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Michael Jackson may face a cash crunch

Pop goes the King?

Jackson (in June) "could use some good advice if he'd listen more," says pal Gary Pudney. "He's so insulated that he misses a lot of what the real world is."  

(PEOPLE) -- On the surface, everything looks fine at Michael Jackson's Neverland Ranch. Elephants and giraffes still fill the private zoo, and visiting children get to ride the steam train and battle with water balloons in a custom-built fort. On any evening Jackson can invite pals over to watch movies in his 80-seat theater, complete with concession stand. Says friend Bryan Michael Stoller, an L.A. director: "'Oliver!' and 'Boys Town' are two of his favorites."

Beyond Neverland's gates, however, life is getting rough for the would-be King of Pop. His tirade in July against Sony Music chief Tommy Mottola -- a cued-for-the-cameras tantrum in which he called Mottola "racist" and "devilish;" later that day he waved a picture of Mottola wearing horns -- seemed bizarre even for Jackson, 43.

His most recent, six-years-in-the-making album, "Invincible," sold some 2 million copies in the U.S. -- about the same as the latest from Puddle of Mudd, a metal band. "Michael's got to compete against the Britneys and the 'N Syncs," says former Spin editor Alan Light. "To 18-year-olds who control what gets played on the radio, Michael is someone their parents listen to."

Beyond the blow to his ego, say sources, Jackson is fighting a very real, very relentless green monster: a growing mountain of debt that, while not a threat to bankrupt him, may cost Jackson some of his most beloved assets or force him to downsize his extravagant lifestyle. Neverland, for example, has a full-time staff of more than 50 employees. "I don't know of another superstar that has higher overhead," says TV producer Gary Pudney, a longtime acquaintance.

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It could not have helped that Sony plans not to renew Jackson's contract after the probable release of a greatest hits album. Many observers believe that by slinging mud at Sony, the singer hopes to squeeze a sweeter parting deal, perhaps by pushing the label to return Jackson's extremely valuable master recordings -- and the marketing rights that go with them -- now instead of in several years, as stipulated in his contract.

"This is Michael trying to accomplish in the press what he was not able to accomplish in the negotiating room," says a veteran music-business attorney. Says another industry executive: "This is a ploy, not a plight." Charging Mottola with racism seemed particularly reckless and far-fetched; even the Rev. Al Sharpton, an African-American activist and a Jackson ally, distanced himself from Jackson's accusation. Says former Fugee Wyclef Jean: "Tommy is one of my mentors."

Business headaches

For Jackson, the Sony squabble is only the latest in a growing list of business headaches. He faces several lawsuits, including one for $12 million in allegedly unpaid fees by a South Korean financial management company that claims it arranged $200 million in loans for Jackson from 1998 to '00. The company is seeking a court order to freeze Jackson's Neverland assets. "Michael Jackson was -- and is -- a ticking financial time bomb waiting to explode at any moment," the suit charges. Jackson's attorney Zia F. Modabber calls the lawsuit "meritless."

"He comes off in the media like a freak. Frankenstein generates more sympathy," says a top music marketing executive

Jackson is also being sued for more than $20 million by a concert producer who oversaw two of his previous tours and says Michael reneged on a contract for a world tour last year.

Even a charitable impulse seems to have turned out badly: Jackson hoped to recruit other stars to join him in recording his song "What More Can I Give" to benefit September 11 victims. A little-known businessman Jackson enlisted to organize the project, F. Marc Schaffel, turned out to be a producer and director of gay porn videos; Jackson apparently abandoned his plan when advisers discovered Schaffel's past. "Michael hires these people on his own and they turn out to be bad," says a source close to him. "He has poor judgment. I don't think he has a good sensor to figure out who is legit and what people's motivations are. It gets him into trouble."

Gradually Jackson's misadventures are putting the squeeze on his wallet. The singer has assets of more than $800 million and may have about $200 million in debts, according to one source. If that's accurate, relatively little of Jackson's fortune is liquid -- even though he is far from broke -- and he dreads the possibility of having to part with any of his prize possessions. Among his most cherished: the rights to 251 Beatles songs he bought in 1985. Jackson and Sony currently co-own the rights to those and 300,000 other songs; few doubt that Sony would like to own all the songs outright. "Michael's biggest fear," says a source, is that Sony was "underpromoting the record to bring him to the point where he felt like he had to sell the catalog. Michael's not selling the Beatles catalog. That's not going to happen."

What about selling the 2,700-acre Neverland outside Santa Barbara, California, estimated to be worth up to $50 million? "I can't see that happening," says longtime friend Kevin McLin. "It means so much to him." Adds associate Pudney: "It's a refuge from harsh realities."

Image problems

Among those harsh realities are problems with his image. Many in the industry suggest that Jackson's plastic surgeries, odd lifestyle and an estimated $15 to $20 million 1994 out-of-court settlement with a young boy who accused him of molestation have permanently alienated audiences. "He comes off in the media like a freak," says a top music marketing executive. "Frankenstein generates more sympathy."

Jackson's Q ratings, a measure of celebrity popularity, support that: He is seen negatively by three times as many people as view him positively. That's why you don't see Jackson pitching products, says Steven Levitt, president of Marketing Evaluations/TVQ: Advertisers see him as "this runaway locomotive that's going downhill rather quickly."

Those close to Jackson say that image is unfair. At home "he's a normal guy," says movie producer Dennis W. Peterson, who is in preproduction for an animated film starring Jackson.

Sources say Jackson has full custody of son Prince, 5, and daughter Paris, 4 (his children with dental assistant Debbie Rowe, whom he wed in 1996 and divorced in 1999), who bounce into Dad's meetings to ask him to read to them. "Michael is a great father," says director Stoller, who is working with Jackson on a movie script. "It's a very playful relationship. The kids have a good sense of humor and they tease him and he teases them back. But Michael can discipline them too." Says Pudney: "Michael told me once that the reason he's so involved with his own kids is because he'll never have to be lonely."

Meanwhile, Jackson's onetime beloved buddy, Bubbles the chimpanzee, lives at trainer Bob Dunn's ranch in Sylmar, California At 19, "Bubbles is an adult chimp and a wild animal," says Dunn. "We don't let him out to play." Instead Jackson and his children visit the ranch to frolic with some baby chimps. "He still acts like a kid around them," says Dunn.

Neverland regulars include Jackson's parents, Katherine and Joe (who calls Michael "a good kid who deserves more than what he's been getting"), and Michael's pal Marlon Brando, as well as groups of disadvantaged kids who still come to play at the ranch. "Michael feels he's been misunderstood," says Stoller. "When you're an adult in an adult body and you have kids as your friends who are not your children, it makes him very open to attack." These days "he's more sensitive to that. You have to be more careful when you hug a child."

And, perhaps, more careful about attacking record executives in the heat of the moment. "He's strong, he's okay, he's dealing with what's going on," says Jermaine Jackson, 47, of his brother. "He's staying busy, writing songs. That's his escape, to keep creating." The current imbroglio, adds pal Kevin McLin, "is all about business. Once things are straightened out, everything will be back to normal."

Samantha Miller, Champ Clark, John Hannah, Lyndon Stambler, Frank Swertlow and Rachel Felder contributed to this report.

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