I recently got my hands on Michael Jackson’s tax documents and a good ol’ fashioned assets vs. liabilities statement, courtesy of the folks at "EXTRA" who wanted me to assess his personal finances.
I don’t think you’d be surprised to hear just how much debt the King of Pop was in, but it still shocked me to see a man (an industry in and of himself) worth—on paper—over a billion dollars only have around $668,000 in the bank.
Less than a million dollars in cash, while he pulled in over $8 million from Warner Music Group in 2006, another $4 million plus from BMI and millions more income through his other companies and interests. But each year this was all a drop in the bucket as the interest payment on Neverland Ranch alone was $3 million (valued in 2007 at $66 million).
Just to pay his bills, Mr. Jackson had borrowed millions of dollars held in a restricted cash fund. He also owned a $6.6 million dollar property in Encino, CA with a vanilla 30 year mortgage on it.
All in all, his Sony/ATV Music Publishing holdings which include most of the Beatles catalogue was worth around $930 million more than “MJ Trust” which was put at a value of $85 million. Surely MJ Trust has already gone up in value.
But all this paperwork reflected two ways that many Americans found themselves living before the recession: on fantasy equity and cash poor. His billion dollar net worth was after all, only on paper. He needed to borrow to pay the bills.
Shave off several zeros and you’ve got someone who bought too much house, lived too large, drowning in debt. An all too familiar story, now, hopefully a memory.
UPDATE:An earlier posting stated that Michael Jackson's 50 percent stake of the Sony/ATV Music Publishing holdings could be worth as much a $500 million. The correction has been made.
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