Michael Jackson’s complicated financial legacy will lead to a battle for control of his business and music empire that could last a decade.
Lawyers acting for his family and creditors owed an estimated $500 million (£300 million) will fight for the right to assets of “Michael Jackson Inc”, which could be valued at more than $1 billion.
The singer was reported to have intended to leave his estate to his three children and his mother. Last night it was unclear if that arrangement was amended later.
During his lifetime Jackson was often described as a millionaire who spent like a billionaire. In the years before his death he was clearly struggling for cash to cover his extravagant spending. “What he needs more than anything is independence and cash,” said Diane Diamond, an expert on Jackson, last month. “His wallet is hurting.” But the singer also made a number of shrewd investments. In 1985 a financial trust founded by Jackson paid $47.5 million for ATV Music Publishing which owned the Beatles’ back catalogue and thousands of other songs.
A decade later the trust sold half the company to Sony for $150 million. Sony/ATV Music Publishing now has an estimated value of $2 billion. The $1 billion share owned by the Jackson-created trust is likely to be protected from the singer’s creditors.
At the time of his death Jackson also had an income estimated at $19 million a year, including $12 million royalties from Sony Music for his back-catalogue. Sony Music is expected to reissue special versions of his biggest-selling albums and possibly previously unreleased recordings — leading to significant increase in royalty payments.
The valuable publishing rights for Jackson’s own songs are currently controlled by Warner but that deal is due to expire soon and the catalogue folded into Sony/ATV, substantially increasing the value of the company.
Fernando Gandioli, an international inheritance expert with Withers lawyers, said that if Jackson has not left a will then under California law his assets would pass to his children, assuming there is no legal wife.
If there is a will, Jackson’s legacies willl be made public once probate is granted unless he had established a trust during his lifetime.
After decades of extravagant spending, expensive legal cases and questionable business advice, Jackson finally appeared to be attempting sort out his finances. After going through 11 managers since 1990 he reappointed Frank DiLeo, who had guided him between 1984-1989. Last week he rehired John Branca, the entertainment lawyer who struck many of his most lucrative deals.
Jackson’s financial troubles date back to his success in the 1980s, which had allowed him to indulge in his wildest fantasies. He paid $19.5 million on the Neverland ranch at Santa Barbara, California, turning its 2,600 acres into an estate with its own zoo, amusement park and miniature railway. At one time the estate had a staff of 150 with an estimated wage bill of $10 million.
But even as the hits dried up he continued to spend, with outgoings between $20 million and $30 million a year more than his income. He was an obsessive shopper and collector, spending $4 million in a single spree at one Las Vegas emporium in 2003, including a giant marble chess set and 10ft tall glass urns.
Then there was a series of highly damaging and expensive legal settlements. In 1994 he was reported to have agreed a £16.5 million out-of-court deal with family of Jordan Chandler over abuse allegations. Five years layer he paid £5 million to Debbie Rowe in return for residency rights of their two children in a divorce settlement. In 2004 he paid £1.1 million to the son of an employee at Neverland ranch who accused him of abuse. By the time of his 2005 trial for child abuse he had debts of $300 million. He obtained a $91 million loan from Bank of America, later increased to £166 million.
In 2008 the debt had risen to £178 million. When he defaulted on the loan to the tune of £198,000 the debt was sold to Fortress Investment Group, a hedge fund. Jackson’s financial troubles were highlighted again when he defaulted on £24.5 million debt secured on Neverland in spring last year.
Six months later he was sued for £4.7 million in London by his former benefactor, Sheikh Abdulla bin Hamad al-Khalifa, who had initially lent him £23,000 to pay his utility bills for Neverland. Although the case was settled out of court, there are still a number of outstanding legal cases, including the singer’s former spokesman, who is seeking a $59 million settlement.
But Jackson still owned half of Neverland, which is currently being refurbished in partnership with the real estate firm Colony Capital LLC, and has been valued at up to $80 million.
Tom Barrac, chief executive of Colony Capital, said: “You are talking about a guy who could make $500 million a year if he put his mind to it. There are very few artists who are muiltibillion-dollar businesses, And he is one.”
As lawyers began poring over the finances there was one final bizzare twist with a claim that Sir Paul McCartney could be one of the beneficiaries amid unconfirmed reports that he had been left Jackson’s share of the Beatles’ back catalogue.
All this should give a plethora of lawyers plenty to fight over — and their bills will run into many millions.
Source:The times
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