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    FINANCE BEHIND MJ

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    EMPATHY
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    FINANCE BEHIND MJ

    Post  EMPATHY on Thu Jul 15, 2010 11:29 am

    Deep pockets behind
    Michael Jackson

    May 30, 2009 | 9:56 am
    This is a longer version of a story that will appear in The Times'
    Sunday (May 31) edition.

    Others have tried to revive the onetime pop star's performing
    career. Tom Barrack is convinced he's the 'caretaker' to do it.


    Tom Barrack, a Westside financier who made billions buying and selling
    distressed properties, flew to Las Vegas in March 2008 to check out a
    troubled asset. But his target was not a struggling hotel chair or
    failed bank.

    It was Michael Jackson. The world's bestselling male pop artist was
    hunkered down with his three children in a dumpy housing compound in an
    older section of town. At 49, he was awash in nearly $400 million of
    debt and so frail that he greeted visitors in a wheelchair. The rich
    international friends who offered Jackson refuge after his 2005
    acquittal on molestation charges had fallen away. His Santa Barbara
    ranch, Neverland, was about to be sold at public auction.

    In Jackson, Barrack saw the sort of undervalued asset his private equity
    firm, Colony Capital, had succeeded with in the past. He wrote a check
    to save the ranch and placed a call to a friend, the conservative
    business magnate Philip Anschutz, whose holdings include the concert
    production firm AEG Live.

    Fifteen months later, Jackson is living in a Bel-Air mansion and
    rehearsing for a series of 50 sold-out shows in London's O2 Arena. The
    intervention of two billionaires with more experience in the board room
    than the recording studio seems on course to accomplish what a parade of
    others over the last dozen years could not: getting Jackson back on
    stage.

    His backers envision the shows at AEG's O2 as an audition for a career
    rebirth that could ultimately encompass a three-year world tour, a new
    album, movies, a Graceland-like museum, musical revues in Las Vegas and
    Macau, and even a "Thriller" casino. Such a rebound could wipe out
    Jackson's massive debt.

    "You are talking about a guy who could make $500 million a year if he
    puts his mind to it," Barrack said recently. "There are very few
    individual artists who are multibillion-dollar businesses. And he is
    one."

    Others have tried to resurrect Jackson's career, but previous attempts
    have failed, associates say, because of managerial chaos, backbiting
    within his inner circle and the singer's legendary flakiness.

    Even as Jackson's deep-pocketed benefactors assemble an all-star team --
    "High School Musical's" Kenny Ortega is directing the London concerts
    -- there are hints of discord. Last week, two different men
    identified themselves as the singer's manager and a month before, a
    respected accountant who had been handling Jackson's books was abruptly
    fired in a phone call from an assistant.


    But his backers downplay the problems. "He is very focused. He is not
    going to let anybody down. Not himself. Not his fans. Not his family,"
    said Frank DiLeo, his current manager and a friend of three decades.

    Jackson needs a comeback to reverse the damage done by years of
    excessive spending and little work. He has not toured since 1997 or
    released a new album since 2001, but has continued to live like a
    megastar.

    THE MICHAEL JACKSON 'PARADOX'

    To finance his opulent lifestyle, he borrowed heavily against his three
    main assets -- his ranch, his music catalog and a second catalog that
    includes the music of the Beatles that he co-owns with Sony Corp. By the
    time of his 2005 criminal trial, he was nearly $300 million in debt
    and, according to testimony, spending $30 million more annually than he
    was taking in.

    Compounding his money difficulties are a revolving door of litigious
    advisors and hangers on. Jackson has run through 11 managers since 1990,
    according to DiLeo.

    At least 19 people -- financial advisors, managers, lawyers, a
    pornography producer and even a Bahraini sheik -- have taken Jackson to
    court for allegedly failing to pay bills or backing out of deals. He
    settled many of the suits. Currently, he is facing civil claims by a
    former publicist, a concert promoter and the writer-director of his
    "Thriller" video, John Landis.

    John Branca, an entertainment lawyer who represented Jackson for more
    than 20 years, blamed the singer's financial straits partly on his past
    habit of surrounding himself with "yes men." Branca advised Jackson to
    buy half of the Beatles catalog in 1985 for $47.5 million. The
    catalog is now estimated to be worth billions and the purchase is
    considered his smartest business decision.


    "The paradox is that Michael is one of the brightest and most talented
    people I've ever known. At the same time, he has made some of the worst
    choices in advisors in the history of music," said Branca, who
    represents Santana, Nickelback and Aerosmith, among others. He said he
    finally split with the singer because Jackson invited into his inner
    circle "people who really didn't have his best interests at heart."



    The singer's financial predicament reached a crisis point in March 2008
    when he defaulted on a $24.5-million loan and Neverland went into
    foreclosure. Jackson's brother Jermaine enlisted the help of Dr.
    Tohme Tohme, an orthopedic surgeon-turned-businessman who had previously
    worked with Colony Capital.


    Tohme reached out to Barrack, who said he was initially reluctant
    to get involved because Jackson had already sought advice from fellow
    billionaire Ron Burkle, an old friend.

    "I said, 'My God, if Ron can't figure it out, I can't figure it out,' "
    Barrack said.

    But he was drawn to the deal. He owns a ranch five miles from Neverland,
    and his sons were among local children Jackson invited over for field
    days at the ranch. The financier retains close ties to the developer who
    built Neverland and is friendly with Wesley Edens, the chairman of the
    property's debt-holder, Fortress Investment Group.

    With the auction of Jackson's home and possessions just days away,
    Barrack made the singer a proposition.

    "I sat down with him and said, 'Look . . . we can buy the note and
    restructure your financial empire,' " Barrack said. But, he told him,
    "what you need is a new caretaker. A new podium. A new engine."


    Tohme, who acted as Jackson's manager until recently, recalled the
    urgency of the situation. "If he didn't move fast, he would have lost
    the ranch," Tohme said. "That would have been humiliating for Michael."

    Jackson and Barrack reached an agreement within seven days. Colony paid
    $22.5 million and Neverland averted foreclosure.

    FROM NEVERLAND TO LONDON

    Jackson has not spoken publicly since a March news conference and his
    representatives declined to make him available for an interview.

    Barrack said his position outside the music industry seemed to endear
    him to Jackson. "He looks at me like 'the suit.' I have credibility
    because I don't live in that world. I'm not interested in hanging around
    him. I'm not interested in girls. I'm not interested in boys. I'm not
    interested in drugs," Barrack said.

    After buying Neverland, Barrack called his friend Anschutz.
    Barrack said the prospect of helping Jackson, given his recent criminal
    case, gave Anschutz, a devout Christian, pause. (Anschutz declined to be
    interviewed.)

    Barrack had spent significant time with Jackson and praised him as "a
    genius" and devoted father. Ultimately, Anschutz agreed to put
    Jackson in touch with Randy Phillips,
    the CEO of his concert
    subsidiary.

    As the head of AEG Live, Phillips oversees a division that grossed more
    than $1 billion last year and has negotiated such lucrative bookings as
    Celine Dion's four-year, $400-million run in Las Vegas and Prince's 21
    sold-out dates at the O2 Arena in 2007.

    Phillips had his eye on Jackson for some time. In 2007, Phillips
    approached the singer with a deal for a comeback, but Jackson, who was
    working with different advisors, turned him down. "He wasn't ready,"
    Phillips recalled.

    This time, however, Jackson was receptive. He needed the money, and he
    has a second, more personal reason: His children -- sons Prince Michael,
    7, and Michael Joseph Jackson Jr., 12, and daughter Paris Michael
    Katherine, 11 -- have never seen him perform live.

    "They are old enough to appreciate and understand what I do and I am
    still young enough to do it," Phillips quoted Jackson as saying.

    Jackson stands to earn $50 million for the O2 shows, "This Is It" -- $1
    million per performance not including revenue from merchandise sales and
    broadcast rights. Jackson is considering options including pay-per-view
    and a feature film. But the real money would kick in after his final
    curtain call in London.

    A PROPOSED TOUR

    AEG has proposed a three-year tour starting in Europe, then traveling to
    Asia and finally returning to the United States. Although Jackson has
    only committed to the O2 engagement thus far, Phillips estimates ticket
    sales for the global concerts would exceed $450 million.

    "One would hope he would end up netting around 50% of that," Phillips
    said.

    Barrack, the man who set Jackson's comeback in motion,
    has seen his net worth drop with the financial crisis of the last
    year.
    Forbes estimated his wealth at $2.3 billion around the time he
    met Jackson, but he is now merely a multimillionaire. He said that the
    economic downturn makes Jackson even more attractive as an investment
    because his value has been overlooked: In times like this, he said,
    "finding little pieces of information that others don't have" is more
    important than ever.

    His company isn't exposed to any risk by working with Jackson. All the
    money Colony has put up is backed by the value of Neverland and related
    assets, he said. If Jackson regains firm financial footing, Barrack's
    company could be a partner in future deals.
    "When he looks back and
    says, 'Who took the risk? Who was there?' I mean, he gets it. So that's
    my hope," Barrack said.

    It all depends on what happens July 13 when the lights go down in the O2
    Arena. Doubts about Jackson's reliability are widespread because of his
    long concert hiatus. Those concerns were heightened earlier this month
    when the show's opening night was pushed back five days. Phillips and
    Ortega, the director, blamed production problems and said Jackson was
    ready to perform.

    Fans demonstrated their faith in Jackson months ago when they snapped up
    750,000 tickets for shows through March 2010 in less than four hours.
    "We could have done 200 shows if he were willing to live in London for
    two years," Phillips said.

    Amid the high stakes, Phillips has taken a hands-on approach more
    reminiscent of his early days as a talent manager for acts including
    Guns N' Roses and Lionel Richie than as the company's chief executive.

    A REPUTATION, A DO-OR-DIE MOMENT

    In addition to the more than $20 million AEG is paying to produce the
    shows, the company is putting its reputation on the line for a performer
    with a track record of missed performances and canceled dates. In a
    video news conference earlier this month, Phillips acknowledged that the
    company has only been able to insure 23 of the 50 "This Is It"
    performances. "In this business, if you don't take risks, you don't
    achieve greatness," Phillips said.

    Phillips said he speaks with Jackson regularly and has closely monitored
    rehearsals in a Burbank soundstage. In response to questions about his
    physical condition, especially in light of his previous addiction to
    prescription painkillers, Phillips said that Jackson passed a rigorous
    medical examination. Associates also say he adheres to a strict
    vegetarian diet and works out with a personal trainer.

    But the problems that have bedeviled Jackson in the past -- infighting,
    disorganization and questionable advisors -- persist.

    In an interview last week, Tohme identified himself as the singer's
    "manager, spokesman, everything" and spoke about the benefits of dealing
    with business titans Barrack and Anschutz rather than their "sleazy"
    predecessors. "Michael Jackson is an institution. He needs to be run
    like an institution," Tohme said.


    The next day, however, longtime Jackson associate DiLeo claimed he
    was Jackson's manager and said Tohme had been fired a month and a half
    earlier. Tohme denied being fired but declined further comment.


    In April, Jackson fired the accounting firm, Cannon & Co., that had
    worked for him for a year, according to an accountant who worked on his
    finances. Jeff Cannon of Cannon & Co. said he received a phone call
    from an assistant of Jackson who said the singer no longer required his
    services.

    Then there is Arfaq Hussain. A British man who met Jackson in the late
    1990s, Hussain designed clothing for the performer -- including an
    air-conditioned jacket, a pair of self-adjusting, rhodium-plated shoes
    and the "Crystal Miracle," a jacket covered with 275,000 rock crystals
    -- and tried to launch a business selling $75,000 bottles of perfume by
    trading on Jackson's name.

    In 2002, Hussain was jailed for four months in Britain for charges
    related to business fraud. Hussain and Jackson recently became
    reacquainted and the singer hired him as an assistant, DiLeo said.

    The woman who was Jackson's public face during his criminal trial,
    former manager and spokeswoman Raymone Bain, is pressing a federal
    breach of contract suit against the singer. Bain claims that Jackson
    cheated her out of her 10% cut of several business deals, including the
    AEG concerts. Bain is to ask a judge in Washington, D.C., next month to
    seize the portion she alleges is hers, citing Jackson's history of
    evading creditors.

    In his corner office high above Century City, Barrack is sanguine about
    reports of disharmony.

    "You have the same thousand parasites that start to float back in and
    take advantage of the situation and that has happened a little at the
    edges," he said. But, he added, he had confidence in AEG's ability to
    keep Jackson focused.

    The concerts, Phillips acknowledged, are a do-or-die moment for Jackson.

    "If it doesn't happen, it would be a major problem for him career-wise
    in a way that it hasn't been in the past," he said.

    --Chris Lee and Harriet Ryan

    http://latimesblogs.latimes.com/musi...l-jackson.html










    __________________

    http://www.mjjcommunity.com/forum/showthread.php?t=94342


    _________________
    "You and I must make a pact, we must bring salvation back,
    whenever you need me, I,ll be there".

    - MICHAEL JACKSON TAROT
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