Newly revealed court documents have shed light on the staggering financial troubles that Michael Jackson faced at the time of his tragic death in 2009. Despite his immense success and the current valuation of his estate at $2 billion, the King of Pop was grappling with a debt of $500 million. This financial burden was exacerbated by his extravagant lifestyle and high-interest loans.
Certified public accountant William R. Ackerman, who testified in a wrongful-death trial, detailed Jackson’s extensive expenses, which included charitable donations, gifts, travel, and jewelry. These expenditures left him financially strained. Additionally, his estate was weighed down by liabilities from canceled tours and ongoing legal disputes. Since his death, the estate has managed to restructure its debts and capitalize on music catalog assets, securing deals with Sony Music and navigating complex legal battles.
In a filing dated March 2024, estate executors attorney John Branca and A&R executive John McClain, along with their legal counsel Jonathan Steinsapir and Saul Ewing, emphasized that the estate was on the brink of bankruptcy at the time of Jackson’s death. The petition highlighted that Jackson faced “more than half a dozen lawsuits pending worldwide” and that “65 creditors’ claims were filed in the Estate, spawning additional lawsuits, several of which resulted in litigation.”
The executors have since eliminated the estate’s debt, resolved virtually all creditors’ claims and litigation, and solidified the MJJ business as a significant entity in the music industry. However, they continue to deal with challenging business, tax, and legal issues.
In court documents filed on June 21, Branca and McClain petitioned the court to approve estate funds for reimbursing the executors’ attorneys for legal, negotiating, and operational expenses incurred in 2018. They argued that they faced exceptionally difficult circumstances managing Jackson’s assets but acted promptly to resolve much of his debt since his death.
Michael Jackson’s financial troubles were not entirely unknown, but the extent of his debt came to light in the petition filed by the executors of his estate. In a previous petition to the court filed in March, Branca and McClain stated that Jackson was overwhelmed with debt and on the verge of bankruptcy at the time of his death. The June filing focused on a court request to approve funds from the estate to reimburse the executors’ attorneys for various expenses incurred in 2018.
The documents detailed how Branca and McClain successfully navigated Jackson’s massive debt, which included $40 million owed to music promoter AEG for the London concert residency Jackson was preparing for in the months leading up to his death. Jackson had just completed a six-hour dress rehearsal for his “This Is It” residency the day before his passing. He suffered a cardiac arrest, prompted by an overdose of propofol and benzodiazepine, and died at his rented mansion in Holmby Hills, Los Angeles, on June 25, 2009.
At the time of his death, Jackson was embroiled in numerous lawsuits pending in several states, including California, and several foreign countries. He was also subject to claims by more than 65 creditors. The court filings contend that Jackson’s executors have since resolved virtually all creditors’ claims and litigation and have successfully enhanced the “Thriller” singer’s image and legacy for the benefit of his beneficiaries, which include his three children, Paris Jackson, Prince Jackson, and Bigi Jackson. The estate is currently valued at over $2 billion, according to the March brief to the court.
While many of these matters have been resolved, the petition notes that there remain challenging business, tax, and legal issues that will require continued legal work by Jackson’s executors.
Michael Jackson, the singer, was also a billion-dollar business. Despite selling more than 61 million albums in the U.S. and having a decade-long attraction at Disney theme parks, the “King of Pop” died at age 50, reportedly awash in about $400 million in debt. He was on the cusp of a final comeback after well over a decade of scandal.
Jackson’s influence on the music industry was immense. His 1982 hit “Thriller,” still the second best-selling U.S. album of all time, spawned a John Landis-directed music video that MTV played every hour on the hour. His popularity led to a $65 million recording deal with Sony in 1991 and a 3-D movie at Disney parks called “Captain EO,” executive produced by George Lucas and directed by Francis Ford Coppola.
One of Jackson’s shrewdest deals at the height of his fame in 1985 was the $47.5 million acquisition of ATV Music, which owned the copyright to songs written by the Beatles’ John Lennon and Paul McCartney. This catalog provided Jackson with a steady stream of income and the ability to afford a lavish lifestyle. He bought the sprawling Neverland ranch in 1988 for $14.6 million, a fantasy-like 2,500-acre property nestled in the hills of Santa Barbara County’s wine country.
However, Jackson’s financial troubles began to mount in 1993 when he was accused of molesting a 13-year-old boy. This marked the beginning of a tragic path, financially, emotionally, spiritually, psychologically, and legally. He settled with the boy’s family, but other accounts of his alleged pedophilia began to emerge.
In 1995, Jackson agreed to a deal with Sony to merge ATV with Sony’s library of songs and sold Sony music publishing rights for $95 million. In 2001, he used his half of the ATV assets as collateral to secure $200 million in loans from Bank of America. As his financial problems continued, Jackson began to borrow large sums of money, leading to a 2002 lawsuit by Union Finance & Investment Corp. that sought $12 million in unpaid fees and expenses.
In 2003, Jackson was arrested on charges of molesting another 13-year-old boy. The 2005 trial, which ultimately ended in an acquittal, brought to light more details of Jackson’s strained finances. One forensic accountant testified that the singer had an “ongoing cash crisis” and was spending $20 million to $30 million more per year than he earned.
In March 2008, Jackson faced foreclosure on Neverland and repeatedly failed to make mortgage payments on a house in Los Angeles used by his family. He was also forced to defend himself against a slew of lawsuits, including a $7 million claim from Sheik Abdulla bin Hamad Al Khalifa, the second son of the king of Bahrain. Memorabilia auctions were frequently announced but often became the subject of legal wrangling and were canceled.
Despite these challenges, Jackson found ways to wring cash out of high-value assets, borrowing tens of millions at a time or leaning on wealthy friends for advice and financial support. Al Khalifa took Jackson under his wing after his acquittal, moving him to the small Gulf estate and showering him with money. In his lawsuit, Al Khalifa claimed he gave Jackson millions of dollars to help shore up his finances, cut an album, write an autobiography, and subsidize his lifestyle. The lawsuit was settled for an undisclosed amount, but neither the album nor the book was ever produced.
Another wealthy benefactor, billionaire Thomas Barrack, chairman and CEO of Los Angeles-based real estate investment firm Colony Capital LLC, came to Jackson’s aid as he faced the prospect of losing Neverland in a public auction. Barrack set up a joint venture with Jackson that took ownership of the vast estate.
A final piece of the financial puzzle fell into place in March 2009 when billionaire Philip Anschutz’s concert promotion company AEG Live announced it would promote 50 shows in London’s O2 arena. Tickets sold out, and the first show of the “This Is It” tour was set for July 8. Jackson, who had won 13 Grammys, hadn’t toured since 1997. His last studio album, “Invincible,” was released in 2001. However, the opening date was later postponed to July 13, and some shows were moved back to March 2010, fueling speculation that Jackson was suffering from health ailments that could curtail his comeback bid.
Jackson’s death, caused by cardiac arrest, raised questions about whether an insurer would refund money to ticketholders. AEG Live did not immediately respond to requests for comment. Jackson was practicing for the concert in Los Angeles at the Staples Center with Kenny Ortega, a choreographer and director of the “High School Musical” movies, who had worked on previous Jackson videos like “Dangerous” in 1993. Ortega expressed his grief, stating, “This was the world’s greatest performer, and the world will miss him.”
Source: HuffPost, Associated Press
