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How did MJ accumulated so much debt by the time he passed away?

KingofPop125

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MJ had been in the business for over forty years, and must have been taught some financial advice at some point, at least sometime after Thriller. And also, he was the biggest star on Earth, making millions from his catalogue alone. But by 2009, he owed $500 million.

How the hell did he have half a BILLION dollars in debt?
 
I researched this a while back, one article said he was asset rich but cash poor. This ends up being true for lot of wealthy people, they sometimes make bad investments or acquire money sucking assets.

Obviously maintaining Neverland was a huge financial drain. His Income (though still in multi-millions) was not the same as pre-2000s. Then you add up lawsuits, personal lavish spendings, bad advisors and you can see how he ended up with cash flow problem. He had an auction of his personal collection planned pre-TII for the same reason. As far as I know, the Estate went ahead with that after his death and was able to clear all his debt through the auction.

After reading about many other wealthy people who end up in debt, it seems it takes huge amount of self discipline to maintain such a fortune!!

PS: if I find it, I will quote the article later.
 
Maintaining his Neverland Ranch was certainly a huge financial drain for him because it required a lot of money annually (such as, staff payments, energy bills, insurance, etc).

Michael Jackson also used to indulge in shopping therapy (i.e., to shop in order to make himself feel better and more cheerful).

Keep in mind that he also used to spend a lot of money on numerous cosmetic plastic surgeries/procedures.

Forensic accounting expert William R. Ackerman also testified (during the 2013 trial) that Michael Jackson used to spend a lot of money on expensive gifts, expensive art items, expensive cars, expensive jewellery and expensive furniture.

William R. Ackerman also pointed out that the singer used to donate huge amounts of money to numerous charitable organizations.

Note also that given his huge debt when he was alive, the cost of that debt was also huge (meaning, he had to pay annually a lot of money also on the interest of that debt).

It has been estimated that Michael Jackson overall had to pay 30 million US dollars in annual payments on his debt.
 
Hiker said:
He had an auction of his personal collection planned pre-TII for the same reason. As far as I know, the Estate went ahead with that after his death and was able to clear all his debt through the auction.
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I never heard of it. The auction was stopped from Michael in his lifetime and the Estate did not make a auction.
The TII-deal for the film, the massive interest in his music after his death, the new Sony-contract, the MJ-One-Show and the Immortal-world-Tour and so on..... brought the money in.
 
Annita said:
I never heard of it. The auction was stopped from Michael in his lifetime and the Estate did not make a auction.
The TII-deal for the film, the massive interest in his music after his death, the new Sony-contract, the MJ-One-Show and the Immortal-world-Tour and so on..... brought the money in.
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Ok, I could be wrong. I thought lot of Michael's clothes and things were auctioned off, and Lady Gaga bought 50 or so pieces. Maybe I am connecting wrong dots.
 
alexbism said:
I think the auction ended up happening after his passing, you can see this item that was sold in November 2009 along with many other items that belonged to MJ : https://www.julienslive.com/lot-details/index/catalog/67/lot/25221
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The seller is not the Estate. It was in other possesion.

This glove was given by Michael Jackson to Walter “Clyde” Orange one of the founding members of the Commodores. The catalog includes photographs and a detailed description from Mr. Orange about the origins of this unique item.


About the clothes which was bought from Lady Gaga. Was it from maybe from Bush-auction? Many people had things from Michael and did sell it.
 
Annita said:
The seller is not the Estate. It was in other possesion.

This glove was given by Michael Jackson to Walter “Clyde” Orange one of the founding members of the Commodores. The catalog includes photographs and a detailed description from Mr. Orange about the origins of this unique item.


About the clothes which was bought from Lady Gaga. Was it from maybe from Bush-auction? Many people had things from Michael and did sell it.
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Oh yes you're right, my bad. So many different items related to MJ came at the same time in 2009, I thought the auction that was planned ended up taking place.
 
As @mj_frenzy said, maintaining Neverland was rather costly but he also had careless spending habits.
 
I think one of the main reasons was that as Michael got older and more eccentric, he suffered mental health issues resulting in his finances being all over the place.

His life was quite frankly a circus l, I don't think it's unreasonable to believe that this was probably the real reason why everything went wayward.

MJ suffered terribly through the years 😞
 
before people get too judgemental here, he worked very hard to earn every penny, and he gave more than most to charities. Beyond that, he had a right to spend his hard earned money as lavishly as he wanted to.
 
mj_frenzy said:
Maintaining his Neverland Ranch was certainly a huge financial drain for him because it required a lot of money annually (such as, staff payments, energy bills, insurance, etc).

Michael Jackson also used to indulge in shopping therapy (i.e., to shop in order to make himself feel better and more cheerful).

Keep in mind that he also used to spend a lot of money on numerous cosmetic plastic surgeries/procedures.

Forensic accounting expert William R. Ackerman also testified (during the 2013 trial) that Michael Jackson used to spend a lot of money on expensive gifts, expensive art items, expensive cars, expensive jewellery and expensive furniture.

William R. Ackerman also pointed out that the singer used to donate huge amounts of money to numerous charitable organizations.

Note also that given his huge debt when he was alive, the cost of that debt was also huge (meaning, he had to pay annually a lot of money also on the interest of that debt).

It has been estimated that Michael Jackson overall had to pay 30 million US dollars in annual payments on his debt.
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Love that mj_frenzy is calling MJ the singer on an MJ forum :)
 
Lightbringer said:
Love that mj_frenzy is calling MJ the singer on an MJ forum :)
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"In the news today from the strange and weird fact file... singer Michael Jackson sleeps in an oxygen chamber. The Singer says that the Hyperbaric Chamber has the benefits of reversing the aging process... Singer Michael Jackson... has a shrine, Elizabeth Taylor, skeletal remains, mister elephant man.... Join us next for the news!"
 
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He was in debt, yes. But he was also stubborn! Although the ATV catalogue generated a "substantial" income annually, had he been desperate he could have sold it and sailed off in to the sunset with 100's of millions of dollars!
 
When he did that Martin Bashir interview and he was in Vegas buying all those pieces raised a flag for me
 
BlackAnon said:
When he did that Martin Bashir interview and he was in Vegas buying all those pieces raised a flag for me
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Same. Just buying random crap as he walked along that totalled many people's annual income. If he did that in a matter of minutes it's no wonder his finances were drained
 
BlackAnon said:
When he did that Martin Bashir interview and he was in Vegas buying all those pieces raised a flag for me
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I remember reading (although I can't find a source) that although he appeared to purchase a large amount of items, his people would cancel the orders and he never actually ended up owning the majority of the stuff.
 
knigofpop said:
I remember reading (although I can't find a source) that although he appeared to purchase a large amount of items, his people would cancel the orders and he never actually ended up owning the majority of the stuff.
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I heard that too!

I believe that store in Vegas still has the video of MJ in their store running in the front window , what a way to entice (rich) customers to shop in there.
 
He was living a Thriller lifestyle on an Invincible budget quite frankly. Outside of owing the ATV catalogue and rights to his own music (which in the 2000s was in far less demand than it currently is), I can't put my finger on how else he made any income from 2001-2009. That's eight years of a non-stop spending spree with no obvious income.

Whitty Hutton said:
Same. Just buying random crap as he walked along that totalled many people's annual income. If he did that in a matter of minutes it's no wonder his finances were drained
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^ This. He seemed to have no care or awareness of what he was spending in that video, and a lof it I wouldn't have even bought for $50 a piece.

knigofpop said:
I remember reading (although I can't find a source) that although he appeared to purchase a large amount of items, his people would cancel the orders and he never actually ended up owning the majority of the stuff.
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I actually hope so. I feel like he would have forgotten about a lot of the pieces he bought immediately after. It would have been impulse buying. The compassionate thing to do given the situation.

Blues_Away2023 said:
I think one of the main reasons was that as Michael got older and more eccentric, he suffered mental health issues resulting in his finances being all over the place.

His life was quite frankly a circus l, I don't think it's unreasonable to believe that this was probably the real reason why everything went wayward.

MJ suffered terribly through the years 😞
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Yep. We don't see any signs of "I need to buckle up and get to work" about him after Invincible. It was basically an all or nothing ultimatum "do this tour or you'll literally lose everything" for him to do This Is It. And even then, as much as we can blame scheduling and Conrad Murray, Michael was not able to mentally get himself in a position to do the tour.

Hiker said:
I researched this a while back, one article said he was asset rich but cash poor. This ends up being true for lot of wealthy people, they sometimes make bad investments or acquire money sucking assets.

Obviously maintaining Neverland was a huge financial drain. His Income (though still in multi-millions) was not the same as pre-2000s. Then you add up lawsuits, personal lavish spendings, bad advisors and you can see how he ended up with cash flow problem. He had an auction of his personal collection planned pre-TII for the same reason. As far as I know, the Estate went ahead with that after his death and was able to clear all his debt through the auction.

After reading about many other wealthy people who end up in debt, it seems it takes huge amount of self discipline to maintain such a fortune!!

PS: if I find it, I will quote the article later.
Click to expand...

I am not sure how much sympathy I have for people who make that kind of money and lose it. If someone gave me 20 million dollars today I'd never need to work again. But then again I am not that materialistic.
 
MJ wasn't broke and was never going to be broke. He got by basically on virtue of reputation alone; to him, donating most of it was the most significant thing about it. Blowing it on trinkets was something that appeased him. It's better than hookers and cocaine.
knigofpop said:
he been desperate he could have sold it and sailed off in to the sunset with 100's of millions of dollars!
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And are those 100s of millions of dollars in the room with us right now?
 
Mister_Jay_Tee said:
MJ wasn't broke and was never going to be broke. He got by basically on virtue of reputation alone; to him, donating most of it was the most significant thing about it. Blowing it on trinkets was something that appeased him. It's better than hookers and cocaine.

And are those 100s of millions of dollars in the room with us right now?
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In the room with us? The estate definitely banked it!
 
Compulsively spending thousands on shopping trips alone, breaching contracts without a second thought, and according to some of his bodyguards he'd pay off any lawsuit that could possibly get him to go to court again, is bound to leave a massive hole in your wallet.
 
Blues_Away2023 said:
I believe that store in Vegas still has the video of MJ in their store running in the front window , what a way to entice (rich) customers to shop in there.
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I live in the "They Don't Care" video city. The owner of that balcony he sings on in the video has his picture there and takes money for tourists to go up there and take a picture lol
here you can see it in Google Maps https://www.google.com/maps/@-12.97...ujgzxszwDfBrDJeA!2e0!7i16384!8i8192?entry=ttu
 
See my thread about this,

It wasn't for the most part because of MJ's spending. Although that didn't help, it was really because MJ took out loans for joint catalogue acquisitions. See Leslie MJ's post about this:

Michael's debts in the 90's

What on earth happened in order for MJ's debts to spiral out of control in the 90's. Without doubt, his debts where a significant contributor to his stress. According to Newsweek, "The musician's extreme debt started in 1994 with $30 million owed and quickly grew. When he died, Jackson was...
www.mjjcommunity.com www.mjjcommunity.com
 
Hurley509 said:
I am not sure how much sympathy I have for people who make that kind of money and lose it. If someone gave me 20 million dollars today I'd never need to work again. But then again I am not that materialistic.
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Without knowing you I'm daring to say that you probably didn't grow up the way Michael did? Sure they didn't have much money in the beginning, but I'm pretty sure they were wealthy to the point of not really having to understand / worry about how money works when Michael was really young. And it stayed like that for most of his life? I'm totally guessing here - I honestly have no insight into his finances (I personally don't think it's any of my business).
 
Hiker said:
before people get too judgemental here, he worked very hard to earn every penny, and he gave more than most to charities. Beyond that, he had a right to spend his hard earned money as lavishly as he wanted to.
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This so much. And with the ridiculous scrutiny and stress that he was probably under, a little retail therapy makes sense. To me anyway 🤭.
 
It was a combination of excessive shopping sprees, trips around the world (not counting tours) and not paying legal fees in time. I’m not saying he was a bad person but he needed help with saving and spending his money more wisely. Maybe as far as spending money frivolously, he didn’t look into the future and consider the consequences carefully. He simply needed someone - maybe a close colleague or financial advisor - to help him curb his spending addiction.
 
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