The sale of Neverland – the historic home owned by Michael Jackson – caused quite a stir in the news.
At the point that even the Wall Street Journal published an article. US businessman Ron Buckle, the majority shareholder of Soho House, the private restaurant and club chain, bought Sycamore Valley Ranch – for $ 22 million.
Mr. Burkle offered active help and guidance to Jackson in 2005/06 to extricating himself from a sudden stunt create by Bank of America when his loan investments were suddenly sold to Fortress, putting at his disposal his Yucaipa organization. Burkle is a man that loaned half a million to Jackson without requesting a guarantee. Money that Jackson gave back as soon as he received after having mortgaged Encino Estate.
Note that weeks ago, Michael Jackson’s Estate won the right to have the public arbitration they always requested since the beginning of the legal challenge and that HBO is desperately trying to avoid. Even if they still have the option to appeal, they are just delaying the inevitable. They signed a contract clause to obtain the exclusive right to broadcast «Live in Bucharest: The Dangerous Tour,» and the word on it, such as perpetual, does not escape the misunderstandings. They violate the clause of no disparagement agreement. Period. But the media did not lose the occasion to help the scammers be once again in the timeline and remember the world that they still want money from MJ’s dead body.
The newspaper in question and all the others that followed the wave state that it is a lower price than the initial sale offer of 100 million dollars and asserts that is because of the serious allegations of sexual harassment allegedly perpetrated by Jackson at Neverland.
The reality is that considering the fluctuations in the real estate market in the area, 22 million is the right price for the Ranch today. It is enough to go to any Real Estate site in the Santa Ynez area to realize the prices that run for properties far beyond the Sycamore Ranch.
The price decreased: it seems to me right to contradict WSJ’s trivial statements by highlighting the facts.
Neverland went officially on sale in 2014 for 60 million. Then again, in 2015, at 100 million. Rationally the price was too high even for a rich Chinese willing to open a winery export. The Ranch has the land but not the structure to put a winery. And with that kind of inflated price, it would have been nonsense to spend more money and getting crazy with permits and Zoning issues. Then in 2017, it was re-listed for 67 million. And again, it did not work.
The house’s pretty modest, and it reflects MJ’s humble soul. The train station is not interesting for the potential buyers, not to mention the dance studio. It remains a small cinema for 50 people and the stable. There is no helicopter place to land, and many other tools rich people love to have in a luxury and private residence.
The investment attraction is certainly not the building but rather the approximately 2700 acres of the Property’s 3 plots. It is no coincidence that Mr. Burkle apparently would have decided to buy Neverland after seeing the Estate from above while flying over it. Burkle’s spokesman said the businessman saw the investment as a land banking opportunity.
The WSJ subtly describes Michael Jackson’s death and relates that the singer bought the Property in Los Olivos in 1988 for $ 19.5 million. After financial problems, in 2008, he sold everything to Colony Capital, which owned a loan on the Property.
Jackson bought Sycamore Ranch for 17 million, not 19. It is easily verifiable in all the information of the time and is contained in most autobiographical books. One that must be given credit is Zack O’Malley Greenburg: Michael Jackson, Inc.: The Rise, Fall, and Rebirth of a Billion-Dollar Empire. Despite the superficial financial approach, Greenburg had the chance to get many numbers from Mr. Branca’s direct source, who complained that in his opinion, MJ paid a bit high price for the Ranch.
About the sale to Colony, things developed quite differently. That’s how:
A few months after MJ won the trial of his life, he still was under discussion for refinancing his assets loan, sold by Bank Of America to Fortress, a company specializing in purchasing and dismantling distressed assets. ( the MJ’s assets, as already explained in the blog dedicated, were not in distress).
While a general agreement was already made between the parties, Mr. Branca filed a UCC Financing Statement against Michael Jackson and the MJ Trusts in September of the same year.
John Branca asserted that he had membership interests in Sony/ATV and MIJAC Catalogs, blocking the new refinance procedure that Michael Jackson was put in place.
There was no time to oppose Mr. Branca with legal action. So after a short negotiation and after having agreed on the amount of 13.5 million to get rid of his request for good, the only viable solution was to put (again ) a mortgage on Neverland. The loan was 20 million reimbursable in October 2007.
- On October 19, 2006, a modification of Deed of Trust was signed by Jackson and DBCG, a Fortress Company, advanced an additional $3,000,000 to Jackson. Recites new aggregate principal amount of loan as $23,000,000, evidenced by Amended and Restated Secured Promissory note dated October 19, 2006.
- However, a Notice of Default was given to Jackson on October 22, 2007. It Recites the principal amount and interest outstanding as $23,212,963.83 (as of October 12, 2007).
- Notice of Trustee’s Sale is given on February 25, 2008. Trustee’s sale was scheduled for March 19, 2008, for the sale of Neverland. Recites total unpaid balance, estimated costs, expenses, and advances at the time of initial publication of notice as $24,525,906.61.
- On March 13, 2008, Jackson’s lawyer L. Londell McMillan announced that a private agreement had been reached with Fortress Investment. No further details of the deal were disclosed at that time.
- Beneficial Interest in Deed of Trust dated May 7, 2008. DBCG assigns to 1224 LLC all of DBCG’s interest in the above-referenced Deed of Trust, Assignment of Rents and Security Agreement Dated March 31, 2006, as modified by Modification dated October 19, 2006.
- Jackson’s attorney McMillan said that the loan was just a refinancing, and Jackson still maintained the majority stakeholder, with legal retention of 87.5% of the Ranch.
- After new MJ manager Mr. Thome Thome‘s insistence, Mr. Tom Barrack agreed to see the Neverland deal of which Fortress Investments had rescheduled the auction for May 2008. Negotiation was longer than expected: in fact, under the loan, whoever held the note would have owned everything on the Property: all of the Jackson pieces of art, books, clothes, the animals, and the rides. So after a lot of back and forth, finally, it was agreed that MJ’s personal things could be removed.
- On May 12, 2008, the foreclosure auction for the Ranch was canceled after Colony NorthStar, the investment company run by Tom Barrack, withdraw the defaulted note held by Fortress. Neverland became part of a deal of the company he had set up with Jackson. Under the terms of the agreement, Colony and Barrack agreed to defer Jackson’s loan payments (for more money later) and finance the Ranch’s refurbishment to sell it at a substantial profit.
- Forbearance Agreement No. 2 dated August 31, 2008, and cover letter from Colony Capital LLC. Forbearance Agreement signed by Jackson and notarized whereby 1224 LLC agrees not to cause recordation of a new notice of trustee’s sale or otherwise reinstate foreclosure proceedings until November 5, 2008. Recitals to Forbearance Agreement describes a sequence of events and agreements or transactions signed by Jackson.
- On November 10, 2008, Jackson transferred the title to Sycamore Valley Ranch Company, LLC, and neighbors reported immediate activity on the Property, including the amusement rides being trucked along the highway. Jackson and Barrack forged a partnership that called for Colony to manage the Property. If Neverland would ever be sold, the firm would return the amount invested, plus a preferred return. (The long-term plan was to hold on to the Ranch and possibly turn it into a school for the performing arts.) Colony Capital would have recouped its investment in the note plus accrued interest, its management and upkeep expenses, and around 12% of everything above that as a success fee. The rest would go to Jackson’s. At that time, Tom Barrack said the Neverland property ought to be worth $60 million to $70 million.
When Michael Jackson passed away, nobody knew the above events in detail, and his Estate kept the line of 87.5 % ownership of the Property in front of the fandom, without further details. However, while checking their probate accounting, Neverland was listed under an undivided 87.5% Membership in Sycamore Valley Ranch Co LLC. Value of 1 USD.
The probate accounting also provided evidence that no restorations or maintenance expenditures if not for small reparations.
In August 2014, Neverland went up for sale for 60 million.
Before being put on the market, the Property had an extensive restoration, which dismembered pieces by piece of the core peculiarity. The rides disappeared, a zen garden was put at the ferries’ place to fill the hole. The Ranch was even on the Alibaba website and used extensively for Colony partners’ PR parties and associated.
Then finally, documents related to the lawsuit between The MJ Estate and Mr. Thome Thome surfaced. It became crystal clear why Neverland belonged no more to the Jackson family assets: here Sycamore Valley Ranch Company, LLC agreement.
After Jackson’s demise, it was a simple exercise for Mr. Barrack to raise his ownership in the J&V due to the MJ Estate’s NO participation in the Property’s renovation & maintenance. The joint-venture’s contractual reference clearly states that the company that more investment in the Property, increases the equity into the same.
In short, it means that MJ and then his Estate always retain membership but not in practice. The same decreases if no financial participation.
Mr. Branca confirmed in Court Room.
The writing is clear. There’s no way that MJ did not understand as some fans were trying to divulge when the documents surfaced – the same group of fans that still support the Estate Management actions, even the most ridiculous.
The J&V documents provided the information that the deal’s goal was to own, operate, reposition and sell Neverland and probably sell the Estate within 12 months (which would have expired in November 2009). Tom Barrack, who’s the owner of a property that confine to Neverland, tried hard to have permits to open to the public even if, when MJ passed away, and Santa Ynez Valley panicked about the possible consequences, Tom Barrack held two days of parties and tours to tell locals he had no plans to make Neverland a West Coast Graceland or a museum devoted to MJ, or that Michael Jackson would have been buried there.
However, on August 12, 2009, his company filed 20 trademark applications for “Neverland Ranch, Neverland Valley, Neverland Valley Ranch, and Neverland,” asking the US Patent Office to protect their rights to operate a museum in Michael Jackson’s former home. The trademark requests were soon abandoned on September 8. Trademarks were expressly abandoned.
In 2016 The Property went up for sale again for 100 million.
One of the main issues in the area is the Zoning law. Under provisions of the Williamson Act, created to protect ranchers and farmers, although the law preserve and guarantees tax breaks, it prohibits commercial use, construction of new houses, and any kind of buildings for private use.
MJ used Neverland for Charities events and invited many people, hosting sick and disadvantaged children at his own expense, and most of the time, without having a deserved media PR return.
Michael had followed permit procedures and zoning ordinances on some of his developed Property, such as the main station’s construction because it would have been too evident, but not all of his amusement rides and other construction. However, since the property purchase, Jackson made several violations on about 70 acres of his plots.
That’s why in 2003, he asked and had the approval to the county Board of Supervisors of Santa Maria to accept to remove his house, amusement park, zoo, gatehouse, a three-car garage, a go-cart track, seven rides at his amusement park, a giant outdoor movie screen outside of the state’s Williamson Act agricultural preserve program even though it would have meant to be subjected to back taxes and possibly fines for permit and zoning violations.
The partnership MJ entered into while alive means he acknowledged the Neverland sale as a possibility. Instead, his Estate did not put down a single plan for keeping Neverland in their assets. MJ Estate had no interest and strength to maintain such Property, so they left Barrack to handle the passive.
We know for sure that Michael Jackson wanted to purchase another house; he never spent so much of his private time at Neverland and moved for good in 2005. In the Joint-Venture with Tom Barrack, he had the right of the first offer in case of sale of the Property. Would MJ have exerted it? We don’t know, but the fact that he agreed to the possibility of sale must make us reflect.
MJ went back to work to save his music publishing catalogs. Far more important than a house he left years before. Colony Capital and MJ Estate wanted to make Neverland into a business for profit. They failed obviously, due to the Zoning regulations. The place cannot become another Graceland for the time being. Time will tell.
Like the ancient palaces of the Renaissance, Neverland has changed ownership, but it will always be remembered as Jackson’s home over the centuries.