The Reason Tom Petty Went Bankrupt On Purpose
Professional heartbreaker Tom Petty's opinion of the music industry was no secret. "You get to be famous, I get to be rich," sings the fictional industry exec at the heart of Petty's sarcastic 2002 track "Joe." Petty was a musician who stuck to his guns when the industry tried to sell him and the Heartbreakers like "groceries, or frozen pork," as he's quoted in the Los Angeles Times.
In 1978, the label that had released the band's first two hit albums, Shelter Records, announced that it was being sold to MCA. As was industry practice, the label had advanced Tom Petty and the Heartbreakers a sum of money to record their albums, but then took it out of the measly royalties they made off them.
Petty wasn't having it. Like the hit song he'd go on to release 10 years later, he didn't back down. "In standing up to MCA," wrote the author of his LA Times obituary, "Petty demonstrated the premise that an artist with fans has leverage."
Tom Petty wasn't one for taking the easy way out
Due to a previous renegotiation of terms, Petty's record deal contained a clause that stipulated that Shelter was obligated to consult with him before it sold the contract to another label. When he argued that the label had breached the contract, Shelter and MCA teamed up to sue him for the same thing, thinking they had him in a corner. According to CNBC, Petty had a plan. He racked up over a half-million dollars in debt financing a new studio album on his own dime, then sat on it and declared bankruptcy to force MCA into voiding his contract. "If you're bankrupt, all contracts are void," Petty said later of the shrewd move.
The label tried to get Petty to undo his bankruptcy claim, but the rock 'n' roll legend replied that he'd have rather sold peanuts than back down to their bullying. He and the band even went on a short "Lawsuit Tour" to cover the legal fees of standing up to some of the biggest jerks in the music industry. And the gambit paid off. The Heartbreakers' subsequent album, Damn The Torpedoes, ended up going triple platinum, and the band's legacy includes 28 Top 10 singles that dominate the classic rock radio waves to this day.