It seems implausible that an artist who sold more than 100m albums during his career could be broke, but Michael Jackson is said to have died owing anything up to $500m (£302m).

With the huge global success of Thriller and the follow up album Bad, Jackson became one of the most bankable stars of the 1980s, giving him the leverage to earn unusually large royalties from the sale of each disc.

He became known for increasingly lavish spending and bought the sprawling Neverland ranch in Santa Barbara for $14.6m in 1988, including a funfair and zoo. In one of his shrewdest business moves, at the peak of his fame in 1985, Jackson paid $47.5m for ATV Music, which owned the copyright to songs written by the Beatles’ John Lennon and Paul McCartney, outbidding McCartney himself. Owning the songs earned him a steady stream of royalties every time one of the songs was either played on the radio or performed.

But the turning point appeared to come in 1993, when he faced a civil lawsuit brought by the parents of the 13-year-old boy Jordy Chandler. Jackson, who paid $22m to settle the case, became ever more reclusive and his financial situation apparently spiralled out of control. A recent press report suggested that Jackson may have burnt through $1bn in the past 20 years. No one knows for sure what he spent his fortune on but there was a clue in Martin Bashir’s 2003 documentary, in which the singer splashed out $6m in a single store on a shopping trip.

The financial strain began to show in the mid-1990s when he agreed to merge ATV with Sony’s library of songs.

Cash crisis

But still his finances worsened. In recent years, he became mired in lawsuits filed by creditors, including the lawyers who had defended the singer in another child molestation trial in 2005. During that trial, which ended in an acquittal, details of Jackson’s finances were trawled over. One accountant testified that he had an “ongoing cash crisis” and was spending $20m to $30m a year more than he earned. Prosecutors said he had a “billionaire spending habit for only a millionaire’s spending budget”.

Earlier this month, the organisers of a proposed Jackson 5 reunion concert filed a $40m claim against the singer. The New Jersey-based promoter AllGood Entertainment claimed breach of contract and fraud, demanding $20m in compensatory damages and another $20m in punitive damages, claiming that Jackson had promised not to perform solo ahead of a show scheduled for next year. Other suits in recent years were lodged by Union Finance & Investment Corporation, which sought $12m in unpaid fees, and a $7m claim from the sheikh Abdulla bin Hamad Al Khalifa, the second son of the king of Bahrain who claimed he had given the singer millions of dollars to produce an album, a stage musical and write an autobiography, none of which appeared.

In 2001, Jackson had used his half of ATV to secure a $200m loan from Bank of America and in 2006 was forced to refinance the loan to stave off bankruptcy.

In March last year, Jackson faced foreclosure on Neverland although a real estate investment firm came to his aid, setting up a joint venture with him to take ownership of the ranch. In April he called a halt to a public auction of his belongings including jewel-encrusted concert tickets, stage-wear and music memorabilia.

Jackson was said to have still been making an annual income of $19m. But the singer had not released any new material since the album Invincible in 2001, which had not been a success, and had not performed live for over a decade and there were hopes that the comeback tour might solve his financial crisis for good. It was estimated that he could have made up to $500m if he had taken the show around the world.

Ultimately though he has left another financial mess at AEG, the owner of the O2 arena, formerly known as the Millennium Dome. According to Billboard magazine, more than $85m worth of tickets have been sold and AEG has already spent $30m on the production.

Reports are also suggesting that the firm was only insured for the first 10 nights of the residence, as insurers were wary of the singer being fit enough to play all 50 nights, leaving AEG with an potential insurance liability of up to £300m.

https://www.theguardian.com/business/2009/jun/26/michael-jackson-finances-lost-fortune