The Color of Money: Michael Jackson's Money Woes and the Dangers of Entitlement
Long before his death, we heard more about Michael Jackson's financial troubles than his incredible music. The singer was reportedly more than $300 million in debt.
Even at the end, he appeared to be living above his means, which is astounding considering he was bringing in millions every year in royalties despite not having a musical hit in years.
There's a lesson to be learned from Jackson's economic plight. During his 2005 trial on child molestation charges, a forensic accountant said the King of Pop, despite having extraordinary assets -- the rights to his own music and more than 200 songs by the Beatles -- was spending more money than he earned: $20 million to $30 million a year more.
In 2006, California authorities ordered Jackson's Neverland Ranch closed and fined him for failing to pay his employees and for letting his workers' compensation coverage lapse. The singer came close to losing the sprawling estate to foreclosure until an investment company bought the $24 million loan on the property.
You knew things were bad when it was announced that Jackson would auction off 2,000 items from Neverland. That auction was later canceled.
In one of his lesser-known songs, "Money," from his "HIStory" album, Jackson asks, "Are you infected with the same disease of lust, gluttony and greed?"
Although the lyrics express anger at people who will do anything for money, it was perhaps Jackson's own excessive indulgence that contributed in part to his fiscal difficulties. That's not unlike many other people. We are in a recession because of overspending by governments, corporations and consumers. Why then should we be surprised that our icons succumb to such wretched excess as well?
A large part of the reason that Jackson was slated to make a 50-show comeback tour was to generate more income. This global superstar may not have been technically bankrupt, but he continued to be cash-strapped. Jackson reportedly borrowed heavily against his assets.
In the same week that Jackson was pronounced dead at UCLA Medical Center after collapsing at his rented mansion in an upscale Los Angeles suburb, Ed McMahon, the longtime pitchman and Johnny Carson sidekick, died at 86. Like Jackson, McMahon had earned millions during his lifetime yet fell into financial trouble because of his overspending.
In an interview on CNN's "Larry King Live," McMahon acknowledged his poor handling of his money.
"Well, if you spend more money than you make, you know what happens. And it can happen," McMahon said.
But what leads so many people to a financial fantasyland?