Neverland Ranch related issues have been on the fans radar for several years. First there was the foreclosure news, followed by MJ – Colony Capital refinancing deal. After Michael’s death, fans wondered what would happen to Neverland. Last year we heard that Colony Capital decided to sell Neverland. This brought a lot more questions. Based on the available information, we believed there was a joint venture between MJ and Colony Capital. Fans questioned how Colony Capital can decide to sell Neverland and how could Estate have no right to stop the sale.
Until today we couldn’t answer such questions. However recently Tohme’s Finder’s Fee Claim (10% from Neverland refinancing, 10% from any future transaction about Neverland) has been put on calendar and this resulted in Tohme filing some documents which included letters and agreements between MJ and Colony Capital. For the first time we get a look inside the Neverland deal between Colony Capital and MJ.
First we confirm that there was a joint venture between MJ and Colony Capital. However the documents also state that the goal of the joint venture between MJ and Colony Capital was “to own, operate, reposition and sell Neverland”.
Colony Capital writes
“As we understand it, our mutual goal is to preserve your interests while at the same time maximizing the value of the Ranch with a view towards an ultimate sale”.
Attached agreement terms provide us a lot more information.
MJ and Colony Capital form Sycamore Valley Ranch company with “the sole purpose of owning, repositioning and selling Neverland”. MJ transfers the title of Neverland Ranch and Colony Capital proves funding to operate, maintain and reposition Neverland Ranch. Colony Capital controls the joint venture with MJ being at a consultant position.
Agreement Terms also shows us that the plan was to sell Neverland within 12 months and the sales decision was under Colony Capital’s control – as previously mentioned by MJ Estate. Again MJ’s role was limited to consultation.
“Colony will develop a repositioning and a sales plan for the Ranch with a view towards repositioning and selling the Ranch within approximately 12 months.”
Further documents (Sycamore Valley Ranch LLC Agreement) clarified that Colony Capital could undertake the sale of Neverland for fair market value without MJ’s approval.
MJ was given a right of first offer which gave MJ right to offer to buy Neverland back.
In their complaint against Tohme, Estate had stated the Neverland deal was very unfavorable for MJ and it had unfavorable financial terms. Now we also see the details of the financial terms. Colony Capital is to be paid the original loan + interest, reimbursed for the money they spend on operating/ maintaining Neverland + interest and a 12.5% fee (at least $3.3 Million). Then add to that Tohme’s 10% from any future sale/ transaction and we are left with an extremely unfavorable financial terms for MJ (and now MJ Estate).
Clarification note: Just to make sure there's no misunderstanding, I'm not claiming to know or state what MJ wanted.It's just that he signed an agreement which clearly states the ultimate goal was to sell Neverland. Michael could have been cornered to sign such an agreement to avoid foreclosure and/or he could have been misled about the terms of the agreement.
For your reading pleasure or displeasure here are some of the full documents about Neverland Deal between MJ and Colony Capital https://www.scribd.com/doc/255769393/Colony-Capital-MJ-Neverland-Deal