Music lovers weren't the only ones drawn to the King of Pop. Wooed by his global fame and earning power, a bevy of financial firms ponied up tens of millions to finance the singer's luxe lifestyle and kick-start his troubled career.
Now they're in line with other creditors and business partners awaiting word on the state of Michael Jackson's murky financial empire. Financial firms including Colony Capital, Fortress Investment Group and Barclays Bank poured tens of millions into the singer over the years. The cash allowed Jackson, a notorious binge spender, to maintain a lavish lifestyle befitting a global pop star.
But the potential peril of owning a portfolio tied to an eccentric entertainer became apparent with the singer's surprise death at age 50. It also highlighted Wall Street's fascination with the entertainment industry — a trend that could cool depending upon how much Jackson's creditors manage to recoup from their investments.
"There's always been a nexus between the worlds of celebrity and finance, and it's only grown in recent years," said Ian Peck, president of Art Capital Group, which specializes in making loans to celebrities and rich clients who put up artwork as collateral.
Jackson's lenders seemed to "get a kick out of having a big celebrity as a client" despite his checkered finances and 2005 child molestation trial, Peck said. The pop star also benefited from the same credit boom that ensnared ordinary Americans and led to the financial meltdown.
"Today, I don't think he'd be able to obtain the same kinds of loans," Peck said.
Jackson died June 25 in Los Angeles of what his family said was cardiac arrest. According to financial documents obtained by the Associated Press, he claimed $567.6 million in assets as of March 31, 2007, including his Neverland Ranch and share of the Sony/ATV Music Publishing catalog, which holds the rights to songs by the Beatles, Bob Dylan and other artists.
The documents also show that Jackson had debt of $331 million. Even so, Jackson's singular earning power and worldwide appeal seemed to make him a safe bet to lenders, who sometimes seemed starstruck.
"You are talking about a guy who could make $500 million a year if he puts his mind to it," billionaire investor Thomas Barrack, owner of Colony Capital, told the Los Angeles Times a month before Jackson's death. "There are very few individual artists who are multibillion-dollar businesses. And he is one."
Such faith in Jackson didn't always come cheap.
In March 2008, the singer defaulted on a $23 million loan to Fortress and nearly had to give up Neverland, the 2,500-acre Santa Barbara property he used to secure the loan. Barrack's Colony Capital stepped in at the last minute and agreed to cover the owed amount. Jackson later signed Neverland over to a joint venture between Jackson and an affiliate of Colony Capital. Jackson got $35 million in the deal — money Colony hoped to recover from the eventual refurbishing and sale of Neverland.
Colony was also reportedly involved in plotting Jackson's planned comeback, which included 50 sold-out dates in London to begin this month. The shows, which were being staged by promoter AEG Live, brought in some $85 million in ticket sales, according to Billboard magazine. AEG says it will offer full refunds on the tickets.