Michael Jackson's Debt And Estate: What Will Happen?
POSTED: Friday, June 26, 2009 - 4:45pm
UPDATED: Wednesday, February 17, 2010 - 10:29pm
Michael Jackson spent the last years of his life buried in debt. But the King of Pop's death is likely to yield a financial bonanza more lucrative than any comeback tour ever could, as fans snap up his music and memorabilia and perhaps one day get the chance to tour his Neverland home.
"Quite frankly, he may be worth more dead than alive," said Jerry Reisman, general counsel for the Hit Factory, a recording studio where Jackson produced his best-selling album "Thriller."
Jackson's death at age 50 leaves a multitude of questions about a financial empire that included his own music, as well a 50 percent stake in a library that held the rights to songs by the Beatles. But Jackson reportedly had $400 million in debts, and it isn't known yet how his estate will be divided and who the beneficiaries will be.
This much is clear: Jackson's heirs, music labels and opportunists will probably be mining his legacy for decades to come.
In that way, his death may parallel that of the music industry's
original King - Elvis Presley, who died in 1977 at age 42.
Like Jackson, Presley hadn't had a hit album in years. At the end of his life, he was mostly relying on royalties from his past hits and doing shows in Las Vegas. But in death he became a moneymaking phenomenon.
Presley's estate was valued at just $4.9 million at the time of his death. In 2005, a company run by media entrepreneur Robert F.X. Sillerman paid $100 million for 85 percent of the estate and a 90-year lease on his Memphis mansion, Graceland.
By some estimates, Jackson's estate could be worth more than $1 billion. Besides the master recordings of his own music, Jackson owned half of Sony/ATV Music Publishing, a jewel estimated to be worth $2 billion by itself. The 750,000-song catalog includes music by the Beatles, Bob Dylan, Neil Diamond, Lady Gaga and the Jonas Brothers.
Creditors will get first crack at the estate. "I think the first question is, `Is there anything left after you pay off the debts?"' said Robert Rasmussen, the dean of law at the University of Southern California.
Jackson might have shielded some of his estate from creditors and ensured that his children were taken care of by placing a life insurance policy and other assets in an irrevocable trust, said Steve Hartnett, associate director of education for the American Academy of Estate Planning Attorneys.
The pop star left behind three children: Michael Joseph Jackson Jr., known as Prince Michael, 12; Paris Michael Katherine Jackson, 11; and Prince Michael II, 7. The elder children were born to ex-wife Deborah Rowe, while the youngest is his biological son, born to a surrogate mother.
Other potential beneficiaries include Jackson's parents, his five brothers, three sisters and a long list of nieces and nephews. His children's nanny was believed to be close to Jackson.
The contents of Jackson's will have not been released. Typically, a will becomes public within about 30 days of a person's death.
In a statement Friday, Joel Katz, Jackson's entertainment affairs attorney, gave no clues to how Jackson disposed of his estate.
"Michael Jackson was a perfectionist, and his business affairs are worldwide," Katz said. "Many of them are quite ongoing and will be dealt with appropriately."
One big question will be what happens to Neverland, where Jackson surrounded himself with animals, rides and children. Jackson nearly lost the ranch to foreclosure in March, but billionaire real estate investor Thomas Barrack bailed him out, setting up a joint venture with Jackson that took ownership of the 2,500-acre property in Santa Barbara County. Barrack declined to comment.
Fans, meanwhile, are rushing to buy Jackson's old songs in a scramble that began within minutes of his death. Both Amazon and Barnes and Noble reported selling out of Jackson's CDs, and his music accounted for the most downloads at Apple's iTunes store.
Amazon's sales of Jackson's albums and MP3s were 700 times higher on Thursday after news of Jackson's death, and they were running at an even higher rate Friday, according to Bill Carr, the company's vice president of music and video.
"It's really hard to express what someone dying really means and how it absolutely brands that individual into the culture," said Dell Bryant, CEO of Broadcast Music Inc., which collects royalties for the use of "Beat It," "Billy Jean" and other songs composed by Jackson. "If you look at everyone from Patsy Cline to the Big Bopper to Buddy Holly ... the effect on the catalog is tremendous."
Bryant said expects revenue from public performances of Jackson's songs to triple this year because of his death.
Sillerman's company, CKX, controls licensing of Presley's image, which has been slapped on dozens of pieces of merchandise, such as T-shirts, watches, belt buckles and figurines. In 2007, Presley's brand earned $52 million - beating out living acts like Justin Timberlake and Madonna, according to Forbes magazine, which has put Elvis atop its list of top-earning dead celebrities for two years running.
Jackson's heirs may similarly explore ways to make money from the singer's likeness and art, perhaps through T-shirts, compilations of previously unreleased music, or stage productions based on his songs.
It's also easy to envision Neverland becoming the next Graceland, said Steve Gordon, an entertainment attorney who worked at Sony Music during the 1990s.
The singer's death could also boost business for the legion of Jackson impersonators. Adrienne Gusoff, who runs the New York-based impersonating agency Bubbygram.com, said she expects the dozen Jackson clones she represents to be about as much in demand as entertainers who impersonate stars like Frank Sinatra and Marilyn Monroe.
"I think his death will make him an even bigger star," Gusoff
First, though, her Jackson impersonators will have to get over the loss of their hero. "One of my guys in New Jersey is devastated," she said. "It's like a family member died.'
Michael Liedtke reported from San Francisco. AP Business Writers Alex Veiga in Los Angeles, Stevenson Jacobs in New York, Rachel Metz in New York and Jessica Mintz in Seattle contributed to this story.