Missteps of the rich and famous don't always end up on TMZ.
Celebrities have a long history of entrepreneurial ventures. But for every Newman's Own or Honest Co., there are several that have failed to take off. And while the failure rate doesn't seem to be higher than the national average for start-ups, because of the high-profile nature of the founders, the misses always seem a bit more notable. Call it a financial form of schadenfreude.
Sometimes, though, there's no getting around it: A celebrity-founded business doesn't just fail, it flames out in spectacular fashion. Here's a look at 10 whose problems were too grandiose to fly under the radar.
—By Chris Morris, special to CNBC.com
Posted 19 June 2015
When the Red Sox pitching great announced he was forming a video game company, it threw a lot of people for a curve. When he trumpeted that he was sinking $30 million of his own cash into the firm, it knocked them flat. To his credit, Schilling wasn't trying to make a fast buck. He is a big gaming fan who wanted to improve the industry.
The company's first title—"Kingdoms of Amalur: Reckoning"—was a moderate success. But in 2012 the company missed a loan payment to the state of Rhode Island, ultimately leaving taxpayers on the hook for a $75 million loan guarantee the state had made to 38 Studios. It then said it didn't have enough money to cover its payroll, laying off all employees in May 2012. Rhode Island has sued Schilling and several others associated with the company, alleging fraud and negligence. The suit is currently in mediation.
Schilling spokeswoman Katie Leighton said he was unable to comment due to pending litigation.
McMahon may have turned the WWE into a global powerhouse, but his efforts to pile-drive the NFL didn't quite go according to plan. In 2000, McMahon (whose wrestling empire was then known as the World Wrestling Federation) announced the XFL—a professional American football league that was co-owned by NBC. It was designed to air in the spring and summer, when the NFL is in hibernation.
NBC aired the games but pulled the plug after just one season. It turns out no one thinks of football as a summer sport—especially when the players had just five weeks to train and the quality of play was below expectations. At the time, the games resulted in some of the lowest ratings in prime-time history.
The WWE declined to comment.
While most other celebrities focus their entrepreneurial efforts on things like restaurants or fashion, Basinger spent $20 million in 1989 to buy the town of Braselton, Georgia (located about 50 miles northeast of Atlanta), hoping to make it into a tourist attraction—complete with film studios and festivals.
Basinger ran into some financial problems soon after, though (after backing out of the film "Boxing Helena")—and was never able to finance the business. Five years later she sold the town for just $1 million, a decision she may regret today. When Basinger bought Braselton, the population was just 500 people. Today, thanks to Atlanta's continuing sprawl, more than 7,500 people live there.
Basinger spokeswoman Annette Wolf declined to comment.
Along with his DreamWorks partner Jeffrey Katzenberg, the famed director tried his hand at a theme restaurant in Los Angeles and Las Vegas in 1994. Shaped like a submarine (with a giant replica of one outside to lure customers), diners could 'dive' into the waters every half hour as red lights flashed in the dining room. It had the shtick it needed to capture people's attention once, but repeat business was a problem. After a huge initial opening (with waiting lists that were hours long), the novelty wore off and, five years later, the venture ... well, sank.
Publicist Marvin Levy said the experience was "interesting for Steven."
It made sense at the time. The Hard Rock Cafe was making a mint on a rock-and-roll-themed restaurant, so some of Hollywood's biggest actors decided to tweak the formula and have it revolve around movies. Instead of gold records, diners could explore props from big films. Stallone, Willis and Schwarzenegger (among others) were the celebrity shareholders, but the draw of their names ultimately just wasn't strong enough.
In 1999 the Planet Hollywood chain filed for bankruptcy protection, and it did so again in 2001. The business is still around—but down to seven locations from 100 worldwide. Although a Las Vegas casino and resort bears its name, that facility is owned by Caesars Entertainment.
Stallone spokeswoman Michelle Bega declined to comment. Representatives for Willis and Schwarzenegger did not return calls.
Would you trust the Kardashians with your finances? Neither would too many others, it seems. The reality-show sisters launched their own prepaid credit card in 2010, but came under fire for the card's outrageously high fees—including monthly fees of $7.95 and a $6 cancellation charge. (Connecticut's attorney general at the time called them "pernicious and predatory" and questioned the legality of the card.)
Only 250 people purchased the card, which was terminated in less than a month, as the sisters hurriedly distanced themselves from it.
Kardashian spokeswoman Ina Treciokas did not provide a comment by press time.
There are plenty of music critics who don't like Spears' music, but the barbs they've used were nothing compared to what restaurant critics had to say about Nyla, a Manhattan restaurant that featured items like Southern sushi and duck and wild mushroom étouffée. (Spears reportedly thought up the idea while sitting in a dentist chair.)
After opening in 2002, an underwhelming menu and health-code violations (albeit minor ones), along with a disinterested public, doomed the restaurant to close just six months after its splashy open.
Britney Spears' manager did not respond to a request for comment.
If the Hard Rock could run a chain around music and Planet Hollywood (at the time) could succeed with movies, surely there would be an audience for a fashion-themed restaurant in the mid-'90s, right?
This collection of supermodels certainly thought so, and fronted the establishment (though brothers Tommaso and Francesco Buti were the primary investors). One supermodel ''partner,'' Christy Turlington, left the business in 1998, according to a New York Times report, while Naomi Campbell, Elle MacPherson and Claudia Schiffer helped market the restaurant but were not official partners or owners.
Diners had a hard time juxtaposing the cases of designer dresses, shoes and accessories with the menu of chicken wings and burgers, though. And the restaurant was out of style—and out of business—by 1998.
A publicist for Naomi Campbell did not respond to a request for comment. Turlington and MacPherson could not be reached.
Well, let me tell you something, brother ... If you're the biggest star of the wrestling world and looking to break into the business world, a restaurant may not be the way to do it. Hogan's 1995 venture had plenty of publicity, thanks to his visibility on World Championship Wrestling at the time. But the restaurant tapped out less than a year after it opened its doors.
Hogan spokeswoman Elizabeth Rosenthal Traub declined to comment.
Rapper and reality TV star William Jonathan Drayton Jr., better known by his stage name Flavor Flav, had a lot working against him when he decided to open a chicken-themed restaurant. There are a number of national chains that are better funded. And choosing Clinton, Iowa, as the location meant he wasn't able to truly capitalize on his fame. The location shut down six months later.
Flav was undeterred and tried opening two subsequent restaurants in Las Vegas and the Detroit suburb of Sterling Heights. Both closed in roughly the same amount of time.
A lawyer for Flavor Flav did not respond to an email request for comment.