The long and winding road of Michael Jackson, from King of Pop to strange recluse with cash troubles, has led to a deal that will help avert his bankruptcy in exchange for a slice of music history — his share in the Beatles’ catalogue.
Under a deal due to be completed last night, Jackson would offer Sony the option to buy half of his 50% share in the Sony/ATV Music catalogue, allowing him a way out of insolvency, and ensuring that the catalogue of hits from Bob Dylan and other stars, as well as the Beatles, remains intact.
The deal would allow Sony to increase its own stake in the ATV catalogue from half to 75% at any point over the next three years. In return, Jackson would be able to fend off foreclosure from the New York investment company Fortress Investment Group, on debts understood to be worth $270-million. The foreclosure move would have pushed Jackson — once one of the wealthiest musicians — into declaring bankruptcy.
Jackson has owned his stake of the catalogue since the 1980s, a decade that brought him multiple Grammys with his Thriller album, and vast wealth through a sponsorship deal with Pepsi. He paid $47,5-million for his 50% stake in the collection; today, the catalogue is valued at $1-billion and generates revenue for Sony every time one of its songs is played on the radio.
The deal, coming nearly a year after Jackson was acquitted of child molestation, could open a new page in the life of a man who is remembered more for his bizarre antics than for his music. Since relocating to Bahrain Jackson has faced rising expenses and little prospect of earnings with no new album or tour due. Sources say Jackson was determined at all costs to avoid being forced into bankruptcy.
Sony was also keen to avoid bankruptcy as it would have seen half of the valuable catalogue — owned 50/50 — put up for auction, and a collection of hits that included 251 Beatles songs and Dylan tunes scattered to the winds.
Executives of Sony are understood to have negotiated a refinancing with the Citigroup bank before Fortress, known as a ”vulture” fund because of its interest in difficult debts, agreed to refinance the terms of its own loan to Jackson. This means that Jackson is paying a far lower interest rate, estimated at 6%, than the previous rate, reportedly 20%.
One financier close to the talks said the situation had become desperate because few blue-chip financial organisations were willing to do business with the exiled singer. ”Frankly he had no credibility with the financial markets.”
Jackson’s long list of advisers also raised eyebrows, with one person close to the situation saying: ”This cast of characters around him — they were like something out of a movie.”
Under the deal Jackson can use the proceeds of Sony’s purchase to pay off his debts. Sony would not be liable for his debts if he were declared bankrupt.
Sony executives are understood to be happy about the deal. The group has other calls on its limited cash resources, such as the development of its PlayStation games machines and the possible need to buy the remainder of the Sony BMG joint-venture. However, the group is understood to be confident it can buy the Beatles’ catalogue, via its own resources or from existing bank facilities. While the deal keeps the Beatles’ catalogue intact, and staves off bankruptcy for Jackson, it is a sorry episode for a man who has spent nearly his entire life on the public stage.
Last month the singer was forced to close the gates of his fabled Neverland estate, in the United States, entrusting his menagerie of animals to the care of a local veterinarian and settling a wages bill for $300 000 that had gone unpaid since December. The 1 052ha estate had become a monument to Jackson’s life of excess, and also his trajectory from eccentricity to more disturbing behaviour.
After his acquittal Jackson went to Bahrain. Aside from occasional sightings of him clad in a burqa-like garment, the star has now largely removed himself from public view.
Where it all went
- Jackson bought Neverland ranch for $26-million in 1988. Staff budget was $2-million a year; the zoo, movie theatre, fairground and miniature train cost $3-million a year
- In infamous 2003 Martin Bashir documentary, Jackson visited Las Vegas and spent $6-million on shopping
- Last year shopped at Harrods, spending £85 000 on two watches
- Thought to have spent $25,5-million in out-of-court settlements, with families accusing him of child abuse – Guardian Unlimited Â