Actually, he’s been broke for since last October.
“About four months ago, I ran out of cash,” Musk wrote in a court filing with the Superior Court of Los Angeles on Feb. 23. “I had to obtain emergency loans from personal friends. These loans are the exclusive source of cash I have. If I did not take these loans, I would have no liquid assets left.” Tough when you make only 8 grand a month and have two high maintenance women.
The documents, released by Venturebeat are part of Musk’s divorce trial. He’s in a messy divorce from budding sci-fi novelist Justine Musk. Justine is not very successful. In all of 2008, she received a total of $7,225 in royalties, and $24 in interest. Tough for Elon: He has to pick up the tab for her lawyer too.
Elon makes a little more. But not much. His monthly income is listed as $8,255. Tesla pays him a salary of $2,773, his SpaceX company remunerates him with $1,690 a month. There is a little income from investments. He definitely won’t be able to buy one of his roadsters with that kind of money.
For someone who makes that little, he lives high on the hog. No bank will give him a mortgage with that kind of income, so he rents. For $50,000 a month. That gets him a Santa Barbara beachside hacienda, barely big enough to house his five sons and a “friend” called Talulah. Talulah Riley is 24, Musk is 38. No complaints from me, my wife is 20 years younger than I.
Five kids and a 24 year old can be a bit of a drain on your finances. Two nannies, $10,000 a month. Monthly laundry bill $2000. Health care costs not paid by insurance: $11,000. It adds up quickly. To $98,023 a month.
Then there is Justine and the lawyers . Another $100,000 a month. With so little income, it has to come out of savings. On February 24, 2010, Musk wrote to the court: “I currently have liquid assets of just under $650,000. This money is needed to support Justine and the children and to pay my own living expenses, which, together, are in the range of $200,000 a month.” That was three months ago. At $200,000 a month, the $650,000 must be gone.
You don’t want to be Musk’s friend. According to court papers, he’s currently scraping by on “emergency loans from personal friends.” To make a long story short: Musk is in deep doo-doo.
If Tesla’s IPO is successful, his finances would look brighter. But there are two problems. The court has slapped a protective order on Musk’s holdings, says Venturebeat. He won’t be able to liquidate significant holdings without first getting permission from his ex-wife. That’ll cost him. Then, there is the matter of how Musk’s precarious finances will affect the IPO.
The filings with the SEC cite the usual laundry list of risk factors, but no word of Musk’s own tight finances. Tesla is “highly dependent on the services of Elon Musk,” says the filing, but in no word does it say that an estranged wife has him by the balls – financially. Venturebeat says that some in the venture capital community think that Musk’s situation should have been disclosed in the filing. Venturebeat asked the SEC, they had no comment.
Should the IPO fail, then no money from Toyota – it’s contingent on the successful IPO. We, the U.S. taxpayer likely won’t see any of the money the Department of Energy loaned Tesla. Should the IPO succeed and the Tesla stock sink afterwards, then you won’t have to wait long for an onslaught of lawyers. The dirty laundry most likely will feature prominently.
If everything goes hunky dory, then Justine Musk possibly gets half of the proceeds. There is a postnuptial agreement, but Justine is contesting it. She lost the first round, but the case goes to appeal. It’s all pretty well explained in her blog. If you are a glutton for divorce drama, then there is a great article in Divorce Saloon. Read it and you’ll never marry.
P.S.: According to her blog, Justine wants:
- The house (not the rental, she did the usual thing and made him move out)
- alimony and child support (with 5 children, pretty much a given)
- 6 million cash (lump sum often negates alimony for the wife, but that can be bunched into child support..)
- 10 percent of his stock in Tesla
- 5 percent of his stock in SpaceX
- and a Tesla Roadster (she says “I really, really want one…”)
Advice to Musk: Settle for a little less. That protective order can get quite nasty over the long time an appeal takes. You pay her lawyers, and they’ll string it out as long as possible . I bet, $10m lump sum, child support, and the roadster would do it.
Oh, and I’d amend the S-1. The story is out anyway.