15 Celebrities Who Had Epic Fails as Entrepreneurs
Every entrepreneur can tell you about the satisfaction of running their own business and the pride in producing their own products. Nowhere is the American Dream more fully realized than in small business or investment success.
That said, there’s something those who have never tried entrepreneurship do not understand: investing in a business is very, very difficult. Why two “verys”? Because success requires a perfectly mixed cocktail of smarts, talent, timing and more than a dash of luck.
Some people find this out the hard way. And when you are a celebrity, everyone knows about it.
Sometimes its ego, sometimes its bad management and sometimes they simply leapt without even so much as a glance. But celebrities, high profile by nature, have made many high-profile business investments that end in epic flameouts. Like the examples below.
Take these as you will. Some might see them as cautionary tales. Others, looking at the overall success of many of these people, might see them as proof that even big mistakes can be overcome.
15. Curt Schilling
The business: Video game start-up
Few recent business flameouts have been as bad as the one involving baseball pitching great Curt Schilling and his video game start-up company, 38 Studios. Based in Rhode Island, the company produced exactly one video game, “Kingdoms of Amalur.” In 2012, Schilling laid off all 379 staffers at 38 Studios, then filed bankruptcy. But the problems extended beyond just his personal and business losses.
Schilling and his partners had taken $75 million in loans from the state of Rhode Island (state officials floated bonds to back the loans, luring Schilling’s company away from Massachusetts) that they now could not repay. Everyone lawyered up. The state sued, claiming 38 Studios used false financial statements to secure the public loans. In September 2016, Schilling and former 38 Studios executives agreed to pay just $2.5 million back to the state, leaving taxpayers on the hook for millions. The bankruptcy filing shows the company had $150 million in debt versus just $22 million in assets. Schilling says he spent $50 million of his personal money on the business.
14. Steven Spielberg
The business: Themed restaurant
Steven Spielberg reigns as one of the most wildly successful movie directors in the past 40 years. He’s copied by many (J.J. Abrams is a prime example) and his list of films include many cultural touchstones. Unfortunately, his list of restaurants is much shorter and forgettable.
In the mid-1990s, Spielberg and Dreamworks CEO Jeff Katzenberg opened two locations of Dive!, a submarine-themed restaurant in the shape of, you guessed it, a yellow submarine. Menu items included “sub-stantial salads” and “sub-lime desserts.” And of course submarine sandwiches. Every 30 minutes, the entire restaurant would simulate a deep sea dive with flashing red lights. Profits soon also took a dive, and it wasn’t a simulation. While the two locations – in Los Angeles and Las Vegas – had early success, traffic tapered off, merchandise sales dropped and both closed by 1999.
13. Kayne West
The business: Clothing line
This one falls into the “all sizzle, no steak” category. Kayne West had talked about launching a fashion line called Pastelle for years. He even included a line about it in a song and famously wore a Pastelle varsity jacket to the 2008 American Music Awards. However, just days after pictures of the Pastelle line hit the internet, official word came out that the fashion line was not going to actually happen. The project, it seemed, had been abandoned.
Or had it? Controversial stylist Ian Connor sent out a series of Tweets in 2016 that seemed to indicate he was working on resurrecting the brand for West, but the future of the clothing line remains unknown. And at this point, probably not so much cared about.
Sylvester Stallone, Bruce Willis, Demi Moore, Arnold Schwarzenegger
12. Sylvester Stallone, Bruce Willis, Demi Moore, Arnold Schwarzenegger
The business: Themed restaurant chain
Ah, Planet Hollywood, an icon among failed celebrity business ventures. That’s not so much because of the business itself – yet another themed restaurant chain – but because of the sheer star power behind it. Stallone, Willis, Moore and Schwarzenegger were all more or less at the height of their careers when Planet Hollywood launched.
The restaurant chain grew to more than 100 locations and went public at $32 per share in 1996. By 1999, when it filed for bankruptcy, shares had fallen to $1. Schwarzenegger severed ties with the company in 2000, and it filed for bankruptcy again in 2001. However, the company is now privately owned by businessman Robert Earl, and has just a handful of locations, including New York City, Las Vegas, London and Paris.
11. Nicolas Cage
The business: Real estate investment
In the early 2000s, Nicolas Cage made as much as $40 million a year. But by 2009, he had filed for bankruptcy. Why? At least partially because of bad real estate investments and property management. For example, in 2006 he purchased Schloss Neidstein castle in Germany for $2.3 million. The agent who sold him the property, Sabine Gammel, said the onsite inspection didn’t take long. According to Gammel, when he arrived to tour the castle, Cage walked through the gate and almost immediately said, “I think this is for me.”
Except it really, really wasn’t. In addition to the $2.3 million he paid for 11th century castle, he reportedly spent double that on mostly exterior renovations, but never got beyond that. He ended up selling it three years later, the year of his bankruptcy. “His heart was not in it,” the local mayor said. Unfortunately, that can’t be said for his millions of dollars.
The Kardashian Sisters
10. The Kardashian Sisters
The business: Pre-paid debit card
Some deals just seem off from the start. And the idea of the Kardashian sisters, queens of conspicuous consumption because they can afford it, issuing a pre-paid debit card marketed at young adults seemed…wrong. And then the attorney general for Connecticut, Richard Blumenthal, looked into the “Kardashian Kard” and found it was far worse than just a bad idea.
Blumenthal issued a letter to the bank backing the card, University National Bank, questioning the legality of the card because of “pernicious and predatory fees." He wrote, “Keeping up with the Kardashians is impossible using these cards." Less than a month after it was issued, the reality show stars removed it from the market
9. Jay Z
The business: Boutique hotel
Rapper Jay Z (real name: Shawn Carter) has done many things right in business, not to mention a stellar music career, but here’s one where things went wrong. Jay Z partnered with real estate developers Charles Baichman and Abram Shnay in 2007 and bought a former Time Warner Cable warehouse in Manhattan. They planned to build the first of what was going to be a chain of boutique J Hotels.
However, the partnership defaulted on their $52 million loan in 2009, and then a legal battle ensued between the partners and lenders. After a round of lawsuits and counter lawsuits, the matter was settled in 2010 when Jay Z transferred the deed to the site to a real estate management firm controlled by his lenders.
8. Flavor Flav
The business: Fried chicken franchise
Flavor Flav became famous as part of iconic rap band Public Enemy. After hitting big in music and also on a reality television show (“The Surreal Life”). Flav (real name: William Jonathan Drayton Jr.) decided to try his hand at challenging KFC and Popeye’s in the fast food fried chicken market. He teamed with Clinton, Iowa, restauranteur Nick Cimino and opened Flav’s Fried Chicken in Clinton in 2011. But his bid for fried chicken dominance, or even relevance, did not last long.
The two partners feuded, each claiming the other was causing problems with the restaurant, including not paying employees or distributors. They even argued over who had decided to close the restaurant, which happened after three months. Things got ugly, but – after a substantial amount of paid attorney hours – the pair legally went their separate ways and Flav was free to open two more chicken restaurants on his own in Las Vegas and Michigan. And then they both quickly folded. In the case of the Michigan location, Flav was actually evicted for failure to pay rent to the building’s owner.
7. Lenny Dykstra
The business: Financial services/publishing/charter jet service/car washes
Lenny Dykstra, the hard-playing baseball player for the New York Mets and Philadelphia Phillies, launched into a number of business ventures after his playing career ended. He ran profitable car washes for a time in Southern California, but got sued by his business partner and members of his own family for financially damaging the business.
He became a stock analyst, writing a column for The Street.com. And then he launched The Players Club, which tried to be a financial magazine, jet charter service and investment house all in one business. Targeted at athletes, it failed to generate much interest. As things unraveled, he was sued by everyone from banks to his own brother for unpaid bills. He declared bankruptcy and listed his assets at less than $50,000 and liabilities at $10 million. He lost his $17 million California mansion to foreclosure and reportedly left it in a deteriorated condition. Federal authorities indicted him, and he eventually pled guilty on charges of fraud, concealing assets during his bankruptcy and money laundering. He recently wrote a book about his life, “House of Nails.” He’s already has been sued by a man who claims Dykstra did not pay him as promised for running the book’s social media campaign.
6. Mark Twain
The business: Technology start up
Mark Twain (real name: Samuel Clemens), as everyone who stayed awake in high school English knows, is one of the most beloved American authors and also one of the country’s first celebrities. He also had a bit of money, including some from his wife’s inheritance. So he had a little cash in his pocket in 1880, when he met James Paige, an investor who was working on an automatic typesetting machine.
The machine, Paige claimed, would do better than human typesetters and better than the Linotype machines of the day. An impressed Twain gave him $5,000. Seven years later, he had put in $50,000 and an additional $3,000 per month as the project’s main backer. He eventually bought the rights to the machine in 1889. As history tells us, Linotype cornered the market on typesetting and Twain ended up bankrupt, with the Paige Compositor the biggest of his poor investments. However, he came back from bankruptcy and even paid off all his creditors, even though he was not legally obligated to do so.
5. Burt Reynolds
The business: Two restaurant chains
What is it with celebrities and restaurants? A move into the food industry ranks as one of the most likely ways a celebrity will make a bad business move. In the case of Burt Reynolds, the beloved actor who reached his height of popularity in the 1970s and early 1980s, the first decision was to invest in a restaurant chain called PoFolks, founded in South Carolina.
The chain expanded to more than 100 locations by 1984. Around that time, Reynolds partnered with country music executive Buddy Killen on 30 PoFolks franchises in Texas, Florida and Louisiana, forming a company named BanditTree (bonus points if you get the bandit reference). “The down-home cooking is the kind of food I grew up on and love,” Reynolds said at the time. Unfortunately, the investment cost him and Killen $20 million each. They then invested in the Daisy Diner chain, which also did not make money, costing them another $10 million-plus each. All of this, plus a famously costly divorce from Loni Anderson, contributed heavily to Reynold’s 1996 bankruptcy.
4. Britney Spears
The business: Restaurant
Britney Spears became famous for many things beyond her music, including a reality television show and movies (“Crossroads”). But her venture into the New York City restaurant scene fared about as well as the movie.
Called Nyla, the restaurant specialized in Cajun cuisine (Spears is from Louisiana). However, things went from bad to worse fairly quickly with Nyla. Located in the Dylan Hotel in Manhattan, Nyla opened in June 2002 and Spears pulled out of the deal just five months later. Over that time, chefs departed, Nyla received several minor health code violations and the menu switched from Cajun to Italian. According to a bankruptcy filing, Nyla owed $400,000 to creditors upon its closure.
3. Debbie Reynolds
The business: A Las Vegas hotel
In 1992, legendary film and music star Debbie Reynolds paid $2.2 million for the old Paddlewheel Casino and Hotel, off (but near) the Strip. She sunk $2 million of her own money into renovations and then, when the Debbie Reynolds Casino and Hotel went public, raised enough cash to put in another $7 million into the hotel. The casino-hotel opened in 1993 and had an Old Hollywood/Classic Las Vegas décor. It also featured a 500-seat auditorium where Reynolds performed.
However, Reynolds did not have any part of the casino, which was operated by a separate company that kept all the revenue. Not a great deal for Reynolds. From the start, not enough cash flow came in to service the debt, even after management sold time shares at the hotel. The monthly negative cash flow reached about $450,000 a month. At that point Reynolds’ people tried to pursue a gaming license to move into the casino end of the business, but without cash flow from the hotel, they couldn’t secure financing. And without financing, they couldn’t get a gaming license. Game over. The hotel – and Reynolds personally – declared bankruptcy in 1997.
The business: Investment services
The lead singer of U2, a band that focuses (at least in its heyday) on political, spiritual and human rights issues, is co-founder and managing partner of Elevation Partners, a private equity firm that focuses on media, entertainment and consumer-related businesses.
He initially scored big with investments in the likes of Facebook and Yelp!, but things didn’t go so well from there, including hundreds of millions put into Forbes and Palm Inc. which made personal digital assistants and one of the first smartphones. The moves, which lost millions of dollars, prompted 24 Wall Street to dub him “the worst investor in America.” However, the company still exists, and in 2015 Bono was hired as special technology consultant to TPG Capital.
1. Kim Basinger
The business: Owning a town
This ranks among the strangest of all bad celebrity business deals. In 1989, actress Kim Basinger partnered with Georgia pension fund AmeriTech to buy 1,751 acres of the 2,000-acre town of Braselton, Georgia. The sellers were the Braselton family itself, which had owned the land 113 years. The price: $20 million. But Basinger – who grew up in Georgia – put about $600,000 into the deal, buying a bank building in the heart of the town.
Basinger talked about all kinds of plans - film festivals and art shows, for example - but did nothing. Then she got sued for dropping out of a movie (“Boxing Helena”) and declared bankruptcy. AmeriTech sold out of the deal in 1995, losing millions, and Basinger sold the bank building for $600,000 to help pay her bills. But we are happy to report that the plucky people of Braselton, which is north of Atlanta on the I-85 corridor, have moved on. According to the city website, the area is home to the Chateau Elan Winery and Resort, which draws 500,000 visitors a year, and has headquarters for Year One and Peachtree Tooling as well as distribution centers for Williams-Sonoma, Hitachi, Whole Foods and Haverty’s. The population has more than quadrupled since Basinger pulled out in the 1990s.