When Michael Jackson died unexpectedly last Thursday at age 50, he left behind a tangled web of financial issues that may reverberate for months. His 50 scheduled shows at London’s O2 Arena next month might have grossed a potential $70 million, and would have gone a long way towards staving off the massive debts he owed on his Neverland Ranch and a multitude of legal payments, including his $25 million out-of-court settlement after child-molestation allegations in 1993.
“He’d been through all these trials and tribulations and wouldn’t have been attempting this comeback if his health wasn’t good both mentally and physically,” says John Scher, a New York promoter who put on three Jackson shows in 1984. “When someone’s ill and weak, usually they don’t try to do something beyond what they think their capabilities are. He took on an absolutely monstrous undertaking — 50 shows, and they were talking about a worldwide tour, on and on and on. My assumption was the trials were over with, and he was in a good space.”
Instead, Jackson’s death means the 750,000 fans who bought tickets beginning at $81 apiece for the sold-out shows must receive refunds, and the promoter, AEG Live, will have to battle with insurance carriers over the liabilities. It’s unclear what type of insurance the shows carried, if any, although AEG’s chief executive, Randy Phillips, told Rolling Stone earlier this year that Jackson passed a five-hour physical exam mandated by insurance carriers “with flying colors.” Phillips didn’t return calls after Jackson’s death, but Billboard magazine estimated AEG has already spent $10 million in payments to the performer and $20 million on an elaborate stage production — and the promoter will have to pay its own costs if a pending autopsy report shows Jackson died of a drug overdose or pre-existing conditions. This weekend, an attorney for Jackson’s personal physician said AEG owes Dr. Murray $300,000, as well.
Also unclear is the state of Jackson’s debts. He owns a 50 percent stake in Sony ATV Music Publishing, which takes in $300 million to $500 million a year from Beatles, Bob Dylan, Eminem others’ songwriting royalties. Jackson had borrowed hundreds of millions of dollars against this investment, which he owned for more than 20 years, The Wall Street Journal reported earlier this year. Up to his death, he continued to lead a relatively lavish lifestyle, renting a property for a reported $100,000 a month in Los Angeles. Until any kind of will becomes public, it’s too early to tell whether Jackson’s three children will inherit his estate — or his debts.
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“We’re just waiting for the coroner report. We’re looking at everything and we will not have anything for this in the next few days,” says Dr. Tohme Tohme, Jackson’s manager until recently and an associate for Colony Capital, the Los Angeles private equity firm that primarily deals with real estate and questionable loans. “What can I tell you, we’re devastated. We didn’t have an indication that something was wrong.”
Last week, a number of concert-business sources expressed optimism that Jackson would pull off a comeback with his O2 shows. “He looked fine,” says Ron Weisner, a Jackson co-manager during the early Thriller days, who happened to catch one of the singer’s O2 rehearsals three weeks ago at a Burbank, California, studio. “It was important for him to get out there and giving people a great show and giving people an opportunity who had never had a chance to see him to experience him again. He was totally into this and working hard to make this happen.”