There’s nothing quite like America’s obsession with celebrities … unless, of course, you consider our obsession with celebrity failures. After all, the shine of a rising star is always eclipsed by the blazing fire caused by a big bank account going up in smoke.
Some high-profile bankruptcy news of late includes:
- A famous New York art gallery that has gone under, leaving the fate of a 500-year-old Botticelli painting up to the bankruptcy judge.
- College football coach John L. Smith has a 132-86 lifetime record, and just landed a gig in the SEC leading up the Arkansas program. Too bad off the field, bonehead real estate moves have driven the Razorbacks coach to the brink of bankruptcy.
- “Octomom” Nadya Suleman has been foreclosed on in her latest bout with financial insolvency.
But these recent headlines are nothing compared with some of the ugliest celebrity bankruptcy stories in history.
Just take a look at some of these disasters:
Lenny Dykstra (Bankrupt in 2009): Baseball star and (absurdly) investment guru Dykstra recently filed for Chapter 11 thanks to an ill-advised business venture — a glossy magazine for millionaire athletes called The Players Club. Not only was Chapter 11 necessary, but the business resulted in 20 lawsuits. (Read more on this in an older column about investment failures of the stars.) Most recently, he was convicted of bankruptcy fraud — facing up to 20 years in prison for hiding sports memorabilia and other items from liquidators and then selling it after the fact. The icing on the cake? He previously pleaded no contest to grand theft auto and exposing himself to women he met through classifieds site Craigslist.
Elton John (Bankrupt in 2002): Sir Elton was living high on the hog with a 37-acre estate in Windsor, among other properties in the U.K., America and France, and a fleet of 20 luxury cars to ferry him around. Too bad he couldn’t afford it. The BBC reported that prior to bankruptcy, his credit card bills were rumored to top $400,000 every month and he spent a staggering $55 million in the span of 20 months! He took legal action against a money manager … but c’mon, Elton. In the court case it was revealed he spent $450,000 on flowers alone during the 20-month binge.
Vince and Linda McMahon (Bankrupt in 1976): The brains behind World Wrestling Entertainment (NYSE:WWE) clearly didn’t have a head for finance in the beginning. The couple was in the hole $1 million in debt as the wrestling empire started to blossom. That included footing the bill for such crazy schemes as a failed Evel Knieval attempt to jump Snake River Canyon and a fight between Muhammad Ali and Japanese wrestler/martial arts star Antonio Inoki. Oh yeah, and they didn’t like the IRS too much — racking up $142,763 in unpaid income taxes over five straight years.
MC Hammer (Bankrupt in 1996): Stanley Kirk Burrell, as the rap star was named at birth, is one of the best-known tales of celebrity excess. After earnings a reported $33 million in the calendar year 1991 alone he was saddled with debts worth $14 million at the time he filed for bankruptcy. Those debts include race horses, 17 cars, an airplane, a record label and a home on nearly 12 acres that was bought for $30 million — and offered for $6.8 million after the bankruptcy. Oh yeah, and don’t forget the $500,000 he owed to Deion Sanders according to filings. MC Hammer spent as much as $500,000 a month on a crew as large as 200 people, according to reports. Nice work if you can get it! But don’t fret, because in the intervening years Hammer has bounced back. According to reports he is in the process of creating his own search engine, called WireDoo, which will compete with Google (NASDAQ:GOOG) and Microsoft (NASDASQ:MSFT) search engine Bing. I’m sure it will be a profitable business venture for him …
Toni Braxton (Bankrupt in 1998 and again in 2010): After her album Secrets went platinum with No. 1 hits “You’re Makin’ Me High” and “Un-Break My Heart,” Braxton was an overnight success. But despite selling 25 million albums worldwide, she declared bankruptcy in 1998 after racking up a $20,000 American Express bill and monthly expenses of over $43,000. So much for learning her lesson, though — by 2010, the R&B singer was bust a second time with debts as high as $50 million. If that’s not enough public embarrassment for you, tune into the sordid affairs and finances of Toni and her kin in the Braxton Family Values reality show on WEtv, a property of AMC Networks (NASDAQ:AMCX).
Mike Tyson (Bankrupt in 2003): After legal troubles relating to sexual assault charges, the former boxing champ was bankrupted by lawyer fees — and, of course, lavish spending. In 2003, The New York Times ran a cutting article with the headline “Tyson’s Bankruptcy Is a Lesson In Ways to Squander a Fortune.” The article states that despite making $400 million over 20 years as a boxing sensation, he was bankrupt due to crazy expenses on jewelry, parties and even pet tigers. “One of his most recent extravagances came on Dec. 22, when Tyson walked into a Las Vegas jewelry store and picked up a $173,706 gold chain lined with 80 carats in diamonds. But he never paid for the fabulous jewelry, which is among the $23 million in debts specified in the Chapter 11 petitions he filed Friday with the United States Bankruptcy Court in Manhattan.” Oh boy. This was before facial tattoos and ear biting, but no less embarrassing. Michael Vick (Bankrupt in 2008): Football star Michael Vick saw financial problems as a direct result of legal problems. The infamous dog-fighting ring cost Vick his endorsements and his NFL paycheck — including a 2007 claw-back by the Atlanta Falcons, where the team demanded that he reimburse them for $20 million of the $37 million bonus. As a result, Vick filed bankruptcy from behind bars in 2008. He’s starting to get back on his feet, but don’t think this has anything to do with voluntary behavior. According to a stark 2010 report by ESPN, two-thirds of every dollar Vick earned in those first few years went directly to creditors and taxes. The rest is strictly controlled as more of an allowance for a child than true adult finances. His creditors stand to receive $12 million through 2015, provided Vick continues to receive a multi-million dollar salary … but Vick himself isn’t going to be piling up the cash anytime soon.
Burt Reynolds (Bankrupt in 1996): If you think tabloid news about Tom Cruise and Katie Holmes breaking up is a recent phenomenon, just harken back to the high profile divorce of Burt and Loni Anderson. The messy proceedings saddled him with $10 million in debt even as an extravagant lifestyle and a chain of failed Florida restaurants bled him dry. The money troubles haven’t stopped, however, as Merrill Lynch Credit recently has threatened to foreclosure on his four-acre waterfront state in Florida to collect a $1.2 million debt. And until recently, he owed California $225,000 in back taxes over about 15 years.
Anna Nicole Smith (Bankrupt in 1996): A sexy Playboy playmate in her late 20s, Anna Nicole sidled up to the elderly but filthy rich J. Howard Marshall, who made a fortune of $1.6 billion in the oil industry. They were wed and after 14 months, Marshall died. Smith expected to inherit a bundle … but the courts decided she would get nothing. The result of a $400 million budget going to zero was mighty painful, and resulted in bankruptcy. Adding to the troubles was that a former female maid sued her for sexual harassment and the resulting $850,000 fine was tacked on. Anna Nicole led a troubled life after that, including drug abuse and death under odd circumstances in 2006.
Lawrence Taylor (Bankrupt in 2009): Many high-priced NFL stars would be happy to spend a few bucks for an edge on their competition. But buying hookers for the opposing teams in an effort to “tire them out?” That’s something only LT would do. During his heyday, the Giants linebacker recorded a league-leading 20.5 sacks and became one of just two defensive players to win the NFL Most Valuable Player award. But by his own admission, he was spending thousands daily on drugs and partying. Business decisions also hurt his finances, notably the 1993 venture in All-Pro Products which went public but then folded in less than a year. Then in 1997, Taylor pleaded guilty to file false income taxes at the end of his football career. Off the gridiron, the troubles only got worse as spotty analyst work dried up and legal troubles including statutory rape charges took their toll.