Michael Jackson: Living on the never never

Published on Saturday 1 March 2008 18:37

With £1bn long gone and his ranch set to follow, Dani Garavelli looks at Michael Jackson's spectacular fall from grace

AT THE courthouse in Santa Barbara in California later this month, a most unusual lot is due to go under the hammer. The sprawling 9,300-acre ranch in the Santa Ynez valley may not be to everyone's taste. The full-sized Ferris wheel and zoo will be superfluous to the needs of the average family, even one living so close to Hollywood. But the celebrity status of its current owner, and the notorious place it has carved out for itself in its country's iconography, means a feverish interest in its fate is guaranteed.

After all, the enforced sale of Neverland – the fantasy world Michael Jackson created at the height of his fame – to pay off the $25m he owes on it, is not merely a personal tragedy; it is a symbol of how the American Dream can be distorted and of the potentially destructive power of success.

The fact that the auction (which will take place on March 19, unless Jackson pays off a considerable chunk of his debt) will be held at the same courthouse where he was cleared of child abuse allegations in 2005 adds a symmetry to a downfall that has been a long time in the making.

Twenty years ago, when he shelled out $15m on realising his vision of an idyll for lost boys, Jackson seemed untouchable. His sixth solo album, Thriller, released in 1982, had reaped him eight Grammy awards and was on its way to becoming the best-selling album of all time (104 million copies worldwide), while his seventh, Bad, released in 1987, had two million advance orders and spawned more No 1 hits on the Billboard Hot 100 charts than any other album. Concerts, merchandise and endorsements – including most famously Pepsi – were also swelling his coffers.

As the cheques rolled in, it must have seemed as if he could well afford to splash out on little luxuries, such as chartering planes, buying antiques and paintings, and the odd bit of plastic surgery.

Today, Jackson is a shadow of his former self. His features and image destroyed, he is living back at the Jackson family home in Las Vegas, mired in debt, with creditors constantly snapping at his heels to recoup at least some of what they are owed. The $25m mortgage on Neverland is just the tip of the iceberg. On top of that, he owes Fortress Investments $320m – a loan secured on his only collateral, a 50% stake in the Beatles catalogue.

With a much-heralded comeback at the World Music Awards in London in November 2006 falling flat when he performed for only a few faltering moments, and a mooted 30-date residency at the O2 Arena in Greenwich apparently foundering on the issue of insurance, his financial prospects look grim. So how did this man – said to have earned more than a $1bn in his lifetime – manage to squander a fortune most people could only dream of? And is there any way the fallen star can regain his former glory?

In the early days – when Jackson was part of the Jackson Five – his earnings, though high (the group was promised $350,000 an album when they moved from Motown to CBS), were split with his siblings and controlled by his father. It was only when Jackson's solo career took off that his profligacy became apparent.

Soon he began hiring planes, travelling with an entourage 15 or 20 strong and repeatedly going under the cosmetic surgeon's knife. He bought Neverland and spent millions more turning it into a live-in theme park. As well as the funfair and the zoo, the ranch boasted a toy room with life-sized Star Wars figures. Financial advisers believe the cost of running the ranch reached $5m at its peak.

When it came to self-promotion, too, there were no financial limits. In 1987, Jackson spent $1m getting Martin Scorsese to direct the video for the single 'Bad' and paid Marlon Brando the same to appear at a tribute event in Madison Square Garden.

In addition, he would indulge in unfettered sprees, splashing out on antiques, paintings, cars, toys – anything he fancied – but not so much because he desperately wanted them, but, it seemed, because he could. In the Martin Bashir documentary which led to child abuse charges being brought against him, Jackson is seen in a Las Vegas antiques shop snapping up almost everything he sets eyes on. "I once saw him looking through a magazine and order almost everything he saw," a visitor to Neverland told an American journalist. "I want that motorcycle, that bike, this, that. It was like one of those shows where the contestant has five minutes to run through a store and fill up his shopping cart with as many items as possible."

Jackson's one sound investment was his purchase of the Beatles catalogue for $47.5m in 1984, which he secured by outbidding his friend Sir Paul McCartney. Although a deal with Sony 11 years later means he now owns just 50%, his share is still thought to be worth at least $500m and brings in a steady income in royalties. But even that investment has been undermined by his profligate lifestyle.

Jackson's flamboyant acquisitions – sensible or otherwise – account for only part of the drain on his fortune. He has also forked out tens of millions of pounds on legal bills, including, most famously, his 20m out-of-court settlement with Jordy Chandler, a 13-year-old whose parents accused Jackson of child abuse. Then there was the settlement worth $8m over nine years when he divorced his second wife Debbie Rowe, the mother of two of his three children, Prince Michael and Paris, in 2001.

"I think Michael never had any concept of fiscal responsibility or logical fiscal responsibility. He was an individual who had been indulged by those who represented him or worked for him all of his life," former financial adviser Alvin Malnick recently told the New York Times. "There was no planning in terms of allocations of how much he should spend. For Michael it was whatever he wanted at the time he wanted it."

As his behaviour became increasingly erratic, the 'Wacko Jacko' headlines intensified and his trajectory began to dip, Jackson carried on spending. Foreign trips, luxury cars and art works were still very much on his agenda and when he couldn't afford to pay for them, he simply borrowed from others.

With his earning power severely diminished – last album Invincible reached Number One in 13 countries, but only sold eight million copies worldwide – he began to rack up debts. Over the space of a few years, his loan from the Bank of America grew from $25m to $50 to $300m – with monthly repayments reaching a peak of $4.5m. Finally, he transferred his debt to Fortress Investments last year.

Even then the spending didn't end. When dangling his third child Prince Michael II or Blanket (born to an anonymous surrogate) over a balcony in Berlin, and then the Living With Michael Jackson documentary, in which he admitted sharing his bed with children, put his reputation in jeopardy, he made two rebuttal documentaries.

The Michael Jackson Interview: The Footage You Were Never Meant to See featured Elizabeth Taylor defending her old friend. As a reward, Jackson bought the actress a 600,000 piece of jewellery – a bad investment as it didn't stop him being charged with sexually abusing teenager Gavin Arvizo. When he was cleared in 2005, the verdict was greeted with a typically extravagant gesture – the release of 10 doves into the skies above the courthouse. An innocent man, Jackson hoped to launch a comeback, but his reputation had been tarnished and his mental health was still fragile.

He moved to Bahrain, where he claimed to be writing new songs and producing an all-star charity single, called I Have This Dream, to help raise funds for victims of Hurricane Katrina. But there is no sign of this project nearing fruition and no sign of a new album. He has only appeared in public a handful of times since 2005.

Shortly after his humiliating performance at the World Music Awards, he received eight awards at the Guinness World Records office in London. The following month, he paid tribute to James Brown at his funeral. In February, Jackson released a 25th anniversary edition of his top-selling album Thriller, which sold 166,000 copies in its first week in the States.

But with recent pictures in a Las Vegas bookstore showing his face covered in what look like post-it notes and some reports suggesting his share in the Beatles catalogue is under serious threat, there is little sign that Jackson – who will turn 50 this year – is about to get his life under control, never mind his flagging career.