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Michael's debts in the 90's

mack77

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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 between $400 million and $500 million in debt."

In 1995, he received a cash injection of $95 million when he merged ATV with Sony, according to Billboard, https://www.billboard.com/music/music-news/michael-jackson-died-deeply-in-debt-268276/

yet in 2001, he took out a whopping 200 million dollar loan from Bank of America ?

What happened?

I think it was a mixture of:
Neverland expenses
The $ 23 million 1994 settlement (I have seen no proof it was insurance)
The HIStory tour not generating profits
The Ghosts film not generating much money
Random jewellery/ painting expenses


Has anyone seen a detailed article giving an explanation, or accounting documents?

Surely MJ could see his debts were getting out of control ?
 
mack77 said:
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 between $400 million and $500 million in debt."

In 1995, he received a cash injection of $95 million when he merged ATV with Sony, according to Billboard, https://www.billboard.com/music/music-news/michael-jackson-died-deeply-in-debt-268276/

yet in 2001, he took out a whopping 200 million dollar loan from Bank of America ?

What happened?

I think it was a mixture of:
Neverland expenses
The $ 23 million 1994 settlement (I have seen no proof it was insurance)
The HIStory tour not generating profits
The Ghosts film not generating much money
Random jewellery/ painting expenses


Has anyone seen a detailed article giving an explanation, or accounting documents?

Surely MJ could see his debts were getting out of control ?
Click to expand...
I think the main reason, was that Michael liked to spend a lot of money, but he never really though that his money could just go away... I guess, he considered his budget as infinite pod... He literally buy everything he wanted, no matter how expensive it was.... he could just buy a banner for a lot of millions, just for fun, and then throw it away or leave in the hotel... That was one of the biggest MJ problems... Also let's not forget that he spent a lot of millions on: charity, his workers, surgeries and courts of course... I still can't believe that he had only 500 million in debt, he spent much much more
 
According to the LA Times, as "early as 1993, Jackson owed $30 million, a figure that grew to $140 million by 1998"

www.latimes.com

Michael Jackson trial: Pop star was 'tapped out,' millions in debt

Michael Jackson trial: Pop star was 'tapped out,' millions in debt
www.latimes.com www.latimes.com

How did it go from 30 million to 140 million in the space of 5 years ??? Especially when he supposedly had a 95 million cash injection from the catalogue merger in 1995. Something doesn't add up...
 
mack77: my recollection is that the catalogue (Sony / ATV Music Publishing), set up in 1995 together with Sony, was the main reason for the increase in MJ's debts.
I understand that the deal with Sony was that they shared the cost of each acquisition - i.e. MJ had to finance the 50% value of the acquired catalogue up front. And since Sony / ATV's growth strategy was primarily based on acquisitions, that's why he took the first loan of $70 million using its own catalogue as collateral in 1997, and then another $140 million in 1999.
These acquisitions accelerated significantly in the 2000s, leading to further loans.

Of course, he may have used the loans to cover other expenses (HIStory tour's lost revenue, music videos, living expenses, etc.). Also, what I understand MJ had more of a problem with, was that his annual income of $10-25 million from Sony / ATV was not primarily used to pay off these loans for a long period of time, but to cover his living expenses (with no other active income). And this led to his loans ramping up significantly and the multiple re-organisation of his debts.
 
^^ What your saying makes sense. If you have a link to an article about it, that would be appreciated
 
Brad Sundberg tells a lot about this in his Neverland seminars. Neverland had over 100 employees, a huge (and I really mean HUGE) electricity bill, and Michael kept spending on improvements.

One story stood out to me:
Neverland had it’s own fire brigade. That brigade would also jump to the rescue if there was a fire outside of Neverland. Brad Sundberg told that happened frequently. In those cases, Michael could have send an invoice to the local authorities, which they would have paid. But he didn’t, because he thought it was something neigbours should do for eachother. Which is beautiful, but it didn’t help him.
 
Piek said:
Brad Sundberg tells a lot about this in his Neverland seminars. Neverland had over 100 employees, a huge (and I really mean HUGE) electricity bill, and Michael kept spending on improvements.

One story stood out to me:
Neverland had it’s own fire brigade. That brigade would also jump to the rescue if there was a fire outside of Neverland. Brad Sundberg told that happened frequently. In those cases, Michael could have send an invoice to the local authorities, which they would have paid. But he didn’t, because he thought it was something neigbours should do for eachother. Which is beautiful, but it didn’t help him.
Click to expand...
Prince told in a recently interview that his dad had a payroll from 2 million per month to cover the cost from Neverland.
 
Piek said:
One story stood out to me:
Neverland had it’s own fire brigade. That brigade would also jump to the rescue if there was a fire outside of Neverland. Brad Sundberg told that happened frequently. In those cases, Michael could have send an invoice to the local authorities, which they would have paid. But he didn’t, because he thought it was something neigbours should do for eachother. Which is beautiful, but it didn’t help him.
Click to expand...
That‘s what you get for being polite
 
This is the first I'm hearing about the history tour not making profit. Wasnt it his biggest selling/highest attended?

I think it just came down to Neverland expenses/excessive spending + charity. Lawsuits didnt help either.
 
Robbsaber01 said:
This is the first I'm hearing about the history tour not making profit. Wasnt it his biggest selling/highest attended?

I think it just came down to Neverland expenses/excessive spending + charity. Lawsuits didnt help either.
Click to expand...

I've seen multiple sources that the HIStory tour just broke even, while another source that it was a loss...

Neverland expenses were part of the issue, but those don't explain how his debt went from 30 million in 1993 to 140 Million by 1998. LeslieMJ's explanation of taking out loans to fund his joint catalogue acquisitions makes the most sense, I wish their was more detail
 
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mack77 said:
^^ What your saying makes sense. If you have a link to an article about it, that would be appreciated
Click to expand...
Unfortunately, I don't have time to look up the articles from that time. But you can search for the loan details in online databases as well (I think they are called USC records).

Neverland's operating costs were more like $1M per month in the 2000s according to some legal documents - so that alone didn't justify hundreds of millions of dollars in debts.
 
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