Maybe Jay-Z should stick to music and apparel: the world’s most successful hip-hop star recently lost around $50 million on two Manhattan hotel projects. The “ J Hotels” high-rises, planned for Chelsea and the Meatpacking District, were purchased back in 2007. When the housing market crashed and property values fell, Jay-Z tried to return his purchase to the Highland Capital Management to avoid repossession, but Highland refused. Jay-Z claimed the company’s unresponsiveness cost him millions, but Highland called the rapper’s claims “meritless.” The projects have since “fizzled,” costing Jay-Z and his J Hotels about $50 million, according to the New York Post. At least he still has Beyonce.
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Remember those great U2 ads for Apple? Bono is probably wishing it was 2004 again, too. The U2 lead singer is short a cool $140 million on an investment in Palm Inc., an Apple rival and money-losing phone maker. Bono held a 30 percent stake in the company (including $320 million in stock) when Hewlett-Packard acquired the phone company for $1.2 billion. The deal, however, didn’t quite work out in favor of the rock star frontman. The HP deal places the value of Palm shares at $5.70—far from the $18.09 they were last year. Because of his huge investment in Elevation Partners, the institutional fund that put its money in Palm, Blog 24/7 Wall St named Bono “The Worst Investor in America.”
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Talk about a master negotiator. When William Shatner began as the face of Priceline.com 10 years ago, he asked for stock options instead of cash. Reports earlier this month put his current take from the deal at $600 million, but Shatner took to Twitter and said he hasn’t made that much. The official number may not be out there—but Captain Kirk certainly has made a pretty penny. His strategy didn’t always look so good, however. In 2000 during the dot-com crisis, Priceline shares hit $1.80 each, but they’ve rebounded nicely to $300.
Kevin Bacon probably wishes there were more than six degrees separating him and Ponzi schemer Bernie Madoff. Bacon and wife Kyra Sedgwick lost millions in Madoff’s crippling $50 billion Ponzi scheme in 2008. When the list of Madoff victims started coming out, Bacon’s representative, Allen Eichorn, told New York magazine, “I can confirm that they had investments with Mr. Madoff—no further specifics or comment beyond that.” Last year, Bacon finally spoke out about his losses (albeit vaguely), saying he was looking at new projects, because “I need to work, for obvious reasons.” Steven Spielberg, Jeffrey Katzenberg, and Eric Roth also lost millions in the scheme.
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In 1989, Kim Basinger famously bought the town of Braselton, Georgia for $20 million. But in actuality, she only bought a bank building. She got Ameritech to plunk down the cash for the town, naming herself as “creative partner.” She’d fallen in love with the town, located 25 miles from her hometown of Athens, and was urged by family members to buy it before it went broke. Basinger had “incredible plans” she said, “like an arts center, a film festival and an animal preserve.” Unfortunately, Basinger admitted later, “nothing came of it.” Shortly after the purchase, and much to the disappointment of the townspeople, Ameritech froze all development and nothing happened. Ameritech sold their interest in 1995 for $4.3 million. Basinger had, by that time, been sued for dropping out of the film Boxing Helena and had declared bankruptcy. She sold her one building for $600,000 to raise money to settle her lawsuit. Would she do it again? "I still get calls about buying towns," she says. "I might do it again. But I'll be wiser about it this time."
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In 1992, Sammy Hagar opened the Cabo Wabo Cantina, never thinking a bar in the small town of Cabo San Lucas would make much money. For the first few years, he was right. But in the mid- to late-‘90s the area began gaining notoriety as a vacation spot, the crowds came—and so did a big profit. “I didn’t give a crap about profits. I thought if this place could just break even it would be a great place to play.” In 1996, Hagar partnered with the Rivera family to produce a premium tequila called Cabo Wabo tequila and now his Cabo Wabo Enterprises employs 200 people and earns about $200 million in revenue. “I like owning and operating a business. It's as creative as stepping on stage or making a record,” he said. “Many businesspeople were trying to convince me that to make this a great thing, I had to have a corporate structure and involve people who knew what they were doing. I don't believe that. I didn't want to make it like that." In 2007, Hagar sold 80 percent of his interest in the company for $80 million.
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Three years ago, Kevin Costner was kicking himself for investing millions in two companies that championed green technology and were inspired by the Exxon Valdez accident in 1989. "There's nothing to show for the millions I've invested. My God, most people would want to die if they lost $1,000 or $100,000. I've lost $40 million plus,” he reportedly said. "I'm not the shrewdest businessman," he admits. "I'm more of a dreamer." Now, the ill-fated companies he invested in with his brother may help clean up the recent massive oil spill in the Gulf. Costner went down to New Orleans last week to demonstrate the oil spill clean-up machine that he and his brother started working on 15 years ago. Locals were enthusiastic after the demonstration. "I just am really happy that this has come to the light of day," Costner said. "I'm very sad about why it is, but this is why it was developed, and like anything that we all face as a group, we face it together."
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Dorothy Hamill won figure skating gold at the 1976 Olympics, and years later wanted to invest some of her fame and fortune to support her favorite sport. Hamill headlined the Ice Capades from 1977 to 1984, and after the beloved show declared bankruptcy, Hamill swooped in with her husband and partnered with Ben C. Tinsdale to buy the company in 1993. “It was breaking my heart to think there would be no more Ice Capades,” Hamill said. Although she received accolades for the changes she made to the company, including updating the shows, the sport she loved turned out not to love her back. Hamill declared bankruptcy in 1995 and sold the Ice Capades to International Family Entertainment.
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Ty Cobb made a fortune by being one of the first investors in a fledgling soda company called Coca-Cola. In 1908, he began accumulating stocks in the company after signing an endorsement deal. Due to this investment and another one in GM at the turn of the century, Cobb was one of the few people who made money during the Great Depression. Despite never having a salary greater than $40,000, he managed to become a millionaire before he retired from baseball. Not bad for somebody who committed 271 baseball errors over the span of his career.
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A Ponzi schemer should know better than to mess with Jack Bauer, but Kiefer Sutherland wasn’t so lucky. The actor lost nearly $1 million in a Ponzi scheme involving cattle earlier this year. According to court papers, Sutherland invested $869,000 with cattle manager and competitive steer-roping promoter Michael Wayne Carr, but his company bilked its investors by alleging to have sold cows bought in Mexico and reselling them in the U.S. for a profit, which turned out to be total fiction.
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Debbie Reynolds headlined for years in Las Vegas, so she might have known better than to buy an off-strip casino. In 1993, she and her real-estate developer husband, Richard Hamlett, purchased the Greek Isles Hotel & Casino, a long-troubled hotel and casino in Las Vegas. They reopened it as the Debbie Reynolds Casino, but business tumbled. In 1996, they were forced to close the casino, and by July 1997, the hotel declared bankruptcy.
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Mark Twain has been called America’s first modern celebrity, so his bad investment should be no surprise. According to Twain’s own estimates, he spent $150,000 over 11 years on the Paige Compositor, a typesetter meant to be speedier than the standard Linotype machine, but others have put the amount higher, at around $300,000. Twain wrote that the Paige Compositor typesetter “marches alone & far in the lead of human inventions,” but he later became disillusioned with the machine that had over 18,000 separate parts and needed frequent repair. In a later letter, he wrote the Paige Compositor would have to be in use almost 24 hours a day to justify the cost.
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