Michael Jackson's finances
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Michael Jackson purchased ownership in ATV Music Publishing in 1985, which owns the publishing rights to songs written by The Beatles and many other acts. Paul McCartney of The Beatles, who had also recorded with Jackson, was reportedly angered by the 'surprise' purchase, and this led to the two becoming estranged. In 1995, Jackson and Sony Music Publishing merged their two catalogues to create, Sony-ATV. Jackson's 50% interest in the company (Sony Music Entertainment owns the other half) is estimated to be worth USD $500 million. Jackson also owns his own music catalogue called MiJac Publishing, which contains all of his songs and songs from Sly & the Family Stone[1].
Over the past 10 years, Jackson has secured two loans for USD $200 million and USD $70 million. The USD $200 million loan was secured by using Jackson's share of the Sony-ATV Catalogue as collateral. He later secured the USD $70 million loan by using his MiJac Catalogue as collateral. However, because of his declining sales, his MiJac Catalogue's value declined to under USD $100 million, therefore he was forced to use his Neverland Ranch and Hayvenhurst as added collateral to keep the loan.
In April 2005, the Bank of America sold the loan to Fortress Investments. Jackson continued to miss payments on the loan, and as of December 20, 2005, Fortress had the right to foreclose on the loan, allowing Sony Music the first right to buy Jackson's share of the loan. However, Fortress extended the loan, allowing Jackson time to get money together.
On March 9, 2006, California state labor officials closed the singer's Neverland Ranch and fined him $69,000 for failure to provide employment insurance. The state "stop order" bars Jackson from "using any employee labor" until he secured required workers' compensation insurance. In addition to being fined $1,000 for each of his 69 workers, Jackson is liable for up to 10 days pay for those employees who now are no longer allowed to report to Neverland for work.[1] Thirty Neverland employees have also sued Jackson for $306,000 in unpaid wages.[2]
Soon after this payment, Jackson's spokesperson announced on March 16, 2006 that Jackson was closing his house at Neverland and had laid off some of the employees but added that reports of the closing of the entire ranch were inaccurate.[3] There have been many reports of a possible sale of Neverland, but nothing tangible has been reported yet.
In a move named by Jackson's advisors as "refinancing," it was announced on April 14, 2006 that Jackson had struck a deal with Sony and Fortress Investments. In the deal Sony may be allowed to take control of half of Jackson's 50% stake in Sony/ATV Music Publishing (worth an estimated $1 billion) which Jackson co-owns. Jackson would be left with 25% of the catalogue, with the rest belonging to Sony.
In exchange, Sony negotiated with a loans company on behalf of Jackson. Jackson's $200m in loans were due in December 2005 and were secured on the catalogue. Jackson failed to pay and the Bank of America sold them to Fortress Investments, a company dealing in distressed loans. However, Jackson hasn't as yet sold any of the remainder of his stake. The possible purchase by Sony of 25% of Sony/ATV Music Publishing is a conditional option; it is assumed the singer will try to avoid having to sell part of the catalogue of songs including material by other artists such as Bob Dylan and Destiny's Child. As another part of the deal Jackson was given a new $300 million loan, and a lower interest rate on the old loan to match the original Bank of America rate. When the loan was sold to Fortress Investments they increased the interest rate to 20%.[4] None of the details are officially confirmed. An advisor to Jackson, however, did publicly announce he had "restructured his finances with the assistance of Sony."[5]
In 2006, F. Marc Schaffel, a former associate of Jackson, filed a suit for millions of dollars allegedly owed to him after working with Jackson on an unreleased charity record named "What More Can I Give" and documentaries. Florida businessman Alvin Malnik, who had advised Jackson, appeared in court and stated that Jackson appeared to be bewildered by financial matters. Schaffel claimed to have made frequent loans to the singer totaling between $7 million and $10 million. Schaffel had received an urgent plea from Jackson for $1 million so that Jackson could buy jewelry for Elizabeth Taylor so that she would agree to sign a release for her involvement in a Fox special.[6]
On July 14, 2006, the jury awarded Schaffel $900,000 of the original $3.8 million he sued Jackson for, which Schaffel later reduced to $1.6 million, and finally to $1.4 million.[7] The jury also awarded Jackson $200,000 plus interest of the $660,000 that Jackson claimed he was owed by Schaffel. The trial revealed that Schaffel had been dismissed after Jackson learned of his past work as a director of gay pornography. Schaffel claimed that Jackson "once wanted him to go to Brazil to find boys for him to adopt. He later modified that statement to "children" to expand Jackson's family."[8] Jackson's lawyer Thomas Mundell said that he had never heard the allegation during the pre-trial investigation and that "it was an effort to smear Mr Jackson with a remark that could be interpreted to hurt him in light of the case against him last year."[9]
On July 31, 2006, a federal judge allowed a $48 million claim against Jackson and one of Jackson's trusts (MJ Publishing Trust) for unpaid fees and breach of contract. Prescient claimed the singer owed fees for the company's help in refinancing his debts and claiming a larger stake in a library of Beatles songs. All parties were ordered to reappear in court in September.[10]
[edit] References
- ^ Workers Barred From Neverland. The Smoking Gun (March 9, 2006). Retrieved on November 11, 2006.
- ^ Demand of Payment of Wages and Penalties Under the Labor Code. The Smoking Gun. Retrieved on November 11, 2006.
- ^ Jackson Closes Neverland House. CNN (March 17, 2006). Retrieved on November 11, 2006.
- ^ Michael Jackson Bailout Said to Be Close. The New York Times (April 13, 2006). Retrieved on November 11, 2006.
- ^ Jackson strikes deal over loans. BBC News (April 14, 2006). Retrieved on November 11, 2006.
- ^ Court hears Jackson's frantic phone messages. Daily Mail (July 6, 2006). Retrieved on November 11, 2006.
- ^ Michael Jackson ordered to pay $900,000. MSNBC (July 14, 2006). Retrieved on November 11, 2006.
- ^ Split Decision In Michael Jackson Trial. ABC7 (July 15, 2006). Retrieved on November 11, 2006.
- ^ Jackson sent witness 'to adopt boys in Brazil'. Independent Online Edition (July 19, 2006). Retrieved on November 11, 2006.
- ^ News: NY lawsuit against Michael Jackson trust goes ahead. Michael Jackson The King of Pop (August 1, 2006). Retrieved on November 11, 2006.
