The latest entry in our “I've Always Wondered” series involves dead celebrities, mythic mansions and legendary kings: the King of Pop and the King of Rock 'n' Roll.
Listener David Rigby, an actuary in Winston-Salem, North Carolina, asked: “We hear about the vast amounts made by the estates of deceased celebrities like Michael Jackson and Elvis Presley. Who enjoys the benefit of all this income, and does the government get any tax revenue from it?”
I started with the king of dead-celebrity lawyers, Mark Roesler of CMG Worldwide. He’s got offices in Indianapolis and, of course, Los Angeles. His client list reads like a "Who’s Who" of Hollywood's departed: James Dean, Ella Fitzgerald, John Belushi, Telly Savalas, Bettie Page, the Andrews Sisters.
When one of these stars checks out, Roesler checks in. He values what’s left and figures out how to make money on it, for both the heirs and his firm. “They have two types of assets," Roesler says of the typical dead celebrity. "Tangible assets – cars, bank accounts, homes; and intangible assets – copyrights, trademarks [and] the right of publicity, which is the right to your name and likeness.”
For the heirs of music stars, Roesler says, this is where the big money usually is. It’s the songs: sold on iTunes, played in bars and used in ads. Plus, the celebrity’s name and image, put on products or even back 0n stage in holographic form.
And who gets the profits? The estate lawyers’ cut is typically 10 percent or more. Record labels and marketers also get a slice of the revenue stream. Income tax can grab as much as 40 percent of the profits, and the IRS also takes a one-time Estate Tax payment on the estimated value of the assets at the time of death.
Roesler says that for a complicated estate — when he’s doing licensing deals and he’s in court suing bootleggers using the artist’s image or music in ads or t-shirts — his cut can be 30 percent or more.
Now let’s examine what the King of Pop and the King of Rock 'n' Roll left to their heirs.
When Jackson died from a drug overdose in 2009, he didn't have much value to marketers. Numerous scandals had eroded his reputation and value as a product endorser, and he faced massive debts from his lavish lifestyle and the upkeep of his Neverland Ranch in Santa Barbara County. He was planning a major comeback and arena residency in London.
Jackson has topped Forbes’ annual dead-celebrities list for five years, bringing in $140 million this year alone. The Forbes list, released in the fall, estimates revenue from all sources from the past 12 months before taxes and management fees. As Beverly Hills entertainment lawyer Joseph Schleimer explains, death often brings a change in a star’s financial fortunes.
“The mansions, yachts, luxury cars, private jets and parasitic entourages are dispensed with,” Schleimer says. “Death ushers in lawyers, accountants and executors, and they usually bring a cold eye for maximizing revenue.”
Jackson’s will was clear: He left the bulk of his estate to his mother, Katherine, and his three children, Prince, Paris and "Blanket." Jackson's father, Joseph, and his siblings inherited nothing.
In the six years since Jackson’s death, the executors designated in his will have turned around his finances, generating more than $600 million in earnings. They've raked in profits from several song catalogs Jackson acquired during his life, Cirque du Soleil shows in Las Vegas, posthumous albums, a documentary, plus numerous marketing and endorsement deals.
Jackson’s estate, meanwhile, is in tax court, fighting a $730 million IRS demand for estate back-taxes and penalties. The executors reportedly pegged the value of Jackson's assets at just $7 million when he died in 2009, and they say the half-billion-dollar turnaround they engineered came after he died – and couldn't have been anticipated. The IRS says the estate was worth at least $1 billion when Jackson passed it on to his heirs, and that’s the figure that taxes should have been paid on.
When Elvis Presley died of a heart attack in August 1977, his finances were a wreck. His personal life, his music and his movie career had been in decline for years. His Graceland mansion in Memphis was expensive to keep up.
Today, Elvis Presley is the second highest-earning dead celebrity, according to Forbes, with his estate pulling in about $55 million each year.
Presley’s longtime manager, Colonel Tom Parker, led Presley into several ill-advised business deals. In 1973, they sold off Presley's rights to future royalties from songs he had recorded up to that date. RCA Records paid the pair $5.4 million, which they split 50-50. After multiple lawsuits over Parker’s handling of Presley’s finances before and after his death, Parker was removed from involvement in the estate.
Elvis never sold off control of his hundreds of published songs, and they continued to generate revenue for him and for the estate after his death.
Presley’s will left his estate to his father, Vernon, his grandmother, Minnie Mae, and his then 9-year-old daughter, Lisa Marie. Mounting debts led to a recommendation that the estate sell Graceland, but the heirs decided to keep the mansion, eventually opening it to the public in 1982. It is now listed on the National Register of Historic Places and receives 600,000 visitors per year. The estate has also since opened the Heartbreak Hotel in Memphis and runs a shopping mall in the city that sells Elvis memorabilia.
Today, the Elvis Presley Estate owns a vast collection of photos, album covers, movie posters, archive video footage, as well as the Presley catalog. It protects and markets Presley's name and image.
But the Presleys don't control the estate anymore. In 2005, Lisa Marie Presley sold an 85 percent stake to Robert Sillerman’s CKX media company. The estate was sold to Authentic Brands in 2013. The company also manages the Marilyn Monroe and Juicy Couture brands. Lisa Marie Presley retains a 15 percent stake in the estate as well as owning her father's personal effects and Graceland, which she manages with her mother, Priscilla Presley.