The Michael Jackson-Tommy Mottola standoff is heading into new territory. A serious source close to Jackson told me yesterday: "There is correspondence between Michael and Tommy that will show why Michael has done what he's done. When it comes out it will clear the whole thing up. It's all about Tommy goading Michael to respond the way that he has."
My source says that on more than one occasion he has been present during speaker calls between Jackson and Sony Music President Tommy Mottola in which Mottola "threatened" Jackson. "Not physical threats, but certainly the threat that Michael would be destroyed and his career would be over if he didn't agree to Tommy's terms. It's Tommy saying 'I'll ruin you.'"
The basis for all this? "The Beatles catalog," says my source. "That's it in a nutshell. This has all been done by Tommy in an effort to squeeze Michael financially. Tommy wants the Beatles catalog."
Most importantly, as I wrote in this space on June 18, Jackson is not doing this to get a better deal at Sony. As that column stated, and as this source reconfirmed for me, Michael's recording contract with Sony is over. His last release from the label will be a greatest hits set at Christmas containing four previously unreleased tracks.
Jackson leaves Sony in debt, with no assets. His album catalog — Off the Wall, Thriller, Bad, Dangerous, History, Blood on the Dance Floor, and Invincible — will remain at Sony/Epic Records. His Beatles catalog is mortgaged to Sony Publishing. His own song catalog containing "Billie Jean," "Beat It" and other hits — is published by Warner/Chappell Music. But Michael has used that catalog for loans totaling millions of dollars.
He is, essentially, tapped out. Hence the current behavior bordering on frenzy in which Michael is running around New York with a megaphone screaming like a stuck pig. It's as if he awoke from a long, deep coma to find his financial house on fire, and Mottola standing there with the matches.
Some critics may say Jackson has only himself to blame. They are not far from wrong. Last year I told you that sources at Sony Recording Studios claimed Michael had spent tens of millions of Sony's dollars on remastering his old records. Some tracks were remastered 20 or more times before Jackson picked one he liked. Jackson ignored the mounting costs, letting Sony pick up the bills. He seemed to have no idea that one day there would be a final accounting.
Jackson's personal costs are also exorbitant even by celebrity standards. He keeps a personal staff of 120 people including those who run and maintain the Neverland Ranch in Los Olivos, Calif. The zoo that's kept on the ranch, which includes many animals not usually seen as house pets, costs a fortune to maintain. Sources told me last year that Bubbles the Chimp, Michael's most famous non-human friend, died from neglect.
The question of whether or not Jackson has any money left was answered last summer. That's when Michael was forced to use a diamond watch valued at $2 million as collateral for a bank loan with Bank of America/NationsBank. Jackson had taken the watch on approval from a Beverly Hills jeweler. When he returned it damaged, the jeweler demanded payment. Jackson, not having the funds, took the watch and then used it to raise the money.
It wasn't Jackson's only loan.
This column reported on April 19 just a portion of Jackson's business dealings. Jackson's banker, a senior vice president at the Bank of America who has worked closely on Jackson's accounts, told me then: "I've kept him alive for 20 years. And it's not that the advice he gets is bad. It's him. He's his own worst enemy."
Some of the loans approved by Bank of America:
In August 1994 — five months after Time magazine reported Jackson had paid a multimillion-dollar settlement after a 14-year-old boy claimed he had molested him — the King of Pop signed loan papers with Sony in which he used his catalog of songs to secure a loan.
But apparently that loan didn't solve Michael's problems. In 1995, Jackson used the same catalog to borrow money from NationsBank (now Bank of America). In a separate filing with NationsBank that year, he also put up the Beatles catalog. In 1996 he again put up the MIJAC songs — including "We Are the World," the proceeds of which were supposed to go to charity.
In 1997, Neverland was used as collateral with NationsBank, while Michael borrowed money from Sony using proceeds from his deal with a Saudi prince who promised to build theme parks with him. He also borrowed money from Sony in 1997 against the MIJAC catalog. What was happening was obvious — a shell game in which Jackson kept using his copyrights as assets against which he was constantly securing cash. As one deal expired, a new one would take its place.
In October 1999, a day after Jackson took out a new loan on Neverland, for example, he borrowed more money from Bank of America using his song catalogs. The former application was made in Jackson's name; the latter was done under "MJ Publishing Trust."
Sony has also been there for Jackson. A check of UCC's filed by Sony in California show that this sort of dealing is unusual for the music company. The only other artist's name that turns up with regularity is Luther Vandross — who still has not said a word publicly about Jackson's situation.
According to filings, Jackson also borrowed money from Sony on Sept. 22, 1997, in a separate filing. In that loan, he used any money due him from a deal he'd made with Saudi Prince Alwaleed bin Talal to start a number of business ventures. None of those businesses — including theme parks and restaurants, TV programming and films — panned out.
(More about Jackson's pattern of borrowing, including his use of Neverland for cash, can be found in the Fox 411 archives from April 19.)
What now for Michael Jackson? Aside from proving that Tommy Mottola is the "Devil" Jackson's immediate problems involve raising money and re-starting his career in a fruitful way. A source who's worked on private business dealings for Jackson claims "there are any number of billionaires and millionaires out there who want to do business with him." These are all potential investment projects in which Jackson would not have to invest money. (Good thing, since he doesn't have any.)
"He brings himself to the table," the source says. "That's all he needs."