Star-Struck Wall Street

Daily Herald (Arlington Heights, IL), July 7, 2009 | Go to article overview

Star-Struck Wall Street


Byline: Stevenson Jacobs Associated Press

NEW YORK Music lovers werent 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 singers luxe lifestyle and kick-start his troubled career.

Now theyre in line with other creditors and business partners awaiting word on the state of Michael Jacksons murky financial empire. Financial firms including Colony Capital LLC, Fortress Investment Group and Barclays Bank PLC 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 singers surprise death at the age 50. It also highlighted Wall Streets fascination with the entertainment industry a trend that could cool depending upon how much Jacksons creditors manage to recoup from their investments.

"Theres always been a nexus between the worlds of celebrity and finance, and its 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.

Jacksons 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 dont think hed 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 his 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, Jacksons singular earning power and worldwide appeal seemed to make him a safe bet to lenders, who sometimes seemed star-struck.

"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 Jacksons death. "There are very few individual artists who are multibillion-dollar businesses. And he is one."

Such faith in Jackson didnt 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. Barracks 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 Jacksons 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. …

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