Forbes: Neverland Michael Jackson is on the verge of being sold

Although Michael Jackson had moved out of Neverland years before his death, this 2,700-acre property has remained inseparably linked to the King of Pop to this day. Soon, that connection may exist only in memory—not in reality: Neverland is on the verge of being sold.

According to sources familiar with the matter, Clonny Capital, owned by billionaire Tom Barrack, is seeking to sell the property in Los Olivas, California. After Barrack signed a contract with Michael in late 2007 and paid off his $23 million debt to the bank, Clonny Capital became Michael’s business partner in Neverland.

The Michael Jackson Foundation said in a letter to Forbes:

"We are deeply disappointed, disheartened, and saddened by how things have turned out. To our great sorrow, Michael lost control of Neverland during his lifetime as a result of the advice of a former manager."

(eMJey: The foundation’s reference is to the theme of Tami Tami, who managed Michael’s affairs during the final years of his life, and is now being pursued by the foundation for fraud.)

Clonny Capital has not yet commented on the matter.

As I wrote in my book The Rebirth of an Empire (about the commercial genius of the King of Pop), the deal between Michael and Clonny was complex. Barrack said he bought the property only to help Michael. In an interview I conducted with him for this book, he recalled the words he had told Michael: "Don’t make me do this unless you truly want to have income for yourself by advancing plans on this property."

The agreement was formalized in early 2008, and under it, management of the Neverland property fell into the hands of Clonny Capital.

(eMJey: It has been said that at first, the share of profits from the sale of the property was considered in an asymmetrical way between the two parties. Meaning Michael’s share of the profit was 87.5% and Clonny Capital’s share was 12.5%.)

For every dollar Clonny Capital spent on Neverland, its share increased. That means that although Michael—and then his foundation—benefit from the Neverland property, that share decreases over time.

(eMJey: Neverland was emptied by Michael in 2005 and went into a semi-closed state, then closed. Clonny Capital has been responsible for maintaining the property from 2008 to the present and has spent money on it each year.)

Over the past six years, Clonny has continued to maintain the property. The annual cost is estimated at nearly $5 million. This amount, plus the $23 million (which was initially paid to the bank to save Neverland), means the company may have invested more than $50 million in Neverland so far. The company also has the right to sell the property.

Over the years, many options have been discussed regarding Neverland. It has been said that Michael, until the end of his life, welcomed the idea of turning Neverland into a performing arts school. After his death, many suggested that Neverland be transformed into a tourist destination, like Elvis Presley’s Graceland (located in Memphis).

But anyone who has been to Neverland (including me) can tell you that Los Olivas isn’t like Memphis. There are no highways around there, and narrow mountain roads won’t be able to accommodate thousands of visitors every year.

The foundation wrote in its email: "The foundation considered many options, including buying this property, but financial limitations and land-use regulations in this area blocked all available options. Given that our duty as the Michael Jackson Foundation is to protect and develop financial resources for Michael’s children."

In just over 5 years, the Jackson Foundation has generated more than $750 million in revenue, but that figure does not include the $702 million in costs and taxes that the foundation is currently disputing.

Buying Clonny Capital’s share of Neverland—paying several million dollars plus the hefty annual costs for a property that will generate no income—would be an unwise financial decision.

Neverland may soon have a new owner on paper. But every buyer should know that this property will always remain the domain of the King of Pop in the minds of millions.

Source: eMJey.com / Forbes