Last week, it was announced that Michael Jackson’s Neverland ranch would be auctioned off March 19. I just noticed an overlooked followup story: That Jackson has been in default several times over the past year on another home as well, what was described as the Jackson family home in Encino. While a manse in the Valley is no great financial asset, it does loom disproportionately large in the Jackson story: I assume that this is “Havenhurst,” where Jackson and his unnerving family all, absurdly, lived during the tumultuous years before and after “Thriller.”
In this case, the notice of default was withdrawn early last month, meaning that Jackson apparently made a payment. The key issue here is that he has apparently mortgaged both houses, indicating that he may indeed be on the brink of a complete financial meltdown at this point, despite what was supposed to have been a stabilizing agreement between him and Sony.
The details are very complicated but basically Jackson had gotten himself into such bad financial straits that a company specializing in distressed loans had collected a fair chunk of his outstanding debts and had him wrapped up in a debilitatingly high interest rate, totaling perhaps $4.5 million a month in payments.
His half-ownership in the fabled Sony/ATV publishing catalog (which includes most of the Beatles’ song rights, as well as those of many other songwriters) was already leveraged in this deal. Sony, which did not want Jackson’s share of the asset to fall into unfamiliar hands, was supposed to have refinanced his debts, with half of Jackson’s stake, or 25 percent of Sony/ATV, essentially serving as collateral.
(Ironically enough, Neverland, or Sleepover Central, as it is known in children’s circles, which is scheduled to be auctioned off on the steps of the Santa Barbara County courthouse in two weeks, was reported two years ago to have been mortgaged to buy out the 2.5 percent stake former Jackson manager John Branca had in Sony/ATV.)
Despite a few substantive looks at Jackson’s finances (there’s a major one from the NY Times here), the precise source of Jackson’s financial woes is something of a mystery. My explanation of Jackson’s money troubles, which is reductive on the one hand but on the other doesn’t contain any mysteries, is that Jackson rarely releases records, doesn’t sell them when he does, doesn’t tour … and spends money lavishly.
He’s had low royalty income since “Dangerous” tapped out more than ten years ago, and whatever advances he gets from the various crummy greatest-hits sets we’ve seen since can’t be much. (It is perhaps indicative of the appeal of his back catalog that “Their Greatest Hits,” by the Eagles, surpassed the sales of “Thriller” more than five years ago.) When you spend tens of millions of dollars a year and don’t have any income, it’s very easy for even a very rich person to head into debt. (And if, before that, you spent $25M in years in which you made only $20M, you might never have been that rich in the first place.)
But I’m no accountant. The touring issue brings up perhaps the saddest factor of all in the Michael Jackson story. As Springsteen, U2, the Eagles and the Stones know, a big-ticket A-level star tour is a tonic for the troops. Jackson could launch a $100M- —or $200M- —grossing tour whenever he wanted to. He could also take home $10M or $15M with just a two week run at MSG or Meadowlands. He’s also had comparable offers from promoters in Las Vegas and London.
Jackson’s history with tours is checkered, of course, but this seems an obvious way to stave off financial problems. (And he could make even more if he kept his ambitions reined in and did a disciplined greatest-hits show with a minimum of spectacle.) The troubling question about Jackson is this: Is a tour or a series of performances the trump card, deep down inside, he knows he can put on the table when the need arises? Or is his mental or physical condition such at this point that it’s out of the question? If it’s the latter, Michael Jackson’s last years may turn out to be truly unpretty.
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