The impoverished professionals: New victims of the crunch
Anybody who's anybody has a financial hard-luck story these days. John Walsh examines the new poverty. Case histories: Holly Williams
Wednesday 26 May 2010
"How did I go broke?" the once-rich F. Scott Fitzgerald said to Ernest Hemingway. "Two ways – slowly then quickly." More and more wealthy Britons are being left surprised at the speed with which the golden horse-drawn carriage of their lives has suddenly become a train on a one-way ticket to Queer Street.
The Duchess of York – who is facing bankruptcy, has been reduced to trying to sell her husband's influence like some eau de parfum and is now in danger of losing her home – is only the most recent case of financial meltdown among the well-heeled. The phenomenon of the A-list debtor is not a localised trend: it's a sign of the times.
For the past year or so, every other news bulletin seems to have brought another celebrity bankrupt shambling out of the woodwork to proclaim their insolvency with something like wounded pride. Anthea Turner, the former GMTV host, Mike Read, the ex-Radio 1 disc jockey, Kerry Katona who was crowned the jungle queen of I'm A Celebrity... Get Me Out of Here! and went on to be the face of Iceland's television adverts, John Barnes, the graceful footballer-turned-manager, Matthew James, the high-society party planner – how could these people possibly go bankrupt? They've all spent half a lifetime in high-earning milieux: television, music, sponsorship, football and charity fundraising, where most of them could once summon a five-figure salary per week. Even in the comparatively low-earning stratum of journalism, financial casualties can be found bleating about their debt problems. Rosie Millard, the former BBC arts correspondent, outed herself as a financial car-crash. Last week Liz Jones wrote a heartbreaking piece claiming her expensive lifestyle had almost ruined her.
Ms Jones was understandably grateful when Daily Mail readers rallied round and sent her wads of cash from their weekly savings. But should we feel sorry for celebrities who have come off the financial rails? There are, after all, a lot of other debtors around who may tug at our sympathy. According to Credit Action, the debtors' charity, people go bankrupt at the rate of one every 3.69 minutes. A property is repossessed in the UK every 11.4 minutes. Spare a thought for the hard-worked staff of the Citizens Advice Bureau who handle an estimated 9.500 new debt problems every day. A staggering 16,348 individual bankruptcy petitions were made in the first three months of this year, along with 2,177 company winding-up petitions due to financial difficulty.
It's possible to trace the arc of circumstance by which middle-class people fall into debt: a rash decision to send a child to private school can bring ruin when you're paying £15,000 per annum for each of your three children's education, 10 years later. Expensive holidays, constantly obsolete technology and chaos on the Stock Exchange can wipe out otherwise prudent and commonsensical bourgeois couples. The "Debt Set", by contrast, get into trouble by expecting huge tranches of money to keep flooding in, and learning to spend accordingly – until the huge tranches cease to arrive. Debt at this level is nothing to be proud of – but at least the debtors can say they're in good company. If you haven't got it, flaunt it.
Sarah Ferguson, Duchess of York
Fergie hit headlines recently when an undercover reporter for the News of the World allegedly filmed her offering to sell access to her former husband, Prince Andrew, for £500,000.
The duchess has a history of finding herself neck-deep in scandal. She fell out of favour with the Royals in 1992, when photographs allegedly showed a financial adviser sucking her toes. By 1995, after three years of separation from her royal husband, she was more than £4m in debt. Divorce followed, in 1996. The couple stayed on good terms: Fergie is reported to have told the News of the World's reporter that they are the "happiest divorced couple in the world". But the paper also reports that she claimed the divorce had left her hard-up: "I have not got a bean to my name... I left the Royal Family for freedom and in freedom it means I am bereft."
Yet for all her freedom – and her debt – Fergie seems to remain infatuated with a luxurious lifestyle. The News of the World quoted her as saying: "I'm a complete aristocrat. Love that, don't you? I love it. It's tremendously fabulous."
Singer and celebrity
Kerry Katona, former Atomic Kitten, face of Iceland and sometime magazine columnist, was declared bankrupt at the High Court in August 2008 – but remains a prime example of the celebrity debtor. Faced with an overwhelming £417,000 tax bill, Katona failed to stump up the final £82,000. The case had already been in court four times.
Trouble had been brewing for a while. Despite allegedly earning up to £3m a year in advertising deals, celebrity appearances and ghost-written novels, Katona was reported to be splashing out more than she was earning on such traditional celeb necessities as fast cars, mansions and drugs.
Things were still not going well a year later – in August 2009 she lost her lucrative six-figure deal with Iceland amid allegations that she was using cocaine, and she was dropped by MTV after her show, What's the Problem? failed to draw an audience. Last Christmas, she had her £1.5m mansion repossessed, having missed months of payments.
It appears, however, that she may now be getting her life back on track – helped by an £11,000 makeover to "reboot her career", according to Now magazine. Nothing helps the debt repayments like losing three stone, it would seem.
When her husband Grant Bovey's property company went bust last year, leaving debts of £50m, the luxurious lifestyle that Anthea Turner was used to slipped away rapidly. As Bovey told the Daily Mail at the time, every day he'd be "down another million here, a million there".
All these mislaid millions eventually meant that they had to flog their £10m 57-acre Barbins Grange estate in Godalming, Surrey, waving farewell to its polo fields, its cinema and its helicopter pad. But despite the sale, Bovey had to declare bankruptcy in March,
Yet Turner has proved that she can smile through the pain. A presumably lucrative interview in the latest issue of Hello! magazine sees her in a bikini jauntily holding a bunch of balloons.
What she reveals in the interview isn't quite so cheery, however. It seems that she struggles to get out of bed in the morning, thanks to the financial problems that still dog the couple.
Turner also became emotional about her financial difficulties in 2008, when she sobbed to The News of the World that "our backs are against the wall – we may even lose our mansion." Fortunately, she also remarked that she didn't think owning a mansion "makes you happy".
Daily Mail columnist
She's one of the best-paid newspaper columnists in the country, and has written about splurging on holidays, cars and cashmere – as well forking out for a £26,000 bat sanctuary in her garden and £530 shed for her godson.
The result? She's £150,000 in debt. But, bless her, she can't help it: she's revealed that she "cannot love anything that costs under £5" and "hates anything cheap, with money off" – she turns down two-for-one offers on her £9-a-tube toothpaste and is "incapable" of shopping at Comet.
Luckily for Liz, her readers are a generous lot – she had an astonishing 4,100 responses offering to help her out of her cash black hole after she claimed she couldn't even afford to pay for heating or petrol. Needless to say, many of these weren't exactly used to her standard of living - a 77-year-old widow on state pension offered to send her a £50 premium bond, while another reader offered the £20 which they kept in a drawer for emergencies.
John Burton Race
John Burton Race declared himself bankrupt in March last year – just two months after his ex-wife, Kim, also went bankrupt.
The couple's financial difficulties first came to a head back in 2007, when Kim closed their Michelin-starred Dartmouth restaurant, The New Angel. John was in Australia at the time, filming I'm a Celebrity... Get Me Out of Here, and was reportedly fuming when he discovered that his wife – who was in the process of divorcing him after he left her for his mistress – had fired 20 staff and shut up shop.
In November last year, Burton Race was arrested for drink-driving. He asked if he could pay his £1,330 fine in instalments "because of my financial circumstances and because of the divorce... I can't really take it in one hit".
It was revealed this month that his bankruptcy and divorce cost him more than £3m. Speaking of his split with Kim, Burton Race reflected: "It's only money. And hell hath no fury like a woman scorned. Kim is a city girl. All she likes is her Gucci handbags and Prada shoes."
Formerly a much-admired Liverpool and England winger, John Barnes didn't show quite the same skills in club management. He was dismissed from Tranmere Rovers in October last year, after his side lost eight out of their 11 games while he was in charge.
His dismissal came in a bad week for Barnes: a mere five days later, he was declared bankrupt by an insolvency court in Liverpool.
His problem, simply, was profligacy. He had been trying to rein in his spending since quitting as a player in 1999, without success. A few months before his bankruptcy he had spoken about his youthful spending sprees: "By the time I was 17 I had signed to play for Watford, so lots of money was coming my way. I wouldn't go as far as saying I became like P Diddy, but I did act like an idiot for many years. I bought an Aston Martin DV7 and stupid flashy clothes, which were very expensive, but I can't wear them now."
Eventually, he resorted to shopping in Primark instead, but it was too late to keep the debt collectors at bay. Barnes has insisted that "the bankruptcy issue is a tax oversight which is being dealt with".
Journalist and author
Writing in the Sunday Times, Rosie Millard reported in 2005 that she was drowning in debt. And that's despite having four properties worth more than £2m at the time, including a £900,000 Grade II listed Georgian home in Islington, a £700,000 Victorian house in Hackney, an apartment in Paris near the Moulin Rouge and two buy-to-let London apartments worth around £600,000.
Identifying herself – presciently – as one of a new breed of "impoverished professionals", Millard revealed that her bank accounts were frozen; she owed £40,000 and had had to sell her Skoda. Well, savings had to be made somewhere, and she just couldn't live without "a decent haircut every eight weeks, vaguely designery suits, Stila make-up and The New Yorker".
Her troubles continued. In 2007, she documented the trials of living within her means in a "thrifty living" column for this paper – hypnosis and holidays in Southwold both being sampled in a bid to curb her spending. Not that Southwold helped much – apparently in the land of the £100,000 beach hut and £28 miniature cake stands, one must be careful not to be infected with the "virus of virtual wealth".
He has organised some of the world's glitziest parties, for a range of celebrities including Sir Elton John, Stella McCartney and Kevin Spacey. But as we know, not all that glitters is solid gold.
Matthew James's good times came to an end in March last year when he went bankrupt after losing a High Court battle with Rafi Manoukian, a property mogul and one of the richest men in Britain. A disgruntled Manoukian had refused to pay the final £200,000 of a £827,000 bill for a party which James had organised at Sir Elton John's home in 2006. The party failed to live up to expectations – and Manoukian had discovered James was making an extra £50,000 in commissions from suppliers.
Embarrassingly enough, an email intended for a supplier was accidentally sent to Manoukian, which didn't exactly help James' case. It reportedly read: "When you do quote, could you also just include 10 per cent commission to us hidden in the quote? We have to show our client the invoices."
James was faced with legal costs of around £450,000, and had no choice but to go bankrupt. His company, DNA Production, had already been liquidated.
Having been declared bankrupt in 2009, the former Radio 1 DJ was forced to sell off his entire vinyl record collection in a bid to make some cash.
This much-loved load spanned five decades and included among its treasures master discs of The Jam's "Going Underground" and The Clash's "London Calling", and signed singles from the likes of David Bowie and Paul McCartney.
The collection had been valued at around £1m, but it sold for only a tenth of that price, leaving Read struggling to pay off his debts.
But at least selling the collection will have freed up a bit of space – in 2004 Read remarked that his "enormous" record collection had "taken on a life of its own in a wing of my house in West Sussex".
It was the second time Read had gone bankrupt. Financial woes have dogged the music man, despite two decades as a successful radio DJ. In 2004, his West End musical about Oscar Wilde – entitled simply Oscar – flopped spectacularly. Panned by critics, it closed after one performance, at a personal cost to Read of £80,000. It was, he explained, "one of the worst times of my life – an absolute nightmare".
Just in case you thought it was only foolhardy Brits who could fritter away their fortunes on champagne and sheds (and the like), consider the case of Annie Leibovitz, doyenne of celebrity photographers.
Like many artists, Leibovitz is a famous perfectionist – so much so that she racked up huge debts with her just-so lifestyle: the multiple mortgages, the chef, the yoga instructor, the gardener. According to New York magazine, she trusted only one man to work on her air conditioning – and he lived in Vermont.
Despite reportedly earning $250,000 a day for advertising jobs, the American still wound up with such huge debts that in 2008 she had to take out a $24m loan from Art Capital – with the rights to her images as collateral. She failed to repay it; they sued. Eventually, in 2009, a settlement was agreed on, with Leibovitz buying back the copyrights for her work. Then, in March this year, she struck a deal with Colony Capital, who became her sole creditor. This deal paid off Art Capital and allows her to retain – for now – the rights to more than 100,000 photos, including images of John Lennon on the day he died and the famous picture of a naked, pregnant Demi Moore.
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