Jackson: Financial Woes Eclipsed Music Later in Life

Michael Jackson, who died unexpectedly Thursday at age 50, will always be known for his music. But in his later years, it was his financial problems that kept him in the news.

Forbes estimated that Jackson earned half a billion dollars from his musical ventures in the 1980s and 1990s, and put his estimated worth at $350 million in 2003. But by last year, the L.A. Times reports that he was $400 billion in debt and facing foreclosure on his Neverland Ranch before being bailed out by a couple of billionaire investors hoping to still cash in on the magic.

Jackson made a lot of money in his life. That much is certain. He reportedly earned $125 million from "Thriller," still the best-selling album of all-time, with earnings padded by a popular video. He also made shrewd investments, paying $45 million to purchase the catalog of Beatles songs, an investment that would now reportedly be worth well in excess of $1 billion, except that sold and hocked its value over time to pay off debts.

Reckless spending or bad investments?

The standard explanation is that Jackson squandered his vast fortune through extravagant spending, on shopping sprees, private jets, an extensive entourage and his private amusement park and home, Neverland Ranch. But other associates say he actually had a keen financial sense, keeping a close handle on things through at least the early 1990s, and it was bad investments and financial advice, along with a pair of divorces, that drained the Jackson fortune.

It is known that Jackson cycled through an ongoing series of financial advisers in the 1990s, and invested in a number of expensive projects that provided little return. But it's also known that he did spend incredible sums on personal luxuries that made him potent fodder for celebrity gossip.

Reported $1.2 million in monthly expenses

The Times of London reported in 2003 that Jackson's monthly expenses totaled about $1.2 million a month, including $375,000 for a personal staff of 120. During a television documentary for the BBC, he took a reporter with him on a shopping spree in Las Vegas where he reportedly spent $6 million in just a few hours.

One of the most detailed looks at Jackson's finances and spending habits was provided by the New York Times, which ran a detailed profile in 2006. In it, associates detailed some of the bad investments that helped drain his fortune, including spending an estimated $65 million on assorted video projects in the 1990s, $15 million on a special-effects heavy half-hour film based on a script by Steven King and another $50 million on amusement parks and various eccentric entertainment ventures that went nowhere.

Heavy borrowing supported lifestyle and business

It's clear that Jackson did a lot of borrowing to finance his lifestyle and investments. He reportedly sold half his interest in the Beatles catalog to Sony Corp in 1995 for $100 million, then shortly after took out a loan for $90 million to fund his lifestyle and business interests. In 1998, he reportedly took out another loan for $140 million, backed by the Beatles catalog, an amount that was later raised to $200 million following his divorce from his second wife, Lisa Marie Presley. In 2001, he needed money again, borrowing $188 million from Sony, again using his share of the Beatles catalog as collateral.

For Jackson, as for so many other debt-ridden Americans, the key to his financial undoing may have interest payments on debt. It was reported that one advisor said that by 2005, Jackson was paying about $4.5 million a month in interest on $270 million in debt - an annual interest rate of about 20 percent. By that time, his lenders clearly regarding him as a high risk proposition.

In 2006, Jackson agreed to give up half of his remaining stake in the Beatles catalog (leaving him with about a one-quarter interest) to cover about $270 million in loans that had come due.

Was still seen as a potential mega-earner

At the time of his death, Jackson had apparently been in declining health for some time. The L.A. Times reported only last month that he was using a wheelchair when billionaire investor Tom Barrack visited him in March of last year.

But Barrack still saw star power in the frail, middle-aged entertainer, and paid off a $23.5 million debt to save the ranch from foreclosure and persuaded concert promoted Philip Anschutz to join him in a venture to get Jackson back on stage this summer.

Jackson died less than two weeks before he was scheduled to begin a series of 50 concerts in London, arranged by the two financiers, that were reportedly to net him $1 million a show.

"You are talking about a guy who could make $500 million a year if he puts his mind to it," Barrack was quoted as saying. "There are very few individual artists who are multibillion-dollar businesses. And he is one."

At least, he was.