JOHN BRANCA and MICHAEL JACKSON’S finances
Recently one blogger approached me with a statement that attorney John Branca isn’t worthy of praise for the brilliant way he (and John McClain) are settling Michael’s debts as he was the one who accrued those debts in the first place. My thoughts were elsewhere at the time and this statement looked so far-fetched and ungrounded that the matter didn’t seem serious enough even to look into.
However the recent letter from several Jacksons demanding immediate Branca’s resignation cast a totally different light on this statement and required an immediate study of the reasons why Branca may have fallen into such a disfavor with the Jacksons.
Considering little information in the press this short study of Branca’s role in Michael Jackson’s financial situation will be an outline only, with all missing details to be filled in later. It will also require mentioning other people in Michael’s surrounding as it is only against the background of these people that Branca’s role may be properly understood and evaluated.
The ultimate goal of the study is to find out whether it could be due to Branca’s ill advice that Michael ended up with a huge debt and what could be the reason for the financial situation he found himself in. This task will require not just one post but probably several.
All I can say at the moment is that after reading all there was to read about Branca’s involvement in Michael Jackson’s life I regard Branca as an exceptionally skilled, professional, honest and upright man – a sort of a Thomas Mesereau for Michael’s finances. His dedication to observing Michael’s best interests (as a client and friend) is awesome and in combination with his brilliance is indeed a rare find.
I personally do not doubt for a second that if Branca had stayed by Michael’s side for a longer time in 2009 he would have found a way out of his financial impasse and would have surely straightened out for Michael the terms of his so-called contract with AEG. Mind you that he would have probably done it in a way that would have satisfied the other side too. It seems that Branca has a knack for finding just the right compromise for the opposing parties.
However I don’t want to press my views on any of you. You surely want to form an opinion of your own, so please have a look at the materials I’ve collected. None of them have anything negative about Branca for the simple reason that there is nothing bad about him on the net. Given how nosy and unscrupulous the media is this notable absence of anything against Branca is a unique result in and of itself.
The USA today says that Branca and Michael met when both were very young.
Branca was the one who helped Michael acquire the Beatles catalog and the Neverland ranch:
When he met a young Michael Jackson in 1980, Branca was already a successful young entertainment lawyer, and has represented 28 members of the Rock and Roll Hall of Fame. His clients have included the Beach Boys,The Doors, Aerosmith, the Rolling Stones and countless other top rock acts.
“Michael was either 21 or about to turn 21 when I met him and he had never had his own (legal) team,” he said.
Branca says they shared an immediate bond, and was there to shepherd Jackson through the phenomenal success of the Thriller album in 1982. And contrary to other versions of the story, he said it was Michael’s idea to buy the Beatles catalog after Paul McCartney told Jackson he was investing in buying copyrights to famous songs.
He bought copyrights to such songs as Runaround Sue and The Wanderer, and the work of Sly and the Family Stone.
“And then came the mother lode,” said Branca. When he told Jackson about the ATV catalog up for sale, “He started screaming on the phone. I actually have a great note he wrote me. It said: ‘Branca, the catalog is mine. Don’t lose it by over-negotiating.”‘
In earlier years, Branca also helped Jackson obtain the rights to his recording masters and brokered the purchase of Neverland Ranch, originally offered for $60 million, for a final price of $17.5 million, including all furnishings.
But life with Michael was not all about money, Branca says. At first they were friends, traveling to Disney World together, socializing at Branca’s home. Jackson was the best man at Branca’s first wedding, bringing with him his pet chimp Bubbles, who was clad in a tiny tuxedo. Little Richard was the minister.
The Associated Press. All rights reserved.
Johnnie L. Roberts of the Wrap who made a five-part series about Branca in December 2010 (trying very hard to cast a shade of doubt on him) provided details of the Beatles catalog transaction which took place in 1985.
His story tells us that Paul McCartney was well aware of the deal and Branca took special care to seek the blessing of Yoko Ono. The deal was so lucrative and the acquisition so priceless that the catalog became an asset coveted by many ever since then:
In 1985, the Branca-engineered Beatles purchase would radically redefine the dimensions of Jackson’s legend. Possessing the Beatles revealed that Jackson’s business instincts rivaled his remarkable artistry
Why the Beatles didn’t own their catalogue in the first place was unfortunate. Seeking to thwart the British tax collector, John Lennon and Paul McCartney in the 1960s formed Northern Songs, a public company, as the repository for the songs they wrote. The move backfired in 1969 when impresario Sir Lew Grade bought control of it on the open market through one of his companies, ATV Music. Seventeen years later, Australian Robert Holmes à Court acquired Grade’s crumbling entertainment empire.
And, inevitably, Holmes à Court, a notable among the era’s unsentimental raiders and plunderers of corporations, would put all or parts of it, including the Beatles, on the auction block.
In September 1984, Branca alerted Jackson, mentioning that ATV, a name the entertainer didn’t even recognize, was available. “It includes a few things you might be interested in,” Branca had teased Jackson, according to a 1985 report in the Los Angeles Times. “Northern Songs … Yeah, Mike … the Beatles.”
.. To this day, 25 years later, it’s still evident Branca and his law partners remain sensitive to Paul McCartney’s stinging accusation that his one-time friend Jackson had stabbed him in the back.
“Paul’s representatives were very aware of what was going on,” said Stiffelman, Branca’s law partner. “The part that always bothered me was the accusation that Michael stole it from under McCartney.”
Branca also had been careful to seek the blessing of Yoko Ono. She reportedly was thrilled that a corporation wouldn’t own the catalogue and hadn’t wanted the headache herself of teaming with McCartney for a joint bid.
So it was that at barely 30 years old in 1990, Jackson now was fabulously wealthy — worth $300 million, according to biographer J. Randy Taraborrelli, author of “Michael Jackson: The Magic and Madness.”
The USA today says that five years after the acquisition, in 1990 Branca was ousted from his job. The article also provides some details of Branca’s further adventures with Michael Jackson:
In 1990, Jackson tearfully told Branca he wanted to try different representation; though Branca wouldn’t confirm it, it was widely reported that Hollywood mogul and record company executive David Geffen advised Jackson that Branca’s influence in his affairs had grown too large. They remained apart for three years.
Branca returned in 1993, at a time when Jackson was being sued in a child molestation case he ultimately settled. But the relationship was different.
“Later on in his career he really had a line between his business and personal life,” said Branca.
In 1997 a will was drafted for Jackson — but not, Branca says, by him. Instead, he said he assigned it to a member of his firm who specialized in wills and trusts. It was redone in 2002, after the birth of Jackson’s third child.
Branca said he played no role in advising Jackson on the will, but knew the singer did not want a family member in control of his estate. Jackson also felt he did not have to take care of his brothers and sisters, Branca said.
By 2006, Branca says, his relationship with Jackson was troubled once again. The star was listening to an increasingly odd set of advisers who Branca feared did not have the singer’s best interests at heart.
“He was surrounded and I had to resign,” he said. “He did not ask me to stay. I resigned amicably.”
And then, a little more than a month before Jackson died, the call came from Jackson’s former manager, Frank Delio. Branca says Delio told him Jackson sought his input on what kind of deals they could begin working on; Branca drafted an agenda and met with Jackson on June 17 at the Forum in Los Angeles, where the King of Pop was rehearsing for his big comeback.
“I hadn’t seen him in several years,” Branca said. “We hugged each other. He said, ‘John, you’re back.’ It was very emotional. I showed him the agenda.”
It was what Jackson wanted, Branca said — including a concert movie, books and merchandising deals.
“That agenda is exactly what John McClain and I are doing now,” Branca said, “for the estate.“
Copyright 2009 The Associated Press.
A word about the the reasons why Branca was fired in 1990.
In a fierce battle between the then CEO of Sony Walter Yetnikoff and entertainment mogul David Geffen, John Branca was on Yetnikoff’s side and Michael had to part with Branca when he chose David Geffen as his main business advisor.
For twelve years Yetnikoff was President of CBS records under whose watch CBS’s annual revenue grew from $485 million fivefold. In 1987 he engineered the sale of CBS Records to Sony for $2 billion with a $20mln. bonus for himself and took the post of a Sony CEO.
But he was an alcoholic and a drug addict as he admitted in his book about the days of his debauchery (for details see here) as a result of which he lost relationships with his colleagues and artists like Michael Jackson and Bruce Springsteen.
However it is not only the Russian-sounding name of Yetnikoff which biases me towards him but also this piece of news about the way Yetnikoff fought for Michael’s rights on MTV:
(08-11-2007) Music mogul Walter Yetnikoff threatened to pull his CBS Music artists Barbra Streisand and Chicago from a fledgling MTV when the cable music channel’s bosses refused to air Michael Jackson’s videos in the early 1980s. He reveals that MTV refused to play ‘Billie Jean’ and ‘Beat It’ – because Michael Jackson was black. Yetnikoff recalls:
I said, ’That’s fine, but I am pulling my entire catalogue, all my records, forget about it. You are not playing anything by CBS.’ I said, ‘Come on, you are acting like a bunch of schmucks.’”
The New York Times article of the period  provides an insight into the character of the man under whose influence Michael fell in 1990:
David Geffen, Still Hungry
Published: May 02, 1993
“David will do anything for you if you’re his friend,” says Howard Rosenman, a movie producer and, yes, a friend. “But if you’re his enemy, well, you might as well kill yourself.”
In November 1990, Matsushita Electrical Industrial Company of Japan bought the entertainment conglomerate MCA for more than $6 billion. At the time Geffen owned 10 million shares of MCA stock — a result of the sale of his company, Geffen Records, to MCA early that year. In a single stroke, Geffen realized more than $700 million from the Matsushita sale. His investments since then, coupled with his real-estate holdings, art collection and film-company profits have made him a billionaire.
Geffen, who is the richest man in Hollywood (and also one of the most complex), helped raise millions of dollars for President Clinton in the election, and has now set his sights on a mountain more formidable than Hollywood — Washington, D.C.
At 50, with a $1 billion fortune, Geffen is hardly seeking a Cabinet job; but he’s looking for an apartment in Washington and probably wouldn’t mind serving on a Presidential commission or two. Asked if he ever saw himself working for the Administration, Geffen says, a little surprisingly: “No one’s asked me. If somebody felt there was a job I could actually do I would consider it — not out of any ambition to be in Washington, but I do want to rise to the occasion of serving there if warranted.”
The enormousness of Geffen’s wealth, while calming his temper and cowing everyone in sight, has hardly quelled his demons. Like his idols, those 1930′s movie moguls who were born poor, had scant formal education and were brilliant and ferocious men, Geffen has a hunger for success that seems bottomless.
…One of David Geffen’s closest friends says that Hollywood is like the Balkans. “There are duchesses and dukes and a court of sychophants,” the friend says. ”And David is one of the emperors. There’s Mike Ovitz and there’s David. Two emperors.
[VMJ: Later on Mike Ovitz would claim that Geffen was the reason for his downfall]
“And you have to pay your respects to both of them,” he goes on. “And David sort of sits there in the darkness. Very quiet. You don’t know what he’s doing except controlling and manipulating. Sort of like the original-cast album cover of ‘My Fair Lady.’ That’s David. But he’s tired now, he’s tired of the con artists and the hustlers and all these betraying human beings here. And he wants more. He wants clout on a bigger stage. And he’s doing it.”
…Another call, this time from Sandy Gallin. They are planning to see the Off-Broadway comedy “Jeffrey” by Paul Rudnick, about a gay man who decides to give up sex in the age of AIDS. Diane von Furstenberg and Fran Lebowitz are set to join them. Geffen’s close circle of friends in show business include homosexuals and heterosexuals, but he speaks with rage at insinuations that there’s a “gay mafia” in Hollywood.
“Let’s just say that there are successful gay people who are aware of each other,” he says. “And if you’re in a minority group that comes with the territory. But if you talk about a gay mafia involved in some kind of nefarious activity, that’s ridiculous.”
As Geffen walks into Calvin Klein’s showroom, the designer is frantically preparing for a new fashion show of men’s jeans and clothing. Klein hugs Geffen. The two are old friends but, beyond that, it was Geffen who bailed out the designer last year by buying up about $62 million in junk-bond debt of Klein’s company, enabling it to avoid a principal payment.
As if that weren’t enough, it was Geffen’s idea to hire Marky Mark, the rapper, for only $100,000 to promote Klein’s jockey briefs. The ads, and the financial results, were sensational.
Most people seem to agree on one thing about David Geffen: he is a man of contradictions. On the one hand, he appears totally unpretentious. The jeans and T-shirt that mark his sartorial style mirror a no-nonsense directness in his approach to friends. “He’s voracious in his criticisms,” says Jeff Katzenberg. ”When he sees a movie of mine he doesn’t like, he massacres me. But it comes from a place of total generosity.”
Geffen can also be generous toward employees. Upon her retirement, he gave his longtime secretary 1 percent of the sale of his record company, which made her $5 million. Yet Geffen also has a take-no-enemies side. He has often been singled out for the Machiavellian role he played in the 1990 downfall of the temperamental Walter Yetnikoff, the former head of CBS Records. (Geffen calls the reports “Hollywood silliness.”)
When Branca was dismissed due to him being a Yetnikoff ally Geffen brought in a team of his own attorneys and managers which included his friend and partner Sandy Gallin who replaced Frank Dileo as Michael’s manager and lawyers Alan Grubman and Bert Fields who replaced Branca.
We know Bert Fields as a staunch supporter of Michael’s innocence in the case brought against Michael by Larry Feldman and the Chandlers, but also as the one who lost to Larry Feldman in a competition over the time of hearing the Chandlers’ civil case – it went ahead of the criminal proceedings though it was the accused party or Michael Jackson who insisted on the criminal case going first (as a side note let me say that only absolutely innocent people can insist on being tried in a criminal court instead of a civil one).
The Justice for some blog makes an excellent research about why Michael chose Geffen over Yetnikoff – he was in awe of the successful way Geffen was carrying out his own business and evidently hoped that Geffen would work miracles for him too:
FRIDAY, OCTOBER 8, 2010
When First We Practice to Deceive: Yetnikoff, Geffen and MJ
The ties between Walter Yetnikoff, David Geffen, Alan Grubman go back further than Sony’s acquisition of CBS Records in 1988.
Geffen and Yetnikoff hadn’t always disliked each other. They had been friends and business associates for years, but “they always feuded. They’d be screaming one day and dealing the next. But this time was different. The feud didn’t go away. Yetnikoff had apparently “said he wanted a girlfriend to take lessons from Geffen in the performance of a certain sex act; in exchange he’d buy Geffen Records for $1 billion in Sony stock.” (Geffen is openly gay.) Many people repeated what Yetnikoff said to Geffen, who was not pleased. And so the war began.
A few months later, Geffen said “Michael Jackson asked him to include an unreleased Jackson song–a cover version of John Lennon’s ‘Come Together’–on Geffen Records soundtrack for the Tom Cruise race-car movie, Days of Thunder. Yetnikoff refused to allow it….It was a small matter, but Geffen’s friends said it enraged him all the same. If Geffen couldn’t get Jackson’s song, maybe he could get Jackson himself–or at the very least, make a move to do so and wreak havoc for Walter.”
Apparently, Michael Jackson was not as impressed with Yetnikoff as he was with Geffen. Geffen sold his record company to MCA for $550 million in 1990; a deal that was extremely lucrative for Geffen, to say the very least. Geffen sat on Jackson’s board of directors for 10 years. Jackson was thoroughly awe-struck with Geffen’s sale of his record company. With Geffen’s sale, Yetnikoff ordered Allen Grubman to sever ties with Geffen, which Grubman snuffed at.
Sources say Geffen proceeded ahead by exploring “the idea of breaking Jackson’s CBS contract. To that end, they say, he had Jackson fire his longtime lawyer–John Branca–an ally of Yetnikoff’s–and replace him with Geffen’s litigator, Bert Fields. (Jackson had already fired another Yetnikoff ally, Frank DiLeo, and replaced him with a Geffen crony.) Jackson seemed under Geffen’s control, but Geffen denies having a hand in this…” Geffen claims it was Michael who wanted to leave Branca, because Branca was too close to Yetnikoff.
Geffen and Grubman were ultimately accused of Yetnikoff’s firing from Sony, along with his protege, Tommy Mottola.
Johnnie L. Roberts of the Wrap adds some details to the way Branca fell a casualty in the war between Yetnikoff and Geffen in 1990:
In the preceding years, Branca had helped propel “Thriller” into the history books and engineered the coup that netted him the Beatles’ song catalogue. Within months of the publication of the book, Jackson would be the best man for Branca’s first marriage.
Then, two years later, Branca was gone — fired by Jackson in the first crack of a relationship that would continually crumble for the next two decades, until just days before the ill-fated entertainer’s death.
His jettisoning by Jackson, in 1990, was one of the more absorbing show business separations.
As chronicled in J. Randy Taraborrelli’s bestseller “Michael Jackson: The Magic and the Madness” — and
an account Branca has never publicly disputed – the lawyer was a casualty of criss-crossing agendas, among Branca, then-Sony Music boss Walter Yetnikoff and, cast as antagonist, show business mogul David Geffen.
With Geffen — at least, as Branca and Taraborrelli paint him — you were either with him or not. Branca was not.
Michael, in fact, had welcomed Geffen into his life initially, though he’d later turn on him viciously. For years, Geffen had served on an informal committee advising Jackson on investments – including, though it’s not widely known, the Branca-spearheaded purchase of the Beatles catalogue.
“Michael changed lawyers because he wanted to — he felt John Branca was too close to Walter [Yetnikoff],” Geffen declared in “The Magic and the Madness.”
Jackson, as biographer Taraborrelli also discovered, had grown anxious over Branca’s representation of other mega-acts like the Rolling Stones and Aerosmith. And, notably, the axe fell after Branca asked Jackson for a 5 percent interest in the Beatles catalogue, perhaps the entertainer’s most prized possession.
In any case, Jackson soon was surrounded by other high-powered attorneys, including Bert Fields and Allen Grubman — part of Geffen’s team, as Branca viewed them.
So Branca was out.
Elaborating on the idea of Michael “turning on Geffen viciously” let me note that our friend Maureen Orth claimed that eventually Michael came to hate Geffen so much that he was said to arrange a blood-bath curse ritual for him and a number of other guys like Steven Spielberg, for example. The sacrifice allegedly took place in no other place but Switzerland where the number of cows sacrificed in broad daylight was 42 (forty two).
Maureen Orth must have gone completely mad if she managed to swallow this story and so easily too. If she had done a simple fact check of this fable she would have found that an average bathtub holds no more than 75 liters of liquid, while one cow contains 40 liters of blood, so 40 liters multiplied by 42 cows must have produced a whole sea of blood which would have not gone unnoticed in the not so vast and civilized Switzerland. I am afraid that the person who played this nasty joke on Maureen Orth must be simply laughing at this woman’s gullibility – same as the rest of us do.
However fable or not, the idea of Michael developing a dislike for Geffen after ten years of their collaboration may have some grounds, especially since Johnnie L. Roberts of the Wrap speaks of it in his article too.
If Geffen became Michael’s main adviser in 1990 and really sat on his board of directors for 10 years (or up to 2000), I am afraid that he may also be considered the main person who didn’t prevent grave difficulties in the cash-flow situation Michael experienced by the year 1999.
This was the year when Michael used his portion of the Sony/ATV catalog as collaterial for a $200 mln. loan from Bank of America. So the very least we can say about Geffen is that despite his own enormous fortune and much luck in business he evidently failed to provide Michael with valuable financial advice and take proper care of his finances.
The only objective factor which may more or less explain this failure is that the 90s and the Chandler molestation set-up delivered a huge blow to Michael’s career and finances and made the sales of his records go sharply downhill. While the revenue generated was quickly getting smaller, the expenses connected with litigation over bogus molestation issues and settling the accompanying lawsuits required more and more cash.
One on the biggest lawsuits at the time arose not even due to Chandler’s case which had to be settled by paying out $15, 3 mln. (later compensated for by an insurance company), but due to Michael’s forced termination of the Dangerous tour.
Lisa Campbell in her book King of Pop’s Darkest Hour (1994) says that the lawsuit was filed on December 28, 1993 or a week after Michael Jackson’s humiliating strip search conducted by Tom Sneddon. There couldn’t be a worse time for delivering Michael this blow.
“On December 28,1993, concert promoter Marcel Avram filed a breach of contract complaint in Los Angeles Superior Court against Michael Jackson, TTC Touring Corp., and MJJ Enterprises. The suit, asking for $20 million in damages plus punitive damages, charged fraud, negligent misrepresentation, and breach of fiduciary duty regarding Michael’s contract with Avram’s Mama Concerts to finance and promote the 1993 Dangerous World Tour.”
The first leg of the tour took place in 1992 and was a huge success. The October 1, 1992 Bucharest concert alone was so thunderous that those who have seen it will never forget it.
Wiki says about it:
Jackson sold the film rights to his October 1, 1992 concert in Bucharest, Romania to HBO for $21 million. The deal was the highest ever paid for a live concert. The concert was broadcast live on radio and shown on television across 61 countries, and received the highest TV ratings in the history of the HBO network, in which Jackson was honoured with a CableACE Award.
All profits from the Dangerous tour were donated to various charities including Jackson’s own “Heal the World Foundation“
Notwithstanding the overall success of the tour Marcel Avram’s lawsuit claimed that Michael’s performances
- ”…were not first class as guaranteed by the contract but instead, were mediocre, abbreviated, and mechanical as compared with his prior performances.” He alleged that Michael Jackson concealed the true facts regarding his condition and actions upon signing the contract. Nineteen of the forty three scheduled dates were cancelled when the tour was ended in November.” (Lisa Campbell)
According to the Times the lawsuit also said some nonsense about Michael “embarking on the tour, in part, to avoid a looming investigation into child molestation allegations” (though it is clear to everyone that the second leg of the tour had been planned well before it started) and complained that that Michael “barely rehearsed for the tour”.
The last point attracted my attention because if Michael could perform during that hardest period of his life it means that he was capable of producing first-class shows even under a huge stress and in totally impossible conditions (like the concert in nasty Moscow weather the very next day the molestation suit was filed on September 13, 1993).
It also proves that Michael Jackson was capable of performing even after “barely rehearsing for the tour”.
Since this is what AEG also had an issue with in the year 2009 it shows that AEG’s fears and insistence on Michael attending every rehearsal were largely ungrounded. In fact it was none of AEG’s business whether Michael did or didn’t attend the rehearsals – his only obligation under the contract was producing first-class shows and not first-class rehearsals after all.
However let’s go back to Marcel Avram. The Times reported his claims to Jackson as follows:
Jackson Hit With $20-Million Lawsuit : Pop music: The pop star faces a fraud and breach-of-contract claim by the promoter of his canceled ‘Dangerous’ tour. The singer performed only 24 of the 43 shows.
December 29, 1993|CHUCK PHILIPS | SPECIAL TO THE TIMES
Embattled pop star Michael Jackson was sued Tuesday for more than $20 million in a fraud and breach-of-contract claim by the promoter of his abruptly canceled “Dangerous World Tour.”
The suit, filed in Los Angeles Superior Court, alleges that Jackson refuses to reimburse Marcel Avram, the owner of Munich-based Mama Concerts, the money for debts resulting from cancellations on the tour.
It also charges that the singer concealed that he was addicted to drugs and embarked on the tour, in part, to avoid a looming investigation into child molestation allegations.
The tour ended Nov. 12 when the singer announced he was seeking help for an addiction to drugs–a condition, he said, that stemmed from coping with the molestation allegations by a 13-year-old boy, who has also filed a lawsuit against the star. Jackson performed 24 of the 43 scheduled dates.
“Michael Jackson has yet to pay one nickel to the people he left stranded after canceling his world tour,” said Los Angeles attorney Don Engel, who represents Avram, owner of Mama Concerts.
“He stiffed hundreds of thousands of his fans and hung my client out to dry. We had no alternative but to bring suit against him.”
Representatives for Jackson did not return repeated phone calls.
Engel said Avram filed the suit because Jackson’s representatives have refused for six weeks to pay outstanding bills and reimburse millions of dollars in cash advanced to the singer for shows he canceled without notice. Among others reportedly due money: tour employees, vendors and associate promoters.
Despite the international uproar created when the allegations of child molestation became public in August, Jackson had publicly pressed on with his world tour, performing across Asia and Europe despite setbacks and distractions.
At the tour’s outset, as the allegations surfaced, Jackson canceled two Bangkok shows, citing dehydration. He shelved a date in Singapore after collapsing backstage. Other shows were canceled in South Africa, Australia, Chile and Peru.
But in Tuesday’s lawsuit, Avram alleges that Jackson’s conduct and performance problems resulted from the entertainer’s addiction to morphine and Demerol.
The suit claims that agents or advisers for Jackson provided the singer with a supply of drugs and deceived Avram by misrepresenting the singer’s health problems. False information about the status of Jackson’s health was unknowingly used by the promoter on Aug. 17 to obtain an insurance policy from Lloyds of London to guarantee against financial losses resulting from Jackson’s failure or inability to perform scheduled concerts on the tour, the suit says. The settlement of the insurance policy is now in question.
Avram himself has been sued twice by vendors and promoters who lost money due to the cancellations.
He alleges that Jackson barely rehearsed for the tour and indeed requested to cancel or postpone it on Aug. 19–less than one week before the first concert was scheduled to take place in Bangkok.
In her book of 1994 Lisa Campbell said that the $20mln. claim could be still paid for by the insurance company (the case was still pending at the time), but from the way it looks to me it was a highly unlikely scenario. It is much more probable that the sum had to be paid by Michael.
UPDATE: The source quoted below says that Marcel Avram sued Michael for $40mln. and that the matter was settled out of court. So the sum of $20mln. mentioned by all other sources could be the sum actually paid by Michael Jackson to settle Marcel Avram’s claim:
- In 1994, the promotion firm sued Jackson for more than $40 million, after he canceled a total of 19 dates of the Dangerous tour. The matter was settled out of court.
Lisa Campbell says that the Dangerous tour lawsuit was followed by other legal and financial trouble:
“The Children’s Peace Foundation was also jumping on the sue Michael Jackson bandwagon, suing him for breach of contract fraud, negligent misrepresentation and unfair competition. The foundation claimed Michael Jackson used them to make lucrative merchandising deals and then cut them out of the profits.
Plans to begin re-marketing Michael’s fragrances, Mystique de Michael Jackson for women and Legende de Michael Jackson for men, were cancelled in December. The makers of the line said it was due to Michael’s addiction to painkillers. The cologne was sold through The Michael Jackson International Fan Club and through television ads only.
Due to the media’s massacre of the Michael Jackson story, airplay of his music was stopped by radio station KEZK-FM in St. Louis. The station’s operations manager and the general manager made the decision that it was “inappropriate to feature this artist given the holiday focus on children.” On December 14, the station began airing an editorial voiced by the operations manager, Robert Burch, stating that they in no way wished to assess the guilt or innocence of Michael Jackson and acknowledged Michael’s contributions of money, time, and energy on behalf of children.
Robert Burch said the decision was in part because of the seemingly unending media coverage of the molestation allegations against Michael Jackson. “You couldn’t turn on the TV or pick up a newspaper without hearing about it”.
In short as a result of trying Michael Jackson in the court of public opinion and finding an innocent man guilty of the crime he never committed Michael began to quickly lose his selling capacity and financial stability.
His legal expenses alone were rumored to be over $100,000 per week and considering that the Chandler civil case lasted from August 1993 to January 1994 (~ 20 weeks) and the criminal investigation lasted a full year, until September 1994 (~ 55 weeks), the amounts Michael Jackson spent on the litigation process must have amounted to millions of dollars.
“With two investigations proceeding simultaneously, sources in the Los Angeles legal community say Jackson is rumored to be spending about $100,000 a week for his defense”.
Michael’s earning potential was sharply declining. In 2003 the USA today made a brief estimate of Michael’s most immediate losses. Incidentally they also mentioned Marcel Avram who sued Michael Jackson again, receiving a $5,3 mln. settlement from him this time:
- 1991′s Dangerous sold 5.8 million copies and 1995′s HIStory sold 2.5 million, respectable sums for midlevel artists but well below expectations for a pop giant.
- Jackson’s monthly expenses run about $750,000, including $250,000 for Neverland upkeep, according to documents in a lawsuit by a former financial adviser.
- Jackson has also paid huge amounts in legal fees and court judgments, including $1.7 million to Sotheby’s auction house and $5.3 million to a German concert promoter [Marcel Avram].
- Jackson family lawyer Brian Oxman says the singer has been sued more than 1,000 times.”
Looking at the appalling decline in Michael’s fortunes I could not help thinking that stripping Michael of his money could actually be the main goal of all those” child molestation” allegations. If someone didn’t like Michael for some reason and wanted his downfall nothing could be easier and more damaging that accusing him of a horrible crime and here you are, the thing is done quickly and quite effortlessly…
The decline was inevitable in the circumstances which Lisa Campbell called a media massacre of Michael Jackson’s life:
“I don’t think he has earning potential on the music side anymore,” says Craig Marks, editor of music magazine Blender. “He has it on the TV side, on the rubber-necking freak-show side. People will tune in to watch him do anything, but they won’t buy his records anymore.”
Slackening sales are inevitable for any 45-year-old artist, Marks says. Jackson’s “record sales are better than Prince’s and no worse than Madonna’s, but he has had more of a spectacular media flameout. It’s almost impossible to hear his records and not conjure that scary weird guy.”
So now we know why the media portrayed Michael Jackson as “weird” even before any allegations against him were made. It was for diminishing his popularity and the resulting commerial value, wasn’t it?
Considering that all the proceeds from the successful Dangerous tour were given away to charity and the second leg of the tour brought Michael nothing but a huge headache of the $20mln. lawsuit from his tour promoter as well as enormous losses in the Chandler civil suit, it is no wonder that in 1993 Michael called Branca for advice whether he should sell half of his Beatles catalog for the sum of $75 mln.
Branca intervened and instead of a simple sale negotiated a merger with the Sony own catalog, which meant sale of Michael’s half to Sony and acquisition of Sony’s half by Michael which was a transaction that put (according to the Wrap) $150mln. into Michael’s pocket.
The Wrap writes about it in a sarcastic manner which in my opinion Branca does not deserve even a single little bit:
Three years later , Branca got a phone call. “Branca, it’s Michael. You think I should sell half of ATV Music for $75 million?”’
One of several lawyers was proposing just that, to raise cash, which Jackson was in dire need of.
The child molestation scandal, which had exploded earlier that year, would ultimately cost him $20 million in a private settlement. He owed promoters a fortune after suspending a world tour. Neverland was draining cash. What’s more, he was addicted to prescription drugs.
Branca realized he had an opening to return to Jackson’s side. He’d come back and fix everything — but this time it would cost Jackson up front: 5 percent of ATV Music (the Beatles), as he had proposed before his firing.
The woeful Jackson assented.
But even though they would reunite, the old relationship was never to be again. Branca would now find himself to be just one more member in the rotating cast of characters in Jackson’s life.
And with Branca now owning the 5 percent stake, Jackson became paranoid that his lawyer would want him to sell his song rights.
On the other hand, Branca did see an ATV transaction with Sony as an answer to Jackson’s cash crisis. But instead of an outright sale, he proposed a merger of Sony’s music publishing operations and ATV.
Mickey Schulhof, the CEO of Sony Corp. of America at the time, was privately elated, one person close to the former executive recalls. He saw a merger as the first step toward Sony’s eventual full ownership of ATV. A brief visit once to Jackson’s Century City apartment — a fantasyland of overstuffed animals — had convince Schulhof that Sony’s troubled star someday would spiral toward the poor house and be forced to sell everything.
Thus, in 1995, Branca pulled off another coup: Sony/ATV Music Publishing. Jackson owned half of a much larger company, and pocketed a $150-million check from Sony. If Branca were entitled to 5 percent, his take totaled $7.5 million.
Frankly, I don’t know what the then CEO of Sony could be so very much “elated” about if the result of that transaction was sharing half of their own songs with Jackson and placing a $150mln. check into his pocket at that. The sum was exactly twice as much as the initial offer for the simple purchase of half of his Beatles catalog, which was a wayout suggested by other advisors and which would have been a much easier method of obtaining the Beatles’ full ownership than giving up a 50% stake in their own music catalog and merging their rights for it with Jackson.
This is how the Sony/ATV music catalog came into being and it was Branca again who masterminded this success.
However the cash situation in Michael’s finances continued to deteriorate. We know it from the fact that in 1997 he had to pledge his 50% share of the Beatles catalog as collateral on a $1,5 mln loan from California’s City National Bank if we are to believe the article posted below. That loan was paid up:
Got To Be Outta There: Jax Selling Estate
BY GEORGE RUSH AND JOANNA MOLLOY
Sunday, September 07, 1997
Is the King of Pop ready to unload his castle? Michael Jackson is reportedly so strapped for cash that he’s quietly trying to sell his 2,500-acre Neverland estate. According to our sources, he’s even parting with his beloved bestiary. (Asking price for his 300-pound Aldabo tortoise: $5,000.)
The house sale and Jackson’s new partnership with a bargain-hunting Saudi prince both point to a singer whose finances are in serious disarray, according to investigative reporter John Connolly.
“Pedophile charges have torpedoed his once-lucrative career as a product endorser,” Connolly writes in the October issue of Penthouse. “His commercial appeal as an artist is fading fast.”
After sinking $9 million into Neverland, Jackson is said to be having trouble getting the $26 million he wants for the spread.
Jackson pledged the estate as collateral to California’s City National Bank. Still, the bank had to sue him this year when he failed to pay $861,891 that was due on a $1.5 million loan. (Jackson has since paid up.)
The Gloved One has also had to hock his precious songbook, which includes rights to 251 Beatles ditties. Having sold half the songs to Sony for $90 million, he’s pledged the other half as collateral on a loan to NationsBank, Connolly reports.
Jackson attorney John Branca says he “wouldn’t call it a cash-flow problem, rather, cash-flow needs.” And according to Ben Ammar, a spokesman for Jackson’s new partner, Prince Al-Waleed bin Talal, the loan arrangements are entirely normal.
“Michael Jackson is not bankrupt,” says Ammar. “Michael Jackson is a huge corporation.”
John Branca was on Michael’s team at that moment though their relationship was not built on the same foundation of friendship and trust as it had been before, so I doubt that Branca was the only advisor Michael was listenting to at the time.
Since the year of the loan coincides with the release of Michael’s Blood on the dance floor album it looks like the money was mostly required for the additional promotion of the album.
Wiki also says that in October 1997 Michael also began recording new material for the Invincible album, and finished with the album’s recordings only eight weeks before the album’s release in October 2001. Considering Michael’s perfectionism and the fact that within the next five year period he recorded 50 songs for the album the project must have been very costly and required a whole lot of ready money.
As far as we know two years later, in 1999 Michael Jackson used his portion of the ATV catalog as collateral for a $200mln. loan from Bank of America. The reason for it was probably the need to put together and promote the new album. Michael had to take the job of promoting the Invincible solely upon himself as just on the eve of its release he severed all ties with Tommy Mottola of Sony, according to Wiki:
Just before the release of Invincible, Jackson informed the head of Sony Music Entertainment, Tommy Mottola he was leaving the record label. As a result, all singles releases, video shootings and promotions concerning the Invincible album were cancelled.
The Guardian says that Michael spent $30 mln. on promoting the Invincible and that it was the most expensive album ever made:
Jackson spends £20m to be Invincible
Michael Jackson, the self-styled King of Pop, is to release the most expensive album ever made in a desperate battle to regain his crown.
The eccentric singer is said to have spent $30m (about £20m) and five years recording Invincible, his first entirely new album in over a decade. He recorded 50 tracks before slashing the results and critics say that the 15 surviving songs mark an astonishing return to form that could revive Jackson’s career.
Unwilling to take any chances, the singer has embarked on a promotional blitz in the run-up to its October release. Last night he appeared with his brothers in the Jackson Five for the first time since 1984 at the first of two modestly titled Tribute to Michael Jackson concerts at Madison Square Garden, New York City.
The reclusive multi-millionaire has become more famous for his eccentric habits, which earned him the nickname Wacko Jacko, than his undoubted gifts. Now in his 40s and a father of two, his career has been on a downward slide since 1982 when his album Thriller stayed at number one for 37 weeks and sold an astonishing 24m copies.
“Invincible is the most important album of his career – a real maker or breaker,” said Peter Robinson, pop critic for NME and the Face. “He’s a fantastic pop star and it will be interesting to see how he develops. They’re trying to surround him with all these people who are more relevant to young people.”
The first single, You Rock My World, has surprised critics who expected a lightweight ballad along the lines of Jackson’s last releases such as Earthsong. “It’s his best work since Bad,” enthused Robinson. “You forget that he does have a great voice and a really distinctive sound and that comes out on the record.”
Robinson believes that a comeback is plausible. “In the 90s Madonna was in the dumper, making quite bad records, and that’s been completely written out of her history,” he pointed out.
“It’s too early to write Jackson off,” agreed Emma Jones, editor of Smash Hits, who says she was shocked by how good his new single was. “He’s an enigma and the mystery that surrounds him makes him even more of a star. There’s no one you can compare to him in the modern pop world.
“He’s a great showman, a fantastic songwriter and his music has stood the test of time. People are going back to albums like Off the Wall and calling them classics. Young bands like ‘NSync and the Backstreet Boys are saying how good he is.”
Ajax Scott, editor of the record industry bible Music Week, is similarly impressed by the artist’s new direction. “He’s still got it,” he said.
“Invincible doesn’t just sound like they spent a huge amount of money on the latest producers. It sounds very much like Jackson, but contemporary Jackson.”
By the way most of the tracks on the Invincible album are indeed excellent and are a step forward in Michael Jackson’s evolvement showing a new side to Michael the composer which is still waiting to be appreciated.
However let us get back to John Branca.
In February 2003 Branca was dismissed once again over the allegations of ”the flow of funds from Jackson through (Sony Music CEO Tommy) Mottola and Branca into offshore accounts in the Caribbean.” The Manhattan-based corporate espionage firm, Interfor Inc. looked into the matter and on April 15, 2003 provided a confidential report. Johnnie Roberts of the Wrap says that its findings showed that no such crime had ever been committed.
The Wrap speaks of it in a tone highly detrimental towards Michael:
But the investigation provided no credible evidence to corroborate those and other assertions. In fact, it seems little more than part of an elaborate smear campaign intended to influence Jackson to fire Branca — initiated by an increasingly paranoid Jackson himself.
Jackson lawyer David Legrand, testified at the singer’s 2005 child-molestation trial that Jackson had hired him to look into the people in his inner circle.
Legrand testified, “I was given no credible evidence to support (the) charges; I would be doing Mr. Branca a great wrong if I said otherwise.”
Nonetheless, the report achieved its goal: Branca’s termination.
“This is to confirm that I am terminating the services of you and your firm effective upon delivery of this letter,” Jackson wrote the attorney in February 2003. “You are commanded to immediately cease expending effort of any kind on my behalf…You are specifically instructed to transfer any funds you are holding in trust for me…”
As regards the time of terminating Branca’s services the Wrap author is totally wrong. Branca was fired in February 2003 as the author himself says it, while the investigation report was made several months later, in April 2003, so the report clearing him of any guilt could be absolutely no reason for his dismissal.
All it could be was a reason for was rehiring Branca back again which, as I hear, was indeed done by Jackson some time after the report clearing Branca of any suspicion was made.
However in 2006 they parted again, evidently over the dispute over Branca’s 5% in the Sony/ATV catalog). The Wrap explains it as follows:
In 2006, Jackson’s and Branca’s on-again, off-again relationship hit a new low. Branca quit Michael this time in what, according to two top music industry executives familiar with the situation, was a broader dispute.
They suggest that Branca, Michael and Sony clashed over the lawyer’s 5 percent when it became a complication in Michael’s bail-out. The settlement: Branca sold it back for millions of dollars.
(A lawyer for Branca responds: “Branca’s fee was not an issue. Branca settled his equity in those assets in which he had an interest for much less then its fair market value.”)
Branca says that he resigned himself as “Michael was listening to an increasingly odd set of advisers who Branca feared did not have the singer’s best interests at heart”. After getting familiar with some more materials on the matter I can readily believe Branca’s words.
“He was surrounded and I had to resign,” he said. “He did not ask me to stay. I resigned amicably.”
The final reunion took place in June 2009 shortly before Michael’s death. I think that when Michael felt all alone and faced the extreme new challenges in his life, he recalled the man who had never let him down. If only he could have done it a little earlier and had listened to him more…
Well, at least at the very end of it Michael realized who was who in his life.
Now thanks to great Michael Jackson’s fans we can see for ourselves the superb work John Branca and John McClain are doing for growing Michael’s estate and turning Michael’s legacy into a thunderous success.
The MJJCommunity.com has written a summary of it which I can’t help repeating here (source:
Gross earnings as of May 31, 2012 is $475 Million.
Breakdown of $475 Million as follows
- $310 Million gross earnings between June 2009 – October 2010 (first accounting period)
- $134 Million gross earnings between November 2010 – December 2011. (second accounting period)
- $30 Million gross earnings between January 2012 – May 2012.
Alll debt is current
Hayvenhurst mortgage paid
$65 Million of Mijac debt is paid and Estate expect to pay it in full by the end of 2012.
Estate is not in a position to be closed yet, Executors asking for administration of the Estate to be extended for one more year.
The only sale happened was some tangible property sold to Richard LaPointe per the settlement agreement in Julien’s Auction lawsuit. Schedule H lists all the items LaPointe got per settlement agreement.
Hayvenhurst is stated that “it will be maintained long term for the benefit of the family”. Renovations are still ongoing.
Katherine is asking for onetime payment of $205,401 to cover her professional fees occurred in 2011. Katherine is also asking for additional $34,700 per month to pay for her accountant and lawyers as well as to cover the expenses of family house in Gary Indiana and a residence in Las Vegas. Estate is asking the judge to allow this onetime payment and monthly increase.
12 Inventory value appraisals are done showing property valued at $50,677,002. Estate says additional personal property was discovered in Las Vegas and at Rock n Roll and Grammy Museum which is in total believed to be $6,700,000.
Estate’s main assets are 50% share in Sony/ ATV, 100% share in Mijac, Michael’s name and likeliness, Neverland and trademarks.
MJ Business activities consists of 2 Cirque shows (second resident show is scheduled to open in June 2013), Ubisoft MJ Experience game, multiple album deal with Sony, commercial endorsements and a possible film and documentary about Michael Jackson.
At the time of his death Michael was facing at least 6 lawsuits. Executors have been part of at least 15 lawsuits. 4 of them are still active, the rest have been resolved favorably for the Estate. Estate has also faced 65 creditor claims.
Estate is also employing multiple law firms around the world to protect Michael’s copyrights and trademarks. Second accounting lists 19 law firms (all around the world) and over $13.5 million in legal costs.
Schedule A (beginning) and Schedule I (end) shows the list of tangible property and business interest of Michael and now MJ Estate
In addition to Hayvenhurst (valued at $4.1 M) and a condo (valued at $315 K), Michael (and now his Estate) has 87.5% undivided membership in Neverland.
Schedule I shows by the end of December 2011, personal tangible property of Michael valued at $13 Million and MJ Estate cash (or equivalent) at $19 Million.
Schedule D shows net income from trade or business during second accounting period (Nov 2010- Dec 2011) at $106,734,448.
Payments to Katherine and MJ’s kids are as follows (Nov 2010- Dec 2011)
Kids allowance $2,139,194
Katherine allowance $470,814
Calabasas residence expenses $436,187
Condo payments $15,569
Hayvenhurst improvements $73,962
Taxes on properties $144,605
Insurance (health and property) $106,033
House employees $658,915
Katherine lawyer fees $233,911
Guardian ad litem $ 54,478
Utilities costs $53,211
Repair & Maintenance $194,127
Estate has also given multiple loans to Katherine
Loan 1 to Katherine $235,000
Loan 2 to Katherne $250,000
Loan 3 to Katherine $75,000
Loan 4 to Katherine $6,000,000 (for Katherine’s debt to Segye Times)
Total loans to Katherine $ 6,560,000
Total paid to Katherine and kids equal $ 11,765,516 ( $5,205,516 + $ 6,560,000)
Estate paid $50,862,363 in taxes and licenses.
Estate has an archiving project ongoing that they paid $789,450. They paid over 1 million dollars for storage of Michael’s property. Estate employees were paid $443,640. Estate paid $442,774 for public relations.
Total Co-executive & creative director compensation is $5,214, 933. The companies’ tables also show a $2,971,982 payment as Co-executive and creative director compensation, however I do not know if this is included in the Schedule G compensation of $5,214,933 or if it is a separate payment.
Bravo MJ Estate