Looming divorce threatens to cut into the disgraced producer’s net worth at exactly the moment his expulsion from the Motion Picture Academy ends his career. Now’s the time to have wealth stashed for disaster.
The point of accumulating wealth is to create a cushion of comfort when the whole world turns against you. That’s exactly where Harvey Weinstein is now. That cushion had better be thick.
Hollywood has turned on him now that everybody knows he kept the vile “casting couch” tradition alive for decades.
His own brother led a coup to push him out of the company that bears his name and he’s out of the club that votes on his beloved Academy Awards.
Now his wife wants a divorce. She’s going to want support, whether or not she’s entitled to it.
When he gets back from sex addict rehab he’s going to need to sit down with his advisors and figure out how to fund the rest of his life.
Weinstein has over 300 producer credits to show for nearly 40 years in the movie business, but he doesn’t own the movies outright. They either belong to the studio he built with his brother or else they’ve been mortgaged or sold in various Hollywood deals.
His 23% ownership stake in that studio was going to be his career exit, the retirement package. Now it looks like his partners aren’t going to cash him out — if anything, scraping up the roughly $100 million it’s worth on paper would push the wounded brand closer to bankruptcy.
A big piece of a bankrupt company isn’t exactly liquid. In a succession crisis like this, the founders are more likely to get diluted to irrelevance than they are to demand a sweet payout.
Unfortunately, this is also the company that paid Weinstein a healthy salary in the meantime. Those checks have stopped. From the sound of it, there’s no easy severance package either.
He’s suing his brother for breaking the employment contract but it’s going to be a long and uphill battle. The studio can’t go easy on him without enraging Hollywood.
And in the meantime, there’s no payday. He’s left with the assets he’s built up personally, just like any other mid-range executive whose career ends abruptly.
I don’t think that’s a whole lot of cash. When he and Bob sold Miramax, they “only” got about $60 million and most of that money got poured back into the new studio when the brothers left Disney.
Harvey never shows up as a major holder of Disney stock like Steve Jobs did after he sold Pixar. While he served on a few corporate boards, it was usually the studio that was a strategic investor, not part of his personal portfolio — and most of those companies have failed or gotten bought out.
So we’ve got to look for places where he could’ve stashed part of his paycheck over the years. None of the usual hot spots show up.
There aren’t any Weinstein trusts associated with the family with a wide enough paper trail to track, and neither brother shows up in the Panama Papers.
At the very least, we’d expect to find a foundation or other non-profit vehicle that can double as a reservoir of emergency petty cash. Weinstein was a player in New York’s elite Robin Hood Foundation, but they kicked him to the curb last week.
Otherwise, a more sophisticated asset protection program seems to be alien to his volatile temperament. That lapse looks like a huge missed opportunity now, but remember, as far as he was concerned, the film library was his rainy day fund and he was confident nothing would separate him from it.
He thought he was going to work at Weinstein forever. After all, his name is right there on the letterhead as co-founder, co-chairman and CEO.
That’s the biggest advisory lapse of all here. If your client is worth $100 million on paper, the odds of a catastrophic career-ending event may be minuscule, but even 1% is worth $1 million.
The biggest and most secure families I’ve worked with keep a few million in a vanilla portfolio of Treasury bonds, money markets and a tiny bit of pocket gold, just in case the billions all evaporate at once. There’s more in trust secure from lawsuits and shifting tax obligations, but that sliver of liquidity is where it starts.
Is a strong second act possible?
Maybe Weinstein has that cushion in place to tide him over while he fights for his piece of the studio. Even so, it’s now vulnerable to whatever his wife demands as her piece of the marital estate.
She’s young and relatively famous in her own right as a fashion designer, but it’s hard to say how much money that business actually nets. And she’s got two young kids who will need child support for another 10-15 years at least.
Maybe there’s an ironclad prenuptial contract in place. Generally those seal off the discrete working assets — in this case, the stake in the Weinstein Company — while leaving the door open to a split of a few million dollars in more portable wealth.
That portable wealth is the liquidity pool well-advised UHNW families have available. If Weinstein has one, only a cruel prenup would leave her with nothing.
Besides, his detractors in the industry would eat him alive. My guess is that it’ll play out like his first marriage. She’ll get the house, which in this case is maybe worth $7 million, and child support at the very least.
Weinstein is trying to sell a few other houses in Connecticut and the Hamptons that could liberate $25 million if they all move fast. If that’s his “rainy day fund,” it’s better than nothing, but high-end real estate is far from a blank check.
To pay ongoing child support and any cash settlement, he’ll need to hand over a significant piece of the proceeds when and if they materialize. Or else he’ll need to go back to work.
The question there is what he’s going to do to support the lifestyle to which the Weinsteins are accustomed. He’s 64. Hollywood and the broader liberal establishment have turned on him.
He’ll need to come up with the contrite performance of his life when he gets out of rehab or no actress will ever work with him again. Maybe he can devote himself to high-profile activism, but even there, do-gooders are worried that close exposure will hurt their organizational brand.
Maybe his little brother will eventually cash him out and cut him loose. But for now, it’s probably more fun watching him wiggle on the hook.
While it may be poetic justice in the end, it’s the kind of scenario your clients need to be braced to survive. Awful things happen to good and bad people alike. No matter how unlikely disgrace may be, planning reduces the impact.