ednesday would have been Michael Jackson’s 54th birthday.
The poor black boy from Gary, Ind., who grew up to become the most famous pop star in the history of the world died in 2009, leaving a tremendous void in the hearts of his fans, friends and loved ones.
But what makes Michael Jackson one of the most interesting financial tales of all time is the way he lived and the way he died.
According to numerous sources, even though Jackson made hundreds of millions of dollars during his lifetime, the King of Pop far outspent what he earned, especially later in his life. An article from Newsweek and The Daily Beast found that Jackson was spending up to $20 million a year in borrowed money:
“In recent years Jackson financed these personal debts by borrowing against assets, and by some estimates his total borrowings at his death may have exceeded $400 million.
"And it wasn't all personal spending: according to record-industry executives, Jackson would drop as much as $30 million recording an album over two or three years in his quest for perfection. His videos cost as much as $8 million.”
Estimates suggest that Jackson’s borrowing may have set him back as much as $400 million by the time of his death. While most men in their 50s who spent borrowed money at this rate would be considered fools or declared unfit to manage their own money, Michael apparently knew what he was doing.
Since his death, his estate has brought in well over $400 million in royalties. The whole of his debt has been paid off and his stake in Sony and ATV catalogs, once thought to be in jeopardy because of the singer’s freespending habits, has been renegotiated and continues to earn money.
In addition to paying off all of his debts, Jackson’s estate now pays his mother $70,000 a month for his children’s support, pays the rent on their mansion in Calabasas and pays bills for other expenses, including renovation of their Encino home.
There’s also more money on the horizon. In an interview with the Associated Press, Jackson’s executor, John Branca, detailed some upcoming ventures that will be pouring more money into the Jackson estate including a permanent Jackson-themed variety show on the Las Vegas Strip and the Cirque du Soleil Jackson tribute show, “Immortal: The World Tour.”
“The Lion King” theater at the Mandalay Bay Hotel in Vegas is also being rebuilt to house a still untitled show about Jackson that features his music, which will also be a Cirque du Soleil production. It’s set to open May 23, 2013.
The renegotiation of terms, settlements with record companies and distribution of the money to his family would not have been possible without Jackson’s will (he actually had four of them), his legal trust and other estate planning made before his death.
While his family is in a minor squabble over who will get what, the King of Pop’s loved ones are taken care of and the vultures circling his empire are coming away with nothing.
This is a testament to the fact that Michael followed the ‘P’s of estate planning-proper prior preparation prevents poor performance-even while borrowing and spending money at an alarmingly unsustainable rate during his life.