Michael Jackson trial: Pop star was ‘tapped out,’ millions in debt
Despite receiving millions of dollars annually from his song catalogs, Michael Jackson year after year spent more than he earned, including $30 million in annual debt payments, a forensic accountant testified Monday.
William R. Ackerman, testifying as a defense witness on behalf of AEG Live in the wrongful-death trial, offered a detailed look at the singer’s finances, telling jurors that Jackson spent money on donations to charity, gifts, travel, art and furniture.
“He spent a lot of money on jewelry,” Ackerman said with a chuckle.
Neverland Ranch -- which Ackerman called “a mini-theme park,” with its maintenance staff, zoo and train that traveled around the property -- was also a huge drain on his income, the certified public accountant testified.
Still, he said, “consistently, his largest expenditure was interest expense. He spent a ton of money on interest.”
Jackson’s biggest expense was $30 million in annual payments on his debt when he died in 2009.
Interest on the loans grew over the years, ranging from a little less than 7% to 16.8% annually, Ackerman said in a downtown Los Angeles courtroom.
As early as 1993, Jackson owed $30 million, a figure that grew to $140 million by 1998. From June 2001 through June 2009, Jackson’s debt increased by about $170 million. When he died, Jackson owed $400 million to $500 million, Ackerman testified.
Ackerman said Jackson received no loans after 2007, and at the time of his death, he was three to four months behind on payments for the San Fernando Valley home where his mother lived.
“He was tapped out,” Ackerman said.
The CPA is the latest high-priced expert to testify in the trial. Ackerman said his company has received $825,000 for its work on the trial. Concert promoter AEG Live has spent around $1.5 million on experts to testify about Jackson’s financial condition, which could be a key factor in how much damages the firm could owe Jackson’s mother and three children.
The Jacksons are suing AEG Live, claiming it negligently hired and supervised Conrad Murray, the doctor who administered the lethal dose of anesthetic to the singer as he prepared for his 50 comeback concerts in London.
AEG says Jackson hired the doctor and any payments the firm was supposed to make to Murray would have been advances to the pop star.
Jackson’s debt has become a contentious issue during the trial, now in its fourth month. During testimony by a previous expert called by AEG, it was revealed that the Internal Revenue Service had valued Jackson’s portion of the Sony/ATV song catalog as being worth hundreds of millions of dollars more than his total debt.
But Ackerman, whose testimony is continuing, said the singer was in a “precarious financial position.”
He provided details of Jackson’s 1985 purchase of the ATV music catalog, which contains many Beatles songs, for $49.5 million. Jackson merged it with Sony’s catalog a decade later, receiving $115 million, along with a guaranteed $6.5 million a year, which was increased to $11 million annually in 2008.
The CPA also testified that Jackson’s tours in the 1990s were not moneymakers. He said Jackson broke even on the Dangerous tour and lost $11.2 million on the HIStory tour.
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