Bad celebrity investments for the ages
While the magic of celebrity may elevate the status attributed to certain individuals, this does not mean that everything celebrities touch turns to gold. Here are some bad celebrity investments that may make you feel better at night.
A famous writer and humorist who has been called America’s first modern celebrity, Mark Twain spent $150,000 to $300,000 (a massive amount of money back then) over 11 years during the late 19th century on a machine called the Paige Compositor. This was a typesetter that was said to be faster than standard Linotype. Unfortunately, the machine had more than 18,000 parts and needed constant care, so the business died.
Jay-Z’s J Hotels in New York City turned out to be a major bust. The hip-hop mogul bought land in the Chelsea neighborhood in 2007 to build a 150,000-square-foot luxury hotel. By 2008, however, construction was shut down because of lack of funds caused by the economic crash. Jay-Z’s company defaulted on the $52 million loan, and the hotel partners gave the property back to the lenders. Legal battles and out-of-court settlements came to a painful yet unspecified financial end in December 2010.
The U2 frontman is a managing director for the private media and entertainment equity firm Elevation Partners. After making a killing with investments in Yelp, Facebook and video game companies BioWare and Pandemic Studios, later investments in Palm ($460 million) and Forbes, Inc. ($300 million) turned into huge losses. Ultimately, Elevation’s return on those investments was only $25 million, which was enough to convince the website 24/7 Wall Street that Bono is “the worst investor in America.”
Talk show host King became embroiled in a life insurance scam that involved flipping policies for profit. King gave up two policies worth a total of $15 million, but only made back $1.4 million on the sale.
Kevin Bacon, Zsa Zsa Gabor and many more
More than 200 investors, including celebrities were taken in by Bernard Madoff’s $65 billion Ponzi scheme. Madoff is now in jail serving 150 years for 11 federal felonies, while celebrities and lower-profile investors are still looking for ways to make up for their sizable financial loss.
The most popular movie star of the 1970s, Burt Reynolds fell prey to the urge many celebrities face: opening a restaurant chain. The chain was PoFolks, and outlets existed in California, Texas and Florida. By the late 1980s, however, the cupboard was bare and Reynolds was out $15 million. His eventual divorce from Loni Anderson and diminished star power led to a 1996 bankruptcy. Even though he was more than $10 million in debt, bankruptcy court allowed him to keep his $2.5 million mansion and all of his personal property that Anderson hadn’t already claimed.
Classic Hollywood film star and Las Vegas fixture Debbie Reynolds bought a Vegas casino in 1991. She christened it the Debbie Reynolds Hotel & Casino but neglected to anticipate just how much trouble the hotel would have maintaining business because it was located off the strip. A 1997 bankruptcy and sale of the hotel to the World Wrestling Federation in 1998 for $10 million left Reynolds broke and heartbroken. She would experience such grief again in 2010 when her memorabilia museum also went bankrupt, forcing her to sell off the trappings of her film career.