Michael Jackson, Inc.

by Zack O'Malley Greenburg

  “The fantastic range of emotions that he showed would not be atypical for a bipolar person,” the lawyer recalls. “And if you’re bipolar, sometimes you’re manic and sometimes you’re depressed. . . . I’m not a psychiatrist, I’m just a lawyer who deals with people. The problem is that the same mania that fuels the well-known buying cycle of manic-depressives also affects their [ability] to make good decisions about other things. And those other things may very well be business matters.”22

  For many great artists, the lines separating brilliance, insanity, and addiction are blurry. And though Jackson’s mind may have been clouded during the deposition by cognitive issues—perhaps innate, perhaps drug-induced, perhaps both—that didn’t stop David from seeing to the core of the man on the other side of the table from him.

  “He was not a foolish man,” he recalls. “People try to picture him as being childlike. It doesn’t work with the guy I spoke to when I was deposing him.”

  By this point, Jackson could ill afford another big settlement. Though his career earnings had surpassed $1 billion and his net worth stood at $236 million, almost the entire sum was locked up in a handful of illiquid investments. According to a report prepared by the accounting firm Thompson, Cobb, Bazilio & Associates, Jackson’s assets had a gross value of $567 million—led by his Sony/ATV stake ($390.6 million), Neverland ($33 million), and a collection of cars and antiques ($20 million)—but he had debts of $331 million. His cash reserves: just $668,215.23

  Burkle had tried to suggest ways for Jackson to dig himself out. “ ‘You have an option to make $100 million a year whenever you want,’ ” he explained. “[Michael] goes, ‘I don’t want to work, don’t make me work.’ I go, ‘I’m not making you work. I’m just telling you there’s only three things in life for you: don’t spend so much money, sell things that I don’t think you should sell, or go to work. You just have to pick one of the three.’ He’d recoil at the thought of going to work, it just horrified him.”24

  To further complicate matters, Jackson had grown increasingly suspicious of everyone around him and believed that Sony—perhaps working secretly with people close to him—was trying to do more than just drive him into bankruptcy in hopes of winning full control of his catalogue. The last time Lisa Marie Presley spoke to her ex-husband was in 2005, and he revealed his deepest fear.

  “He felt that someone was going to try and kill him to get ahold of his catalogue and his estate,” she told Oprah Winfrey. “And I really didn’t know what to do with that.”25

  Jackson’s concerns may have been exacerbated by deteriorating relationships with his Bahraini business partners, who insisted upon being involved in every aspect of his life. Hip-hop legend Nas remembers calling Jackson around this time; when the singer picked up, there seemed to be someone else on the line with them.

  “We just talked about having respect for each other’s careers,” Nas recalls. “I thought it was strange that there was an Arabic guy on the phone, ’cause anytime Mike needed to make reference to something he had going on, the guy would chime in. . . . I just thought, ‘Wow, when you become that famous, when it becomes like that, it just seems scary, man. It made me concerned for him.’ ”26

  In the summer of 2006, Jackson abruptly abandoned Bahrain—and his royal partner’s plans for a record company—after signing a contract promising the prince half of everything he created going forward. When Jackson’s erstwhile business partner later sued, the singer claimed he had no idea that was part of the deal but subsequently settled for $5 million.27

  “The more money and the more power you have, the less likely you are to be smart,” says Burkle. “Because fewer people are telling you when you’re wrong. I think he would have benefitted from more people telling him he was wrong.”28

  * * *

  If you take a map of Ireland and push a thumbtack into the island’s geographical center, you’ll likely puncture a spot somewhere near Rosemount, a village in the lowlands about two hours west of Dublin by car. That’s where Michael Jackson and his children went after leaving Bahrain.

  With a population in the hundreds, the town has room for only the essentials—gas station, church, pub. Outsiders rarely visit the lushly forested hamlet, which visitors learn from the looks they get when they walk into the Stile Bar. But if they pull up a stool, pretend to watch the television show It’s an Irish Thing (think I Love the 90s, but for Ireland), get a pint of Guinness from bartender Tom Martin, and ask a few questions, they might be surprised to hear what the locals have to say about the King of Pop.

  For half a year, he stayed at Grouse Lodge, a rural retreat with its own recording studio located about a mile up the road. He joined a long list of musicians who’d laid down tracks there, from R.E.M. to Snow Patrol, and for a moment, it seemed he’d found a place where he could live anonymously.

  “He was literally near gone by the time we found out [he was here],” says Jackie Martin, Tom’s wife.29

  “He just stayed in the house,” adds the bartender. “But the guy who drove him around in the minibus said he couldn’t believe the hype about him. He found him a very genuine guy. Down to earth.”30

  That seemed to be the general perception of Jackson in Rosemount, and it came as something of a shock to the townspeople given what they’d heard about him previously.

  “The media for years have been telling us that he was bleaching his skin, and he was doing this and that,” says Jackie. “You’re expecting somebody who was totally mental. But all he wanted was some peace and quiet to record his music.”

  Though it seemed Jackson had finally found the serenity he’d been seeking for years, his wanderlust took hold once again. Toward the end of 2006, he and his family left Ireland, eventually landing in a place that couldn’t be more different from Rosemount: Las Vegas.

  Chapter 16

  * * *

  THIS IS IT

  In the fall of 2007, billionaire Tom Barrack received a call and an unusual request: would he be interested in coming to Las Vegas to have a meeting with Michael Jackson?

  Barrack politely declined. The middle-aged, polo-playing, shiny-bald-headed founder of real estate investment firm Colony Capital—which manages $35 billion in assets around the world—was a great fan of the singer and owned a ranch near Neverland. But he didn’t want to get wrapped up in the affairs of a music star.

  “It’s not my business,” said Barrack. “I know nothing about it.”1

  “Well, he’s got financial difficulties and he really just needs somebody impartial to talk to.”

  The voice on the other end of the line belonged to Jackson’s latest business advisor, Dr. Tohme Tohme. Like many of the figures who materialized during Jackson’s later years, he’s still surrounded by a fair bit of mystery (nobody seems to know where he earned his doctorate, if at all, and he didn’t reply to an email inquiry pressing the issue). Barrack describes him as “a business guy around town” who “would bring us transactions to look at.” Initially, this one didn’t entice Barrack.

  “I’m not interested,” he said.

  A month later the billionaire traveled to Las Vegas on unrelated business. Jackson had relocated to the area with vague plans to launch a lucrative comeback residency on the Strip, but after a year, nothing had materialized.

  Tohme heard Barrack was in town and called again.

  “Can I come over and pick you up?” he asked. “I want to take you to see Michael. Just spend fifteen minutes with him and listen to what he has to say. He’s up against a wall. He’s in foreclosure on Neverland and he needs a financial surgeon to understand what his options are.”2

  Barrack paused. He still had misgivings, but Tohme’s persistence had piqued his interest.

  “Fine.”

  * * *

  Jackson was living on a dusty residential street called Palomino Lane, a few miles beyond the glittering lights of the Strip, in an older part of Las Vegas. The house where he was staying wasn’t quite Neverland, but some of its fea
tures were indeed fit for a king. Situated on a lot two or three times the size of the adjacent properties, it boasted a picturesque terra cotta roof, a turret topped by a blue-tiled dome, and tall security fence.3

  When Tohme and Barrack arrived, the King of Pop himself met them at the front door. “Thank you so much for coming,” he said. “Thank you, thank you, thank you!”4

  They walked into his living room, remarkable only in the sense that it was utterly unremarkable in size and style. The noteworthy features were on the coffee table: two sets of financial documents—one for Neverland, one for Sony/ATV—each about the size of a phone book. Jackson’s kids were playing nearby, and one of them asked him to make a peanut butter and jelly sandwich; he obliged. Then he moved on to business.

  “I don’t understand what’s happening,” he told Barrack. “All of a sudden I got to this place where they’re saying Neverland will be foreclosed on Friday.”

  It was Monday. Jackson went on for about an hour and fifteen minutes, explaining his financial situation as best he could. As Barrack listened, he remembers “drinking the Kool-Aid.” He was amazed by Jackson’s “brilliant, unbelievable mind.” The singer seemed completely lucid; there was no indication of drug use—though, as Barrack recalls, “everybody knew that he had a big pharmaceutical drug issue.” Even so, the billionaire was hooked, and he decided to try and help Jackson.

  “Let me take this stuff,” he said. “I’ll take a look at it and I’ll get back to you in a day with just a point of view.”

  Barrack took the documents detailing Jackson’s Neverland loans and his relationship with Sony/ATV back to his office in California. Along with his finance team, he began combing through the pages.

  “It was an absolute nightmare,” he recalls. “The long and the short of it is, for all sorts of reasons, MJ hadn’t worked for over a decade. His income was primarily based on the Mijac portfolio—his own catalogue—and the Sony/ATV portfolio, which had been refinanced about three or four times.”5

  All in all, there was about $12 million more going out per year than there was coming in. Jackson hadn’t toured since 1997, and his image and likeness earnings had dwindled to less than $100,000 per year.6 He’d been able to live with the imbalance thanks to loans he’d taken out, largely against his Sony/ATV stake; by the end of 2007, the latter was thought to have a gross value of about $500 million. At that point, though, his total debts were approaching half a billion dollars, and there wasn’t much left to mortgage. That was partly due to the relationships Jackson had with his advisors. Says Barrack: “Anyone that told Michael something he didn’t want to hear, Michael got rid of.”

  To make matters worse, he kept spending money—$6 million on a single antiques shopping spree at the shops at Las Vegas’ Venetian Hotel, for example.7 And every time he took a loan out against his Sony/ATV stake, he needed Sony to guarantee it. In exchange, Barrack explains, the company would take a slightly larger interest in the residual payouts from the catalogue.

  “Sony was doing a very good job of running the portfolio,” says Barrack. “They were also accommodating Michael by letting him borrow money out of the portfolio. But at every instance that they did, they tightened the noose a bit. Not in a mean way, but in a normal business way.”8

  By the time Barrack arrived on the scene, the private equity fund Fortress held the $23 million note on Neverland. The property had already gone through the complete foreclosure process, paving the way for it to go on sale the Friday after Barrack first met with Jackson. Two days before that was set to happen, the pair spoke again.

  “Here are the financial pieces,” Barrack began. “You’re spending $25 million a year . . . you’re making $13 million. And that’s getting worse because you have a due date on your Sony/ATV loan. Not only are you going to lose Neverland, but you’re going to lose your catalogue. We can reshuffle some of these pieces, but at the end of the line, you’re going to have to find a way to create some revenue . . . are you willing to start down that line?”

  “Yeah,” said Jackson. “I am.”

  The singer mentioned a few ideas to Barrack, speaking of 3-D films and holograms. Barrack countered by suggesting that Jackson consider trying to reestablish himself as a live performer, which could lead to a comeback tour. The Rolling Stones had just broken the record for gross ticket sales, pulling in over half a billion dollars for their 144-date excursion. Jackson could lift himself out of his financial mess with a tour less than half that size, and he could start even smaller.

  “Even if it’s you making an appearance on a late-night show and singing a song,” said Barrack. “Even if it’s you doing one two-day appearance at a Vegas show. Something that shows you’re still Michael Jackson, that you still have the capability, that you’re still coming back. And that will create an income stream that you can build.”

  Then Barrack presented the alternative.

  “If you don’t want to do that, if that’s not where you’re going, I have the names of five bankruptcy lawyers,” he said. “And I suggest you get ahold of them as fast as you can, because that’s where you’re going.”

  According to Barrack, Jackson wasn’t shocked by the assessment. He knew his finances had gotten out of control, and though he had an excellent grasp of the value of his assets and brand, the complex web of loans in which he’d become ensnared was beyond his expertise. (Says Barrack: “MJ realizing the value in the Beatles’ catalogue is MJ’s brilliance. MJ understanding a very complicated financing and distribution structure is quite another thing.”)

  But to Barrack, it seemed—as it had to fellow billionaire Ron Burkle—that Jackson genuinely wanted to get his financial life back in order. This time, however, he was willing to perform again.

  “I think I can get there,” Jackson told Barrack. “But it takes some time, and if I do it, I want to do it the right way.”

  “If you’re interested in doing this, if you will promise me you’ll work towards figuring it out, I will go buy the note from Fortress,” the billionaire replied. “And that’ll buy us some time to figure out a plan. But don’t have me do this . . . unless you’re really interested in building a program going forward to create some revenue for yourself.”

  “I’ll do it,” said Jackson. “I’ll do it. Will you help me do it? Will you help me think through it? I need someone who’s not invested.”

  Barrack agreed and bought the note from Fortress, with Jackson retaining partial ownership of Neverland. During the first half of 2008, they forged a partnership that called for Colony to manage the property, increasing its equity with every dollar spent. If Neverland was ever sold, the firm would get back the amount invested, plus a preferred return. (The long-term plan was to hold on to the ranch and possibly turn it into a school for the performing arts.)

  The next step was to set up Jackson’s comeback tour. Barrack put in a call to fellow billionaire Philip Anschutz, the owner of Anschutz Entertainment Group; he recommended that Jackson talk to Randy Phillips, the head of his AEG Live division at the time. That conversation planted the seed that would eventually grow into plans for a string of performances at the O2 Arena in London and offer Jackson a chance to pull himself out of the hole into which he was slipping.

  “Randy [Phillips] called and was very capable, confident, knew Michael and had worked with Michael before,” remembers Barrack. “He said, ‘This is a sensational opportunity for Michael, and I would love the opportunity to try and advise Michael and create a platform for him.’ And that’s how it all started.”

  * * *

  While the wheels of Jackson’s London shows slowly spun into motion, the singer kept his ears to the charts and his eyes on collaborating with some of the biggest names in the music business.

  50 Cent remembers the King of Pop calling to tell him he’d been waking up to the rapper’s “In Da Club” every morning—and wanted to work on a new song together. “He just said, ‘I have a song, I think it’s my new ‘Thriller,’ ” 50 Cent recalls. “[M
ichael] had something that he thought would be interesting if I wrote with him on it. . . . I just didn’t even know it was real when he said that.”9 (The rapper eventually laid a verse on the song, called “Monster,” produced by Teddy Riley and released on the posthumous album Michael.)

  By 2007, the trail blazed by Jackson’s ill-fated clothing and footwear ventures was becoming crowded with entertainer-entrepreneurs—and this time, they were succeeding. Diddy’s Sean John line was generating hundreds of millions of dollars in annual sales, and Jay Z’s Rocawear became so successful that licensing giant Iconix bought the brand for $204 million.10

  Around the same time, 50 Cent launched his G-Unit Clothing line, which racked up sales of $55 million in its first year. For his efforts, he earned an 8 percent royalty11—and gobs of praise from the financial press.12 50 Cent had been aware of Jackson’s foray into the clothing world. He just didn’t think of himself as being on a high enough level, at least initially, to do something similar. “He was so big in my mind that it was like, ‘Fool, you ain’t Michael Jackson!’ ” the rapper explains.13

  The King of Pop also sat down with R&B singer-songwriter Ne-Yo, who has penned hits for Beyoncé, Rihanna, and Céline Dion, to create some new songs. “I learned a lot through the whole process,” says Ne-Yo. “Mainly that simplicity is one of the most difficult things for an artist. And if you don’t master simplicity, it’s pretty much not gonna work. Every song I’d submit to him, he’d always go, ‘I like where you’re going, but it could be a little simpler, it’s a little too thought-out. Music is supposed to just roll, it’s not supposed to be forced.’ ”14

  Jackson nearly collaborated with beatmaker Pharrell Williams, too. “The one time I did take a real shot at it, he didn’t like it,” says Williams, who has crafted tracks for artists from Jay Z to Gloria Estefan. “I was so happy that Michael Jackson [knew my name] . . . I never took it in a negative way. I was like, ‘Okay, I gotta get better, I gotta get to the top of my game.’ ”15