Monday, June 29, 2009

Michael Jackson - The Legend and Financial Disaster

He truly was a one of a kind. With the passing of Michael Jackson, we now reflect back on the true extent of his talents. Nobody will deny, he may have been the best entertainer of our generation. He will be remembered right along side Elvis Presley and The Beatles.

His financial affairs were a different story. He couldn't budget and didn't seem to have an interest in doing so. His larger than life lifestyle was out of control and resulted in a tumultuous balance sheet. Last minute loans from hedge funds (allegedly at 16%) averted a foreclosure of his Neverlands mansion in California a few years ago. And, his scheduled comeback tour was an ill fated attempt to get out of debt. He was scheduled to perform 50 shows in London and hoped to net $100m. Unfortunately, he owed somewhere around $500m at the time of his death.

If we go back to financial planning 101, it's pretty simple. Spend less than you're making and you'll be in good shape. He must have missed this class. A basic income statement would have been appropriate. Total expenses were running way ahead of income and changes should have been made.

As for estate planning? This should be interesting. Having three children with two different women, I wonder if Michal Jackson had a will? Who will become the guardian of his children? Only time and legal wranglings will tell.

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