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| Far from invincible |
| Edward Hadas / Jun 27, 2009, 00:22 IST |
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Michael Jackson: Reckless spending can destroy even the most creative genius. Michael Jackson provides a sad example. The singer’s recording heyday was in the 1980s, when recorded music was still hugely profitable. He was also a shrewd investor. A $47.5 million investment in the Beatles music rights in 1985 was worth about $1 billion when Jackson died, broken and probably close to broke, on Thursday.
Almost everything about Jackson’s musical life – his pioneering music videos, cross-over appeal and commercial endorsements – was highly lucrative. Scandal and lawsuits reduced his income sharply, but Jackson hardly died a pauper. He was pulling in $19 million annually in royalties and investment income at the time of his death, according to the Wall Street Journal.
Still, that wasn’t anywhere near enough to keep up with the interest payments on the $300-500 million of debts run up over decades of extravagant living. Spending so much is an achievement in itself. Assume the lower end of the range and an average interest rate of 8 per cent, and Jackson was $5 million a year short – before paying for food, clothing and security guards.
Jackson might have been able to pay off his debts by selling assets and cutting back sharply on expenses. He was doing some of that, including putting the Neverland ranch up for sale.
But the singer’s principal financial strategy was to try to boost his income. The agreement to do 50 concerts in London was a desperate attempt to make ends meet. The preparation for that gruelling run may be what killed him.
It’s easy to say that “wacko Jacko” was a special case. But many millionaires have spent and borrowed their way to ruin without building private zoos or reported $20 million payouts to settle child abuse allegations.
Indeed, the very rich can find it harder than ordinary, pay-check-earning mortals to admit that their finances are out of control. Jackson just wasted his money in an especially public way. But he was well aware of the corrupting power of lucre: “Money, Money. Lie for it, Spy for it, Kill for it, Die for it.”
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