A SURGE in interest in Michael Jackson's music and history is forcing people around him to revise their initial assessment that his assets could be overwhelmed by the debts attached to them, write ANDREW EDGECLIFFE-JOHNSONand HARRIET RYAN
Amazon.com sold as many Jackson albums in the 24 hours after his death as in the previous 11 years, and HMV in Britain says that its music stores have seen an 80-fold jump in sales of his recordings.
The response has overwhelmed sales increases seen after Elvis Presley and John Lennon died, HMV says.
In spite of dying with debts estimated at between $400 million and $500 million, the value of many of Jackson’s other assets has been similarly transformed by his death, according to industry executives, lawyers and former advisers.
They warn, however, that the experience of the estates of other singers indicated that the extent of his future earnings would depend on decisions taken in the coming weeks by his family and business partners.
The future control of Jackson’s estate remains unclear. His mother Katherine Jackson (79) has temporary custody of Michael Jackson’s two sons and his daughter and temporary control of his estate with limited powers, including the right to secure his tangible assets.
One 2002 will has been produced by John Branca, a lawyer who began representing Jackson in 1980.
Branca and Jackson parted ways in 2006 in a disagreement over other advisers, but on June 17th – eight days before his death – Jackson signed a letter once again retaining Branca as his lawyer, according to a source familiar with the relationship.
The 2002 will names Jackson’s mother as guardian of his three children and orders that all his assets be moved into an entity known as the Michael Jackson Family Trust, the source says.
The will appoints as executors Branca and John McClain, a founder of Interscope Records and an associate of Jackson since his youth, the source says.
Branca, whose clients include Santana and Aerosmith, advised Jackson on what is acknowledged as Jackson’s smartest business decision: buying half of the Beatles’ catalogue in 1985 for $47.5 million.
The catalogue, supplemented over the years by the work of many other artists, is estimated to be worth at least $1 billion.
In a May interview with the Los Angeles Times, Branca said he stopped working with Jackson because the entertainer brought into his inner circle "people who really didn't have his best interests at heart".
“The paradox is that Michael is one of the brightest and most talented people I’ve ever known,” he added. “At the same time, he has made some of the worst choices in advisers in the history of music.”
The other executor named in the will, McClain, worked with Michael Jackson, his sister Janet, and the Jackson 5 as well as with rappers Ice Cube and Dr Dre.
He is best known for his work at Interscope Records, where he was responsible for bringing the controversial yet lucrative gangsta rap label Death Row Records into its corporate fold.
An executor role would give the Branca and McClain power to manage Jackson’s finances while the courts settle his affairs, a process that could take years.
J Duross O’Bryan, a forensic accountant and managing director of Alix Partners, who examined Jackson’s finances for the Santa Barbara district-attorney’s office during his 2005 molestation trial, said on Tuesday that at the time, Jackson had “little or no cash at all, from the documents we saw”.
“He’d overspent so badly at that point that he had gotten a number of advances [against future income] from Sony,” his partner in the Sony ATV music publishing venture which owns most of the Beatles’ biggest hits, O’Bryan said.
Several industry executives estimate that the 50 per cent stake, valued at $500 million to $1 billion, should, however, still be worth much more than a $300 million loan from Barclays secured against it.
Sony’s recorded music business handles sales of Jackson’s albums and has been pressing more compact discs to meet demand.
Jackson’s next largest asset, the Mijac catalogue that controls publishing rights to his recordings, will see the most direct benefit from his return to the top of the charts.
Before his death, Mijac licensed some songs to video games such as Activision's Guitar Hero.
According to one executive who has heard them, Jackson had been working on new songs with a producer called RedOne.
AEG Live has not commented on media reports that the company, which had planned Jackson’s 50 nights of concerts at London’s O2 Arena, could release video footage of the rehearsals on DVD.
His death has also transformed the potential fortunes of Neverland, the 2,600-acre Santa Barbara ranch that had been one of the heaviest drains on his cash. Before moving out in 2006, he maintained about 50 cars and more than 100 staff on the property.
Colony Capital, which saved Neverland from a foreclosure sale last year by forming a joint venture with Jackson to spruce up the dilapidated property, has not commented on its plans.
Industry lawyers said, however, that it would be well advised to study the model of Elvis Presley’s estate.
Presley died in similarly straitened financial circumstances, but his family’s agreement to open his Graceland home to the public and keep a tight rein on the use of his image turned the value of the estate round.
CKX, which owns an 85 per cent stake in Presley’s estate, generated operating income before depreciation, amortisation and charges of €12 million from the asset last year, on revenue of $54.9 million.
Tom Barrack, Colony’s chief executive, said before Jackson’s death that the value of Neverland could be between $70 million and $90 million.
Copyright The Financial Times Ltd 2009 and
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