Untangling Michael Jackson’s Finances
Shock and grief were expressed by many this June as the world lost one of its most influential pop-stars, Michael Jackson. Jackson transformed the world of popular music, establishing a new gold standard of global celebrity. However, along with his influence came an extremely garish spending habit. In the wake of his passing, it is important not only to discuss his musical legacy going forward, but also to sift through the financial mess he left behind.
In 1984, Jackson, known to be an intense negotiator and savvy investor, secured one of the biggest coups in music publishing history, acquiring the rights to The Beatles’ entire catalogue for $47.5 million dollars. Partially owned by Sony, today the investment is worth over $1 billion. However, in more recent years, Jackson has been in financial trouble. Mounting personal debt, a result of Jackson’s serial over-leveraging against his expansive asset sheet, had begun to loom over his estate. Secluded in his Neverland Ranch enclave, Jackson spent a majority of his final years paying off the high interest and costs associated with his eccentric and lavish lifestyle.
Yet Jackson’s estate is still fundamentally sound. He may have had a cash-flow problem but the high net-worth of the estate is not in question. The future-value of his holdings, especially in publishing, may be hard to evaluate, but the debt will surely be sunk as revenue from recording sales and songwriting continues to rise.
Moreover, Michael’s exorbitant living expenses are in check forever at a time when the estate is well positioned to regain ownership of his old recording masters, now in the care of Sony (see our cover article). Certainly, Jackson’s estate would be able to extract maximum advantage from Sony, even if the masters did not completely revert to it. All of which suggests that Michael Jackson’s family will gain much financially from Michael Jackson’s passing.
For many fans that know Michael’s intimate story, the shock of his death will be compounded by the observation that, perversely, his death may have undone the financial Gordian knot that tied him down lately. Even the most consummate and beloved music entertainer in the world, and one of its top business scions, could not in the end extricate himself in time from his worldly troubles.
