'Spendaholic' singer dies in debt

Thriller video
Thriller was the biggest selling album of all time

Michael Jackson, one of the biggest and most successful pop stars of all time, ended his days deeply in debt.

At his peak, few people could match his earning ability, having produced the all-time best-selling album, Thriller.

But the singer who rewrote the rules of pop struggled to fund his lavish lifestyle, and hoped a 50-date tour in London would rebuild his finances.

Prosecutors in his 2005 trial on child abuse charges, of which he was cleared, described him as a "spendaholic".

They said he had a "billionaire spending habit for only a millionaire's spending budget".

Extravagant lifestyle

It is difficult to say how much Jackson earned during his career.

Many reports estimate his earnings to have been in the hundreds of millions of dollars. In 1991 he signed a $65m (£39m) record deal with Sony.

His 2005 trial provided a glimpse of his extravagant lifestyle.


In figures
$14.6m - the cost of Neverland in 1988
$30m - the amount by which Jackson overspent every year
$47.5m - the amount he paid for ATV, owner of the Beatles' catalogue
$200m - a loan he secured on the back of ATV in 2006

An accountant testified that the singer had an "ongoing cash crisis" and spent $20m to $30m a year more than he earned.

The singer was known for his huge shopping sprees on toys and antiques.

Alvin Malnik, a former financial adviser to Mr Jackson, said he did not travel light.

"Millions of dollars were spent annually on plane charters, purchases of antiques and paintings," he said in an interview with the New York Times in 2006.

"If you want to take a trip to London, that's one thing. If you want to continue that trip and have your entourage of 15 or 20 people go with you, it gets expensive."

Smooth operator

Ironically, the lifestyle of the Thriller performer was, in part, funded by royalties from two other songwriters: John Lennon and Paul McCartney.

In 1985, Jackson paid $47.5m for ATV Music, which owned the copyright to the Beatles songs.

Michael Jackson,right, poses with Sheik Abdullah bin Hamad Al Khalifa, in August 2005, in Dubai.
The son of the King of Bahrain brought a lawsuit against the singer

When he ran into financial trouble in 1995, he agreed to merge ATV with Sony.

Then in 2001, he used his half of ATV to secure a $200m loan from Bank of America. He refinanced these loans in in 2006 in an effort to stave off insolvency.

But even this couldn't keep him out of debt.

He faced a string of lawsuits from people who claimed he owed them money. In 2002, he faced a lawsuit from Union Finance & Investment Corp for $12 million in unpaid fees and expenses. In 2006, he was sued by a veterinarian for unpaid bills. Martin Dinnes claimed that Mr Jackson owed him $91,602.

He also faced a claim from Sheikh Abdulla bin Hamad al Khalifa, the second son of the King of Bahrain.

In a lawsuit, Al Khalifa claimed he gave Jackson millions to shore up his finances. The lawsuit was settled for an undisclosed amount last year.

Frantic juggling

Right up until his death, Jackson was seeking solutions to his financial problems.

In March last year, he faced foreclosure on Neverland, the 2,500 acre ranch he bought for $14.6m in 1988.

In November, he set up a joint venture with Colony, a real estate investment trust, to take ownership of Neverland.

His hope was that the UK tour could revitalise both his career and his finances.

Lawyers are now likely to be busy for years, unpicking his complex estate.

The copyright to his own songs and those of the Beatles must be worth hundreds of millions of dollars and his creditors, family and partners are likely to claim shares.

Overshadowing this complicated financial legacy are his vast debts, reported to be anything between $300m and $500m.

The irony is that with music channels and radio stations replaying his greatest hits, Sony, his record label, may re-issue the songs that made his name and his fortune.

Once again, the Michael Jackson machine will generate money.