The king of pop, Michael Jackson, is gone but not forgotten. He died of a drug overdose on 25 Jun 2009. Though it seems hard to believe that someone who sold more than 61 million albums to have money problems, it is true; Michael Jackson was nearly broke by the end of his life. It is estimated that when Michael died, he was $400 million in debt. What money lessons can we learn from King Of Pop?
NME readers cast 10 million votes in a poll for 20 top singers and Michael Jackson topped the poll. Participants from 103 countries came together to make a collaborative music video Behind the Mask Only a star of Jackson’s calibre could convince people to contribute to a project like this!!.
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Life of Michael Jackson
Michael Jackson was born on 29 Aug 1959. The King of Pop burst onto the music scene in the early 1970s in a band ‘Jackson 5’ with big brothers Jackie, Tito, Jermaine and Marlon. Jackson released his debut solo album Off The Wall in 1979, but it was Thriller (1982) which established him as the King of Pop, earning him eight Grammies(7 for Thriller and 1 for his E.T narration). Featuring classic tracks like Billie Jean and Beat It, it went on to become the best-selling album of all time.
Jackson unleashed his trademark dance move, MoonWalk, on the world during a live performance at the Motown 25: Yesterday, Today, Forever television special in 1983. It quickly became as much of Jackson signature as his vocal hiccups or single white-sequined glove and leather jacket.
He rocked the music world with We are The World(1982), Bad album(1987) accompanied by first solo tour , Dangerous(1991), HIStory:Past, Present and future(1995) with world tour,The Essential Michael jackson(2005) , Thriller 25(2008).
He signed a contract with Pepsi Cola that reportedly paid him $12 million for 4 commercials.
His financial masterstroke was buying the Beatles song catalogue in 1985 for $47.5 billion, outbidding ex-Beatles Paul McCartney, which cost him Paul’s friendship. It is the Beatles catalogue that he used as collateral in various financial deals.
But was Michael financially responsible? He was in deep financial straits despite owning various music and real estate assets worth as much as $600 million. The reason – Cash Crisis! Let’s check them out.
Expensive Property: NeverLand
One of his biggest expense was buying a property near Santa Ynez, California for $17 million in 1988. that became Neverland. Named after the fantasy island inhabited by Peter Pan(J.M.Barrie’s children’s story), the boy who never grew old. It featured a theme park and a zoo-full of exotic animals like giraffes, giant pythons, parrots and chimpanzee Bubbles(who sat in on the recordings of the Bad album and later slept in a crib in Jackson’s bedroom. This bizarre friendship started to turn the King of Pop into Wacko Jacko. The annual upkeep for Neverland was about $4 million.
Expenses more than Earnings
Some of the expenses of MJ were:
– Legal fees for fighting legal suits around $22 million.
– $25 million to the Jordan Chandler and his father Evan who accused him of molestation.
– $1.2 million yearly to children Paris’ and Prince’s biological mother Debbie Rowe
– $61,000 for cream to treat his “vitiligo” (skin condition)
– Living expenses and care for the children’s nanny, Grace Rwaramba.
– His extravagant videos. For his 1995 album, “HIStory,” he shot the video in Hungary for millions of dollars and hired Hungarian soldiers to march in it.
John Duross O’Bryan, a forensic accountant who testified at Jackson’s child molestation trial in 2005 told the jurors that Jackson was spending about $30 million a year more than he earns. He also testified that Jackson has long-term liabilities of about $415 million.
Debt of Michael Jackson
In 2001, Jackson borrowed $200 million from Bank of America to stay afloat and fund his lavish life style. His 200 Beatles songs and his own music library were used as collateral. He was making monthly payments of about $4.5 million in 2005 on $270 million in debt -an annual interest rate of about 20 percent. Bank of America sold Jackson’s loans valued at $270 million to a private hedge fund.
Bad Financial advisers of Michael Jackson
Alvin Malnik, a former financial adviser to Michael Jackson said”, “I think that Michael never had any concept of fiscal responsibility, or logical fiscal responsibility. He was an individual that had been overindulged by those that represented him or worked for him for all of his life. There was no planning in terms of allocations of how much he should spend. As a businessman, you can forecast your spending for the next six months to a year. For Michael, it was whatever he wanted at the time he wanted”. Michael became overly enamored by bad advice. Some of Mr. Jackson’s advisers squandered $50 million on deals that never panned out such as amusement-park ideas and bizarre, computerized Marvel comic-book characters.
Michael Jackson was on the edge of financial ruin when he agreed to do his “This Is It” concert tour, and his fear of failure spurred by severe insomnia drove him to take desperate measures that killed him.
Video on Life and Career of Michael Jackson
He was the King of Pop. This 10 minute video takes a look at the life and career of Michael Jackson
So the money lesson that we can learn from King of Pop are It’s Not What You Earn That Counts, It’s What You Keep. In words of the King of pop himself-From the song Money(Album: History)
If you show me the cash, Then I will take it
If you tell me to cry, Then I will fake it
If you give me a hand, Then I will shake it
You’ll do anything for money…