his books out of balance. The concerts he planned in London might have generated enough cash to pay off his debts, but a rumored Demerol injection stopped his heart before he could perform there. So he leaves this earth with as much as $500 million in unpaid debts.
Before focusing on the liability side of Michael Jackson's business, let's look at the his assets, which provided the collateral for that borrowing. He sold 61 million albums in the U.S. and had a decade-long attraction open at Walt Disney (DIS) theme parks.
But his most valuable asset was Beatles' music -- in 1985 he paid $47.5 million for ATV Music, which owned the copyright to 259 songs written by John Lennon and Paul McCartney. A few years later, in 1988, he paid $14.6 million for Neverland, a 2,500-acre property in Santa Barbara, CA. In total, Jackson's assets may be worth $1 billion.
Jackson used some of these assets as collateral to borrow money after his album sales peaked out in the 1980s. In 1995, he merged ATV with Sony (SNE)'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 (BAC). The problem was that his appetite for spending exceeded his cash inflows -- to the tune of $20 million to $30 million each year.
But the Michael Jackson magic enabled him to attract wealthy benefactors. Abdulla bin Hamad Al Khalifa, the second son of the king of Bahrain, took Jackson under his wing, giving him a palace and showering him with money in hopes that Jackson would cut an album and write an autobiography. But Al Khalifa was disappointed and sued Jackson for $7 million.
There were two more billionaires who stepped into Jackson's financial world before the end. First, Thomas Barrack, chairman and CEO of Los Angeles-based real estate investment firm Colony Capital LLC, who agreed to bail out Jackson and set up a joint venture with him to take ownership of Neverland, yielding a $23 million loan. Barrack estimated that a spruced-up Neverland could sell for as much as $80 million.
The last was conservative Philip Anschutz, who had no moral qualms about doing business with an alleged child molester. Anschutz' concert promotion company, AEG Live, planned to promote 50 shows in London's O2 arena. Tickets sold out and the first show for the ''This is It'' tour was set for July 8. AEG hoped to raise $400 million through a 3.5 year plan to work with Jackson.
But that date was delayed until July 13th as rumors of health problems surfaced. And with his sudden passing, it remains for the courts to divide up Michael Jackson's assets to satisfy his lenders.
Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College. His eighth book is You Can't Order Change: Lessons from Jim McNerney's Turnaround at Boeing. He has no financial interest in the securities mentioned.
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Reader Comments (Page 1 of 12)
6-26-2009 @ 9:48AM
Carolyn Bond said...
Now in death, Michael will become more famous. Like the great composer's, artist's, writer's... Michael will garner more money and fame. Or I should say, his Estate will... I wonder who will rear his 3 children? I hope that person will be as loving as possible. They will have much expected of them. I really wish those children well... Mrs Jackson, you should have protected Michael from his father. You should have been a better mother for him. I hope you can do better with his children... Keep them away from Joe Jackson.
Reply
6-26-2009 @ 1:36PM
Yoty said...
Carolyn Bond..YOU ARE AN IDIOT! If it wasn't for Joe Jackson there would have been no Michael Jackson...DUMMY! Joe Jackson's efforts saved the family and created a dynasty! If anybody messed up Michael's head it was his weird mother. The kids should be saved from her!!
6-26-2009 @ 1:56PM
sots said...
Very interesting and the lesson to be learned here is that we ALL must face TRUTH no matter HOW BAD it is.
TRUTH of the MATTER is as FOLLOWS:
YOU SHOULD BE PROUD OF WHAT YOU ARE.
NEVER forget where you come from and what you are!
6-27-2009 @ 11:25AM
JOE said...
He was born a black man and died a white woman? How is that being proud of what you are?
6-27-2009 @ 3:58PM
mrs b said...
Its unfair to put the blame on his mother. Michael's bizarreness was discovered years after he left home. Grant it, I was a fan and loved him and his music as much as the next person and hope he's at peace but his life and lifestyle spiralled out of control during his years of living as an adult. Mother's raise their children to do what's right but once the child hit the other side of the door, they are responsible for their own lives.
6-26-2009 @ 10:12AM
Scott said...
From the article: "The last was conservative Philip Anschutz, who had no moral qualms about doing business with an alleged child molester."
Typical liberal mindless crap.
Are you waterheads EVER going to understand that Not Every Conservative is Your Moral Compass?
Are you THAT void of common sense and control?
Reply
6-26-2009 @ 12:02PM
Cashman said...
There is no cheap shot the morally bankrupt won't take to compensate
for the giant hole they have in their soul.
6-27-2009 @ 12:17PM
pema said...
no conserv is anyones moral compass, heck even the conserves want Sanders gone.
6-27-2009 @ 12:39PM
Craig said...
Let Michael Jacksons family morn the loss of there son in peace without judgemental hate mongers like yourself passing judgement on him. God will pass judgement on him and last I looked you wern't God so keep your mouth shut and start worrying about your own sins cause I'm sure you ain't no angel your dang self!
6-26-2009 @ 10:15AM
Analyze This said...
No sweat! With proper management, his estate could raise many times that 400 million through the sale of some of his possessions, rights to a movie about his life and the increased volume in the sales of his music. Like Elvis, he could be worth far more after his death than when he was alive performing. The key is to keep the Michael Jackson name out of the hands of greedy people that could squander it away. Management of his estate would be better off outside the Jackson family. In Michael's favor.... worldwide mass appeal! 400 Million could be raised in a heartbeat with the right product!
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6-26-2009 @ 10:16AM
Aresa said...
Was this article really necessary? I mean damn dude isn't even cold yet and we are discussing his assets and liabilities. I wonder how many assets the writer of this article has? Probably not many considering he is a freelance writer for AOL. Seriously this is not the time. No matter how many issues this man had his impact on the world is undeniable and this is not the time for this. Someone has lost a relative, father and friend. The writer could have at least respected that much if nothing else so soon after Michael's death. Tasteless doesn't even begin to describe this article.
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6-26-2009 @ 12:19PM
gd said...
This is the business section. Some people have exposure to the crap Jocko leaves behind and need to start unravelling this sh*t ball post haste. I suggest you go to entertainment section if you wish to weep. Do you weep for the innocents he hurt?
6-26-2009 @ 2:13PM
Rich said...
Aresa - Grow up. All fighting about money starts the second the person dies. It will happen in your family and it will happen in mine.
6-27-2009 @ 10:15AM
Anna Nancett said...
Bout time someone with some compassion made a logical and heartfelt statement.Where would the media and all the other nosy sensationalists be without a tragedy to keep them going?
6-27-2009 @ 10:52AM
speedy said...
Well, when should the time be to talk about this? His "investors" have been waiting for 20 years to get there money back but he decided he would be better off to paly with little boys then to go back to work and clear his name. Maybe now that he's gone those 3 PURE WHITE kids he bought to play with at his house might have a chance to have a normal life. Yes I said white, dont forget he is PURE BLACK and those wal-mart bought kids are PURE WHITE not MIXED. This dude was a freak and if it were anyone else off the street you all would complain like no tomorrow.
6-27-2009 @ 2:17PM
Rob said...
I couldn't agree more.
6-26-2009 @ 10:19AM
Scott said...
Aresa, you are so right.
This article stinks in every way.
Writer Peter Cohen is apparently an extremely lazy, thoughtless fool.
Reply
6-26-2009 @ 10:50AM
Jeff said...
I actually thought the article was informative. When someone famous dies that has alot of debts there are alot of finacial questions. Who gets what? Will his children be provide for? Will they be as sucessful as the Elvis estate was at marketing? Will there be so much strife between family members that the lawyers are the only one who gets paid? It is unfortunate that Mr. Jackson died suddenly. After the mourning period, there are alot of issues that need to be addressed.
6-26-2009 @ 10:37AM
alicia said...
michaels so-called children were 100% white. he was not the biological father of them as dna tests will prove.
Reply
6-26-2009 @ 10:42AM
Sholonda said...
I totally agree with you. Looking at those children nothing about them is black. I feel it will be a battle over the children and the money.