This 1979 Album Made Tom Petty Declare Bankruptcy

Published Aug 27, 2026, 4:29 AM EDT

Damn the Torpedoes (1979) is also a strong contender for Tom Petty’s best album. This record was the third studio album for Tom Petty and the Heartbreakers, but the first to really cross the threshold into great commercial success. Damn the Torpedoes went double platinum in Canada and triple platinum in the USA, blowing the band’s previous work clear out of the water. However, making this album was no easy feat – the road to success was extremely rocky for Tom Petty and his bandmates. In fact, the album almost did not exist – making Damn the Torpedoes resulted in a vicious legal battle and Petty filing for bankruptcy.

Tom Petty was Not Business Minded

Let’s make one thing clear: Tom Petty was an amazing musician and a first-rate songwriter — priceless skills that are not, however, transferable to the corporate world of moneymaking. He made a lot of poor financial decisions throughout his career, as he was much more focused on music than monetary gain (as he should be!) That being said, his lack of business acumen would get him into trouble on multiple occasions, most notably during the writing and recording of Damn the Torpedoes.

At the time, Tom Petty was signed with Shelter Records, a subsidiary of ABC. In 1979, ABC sold Shelter to MCA Records – and with it, Petty’s contract. He had not consented to this transfer, nor did he feel it was fair to him or his band. He felt he was being “bought and sold like a piece of meat” and refused to agree to the transfer. He was, of course, bound by contract, which made it a little more difficult to maintain his resistance – he had no legal leg to stand on. Regardless, Petty refused to concede his position. He started thinking of other ways around this seemingly insurmountable roadblock.

A Battle of Wits

Petty’s first move was to withhold the music he was working on. No MCA employee would have access to the new album, nor would it be released into the world unless it was done Tom’s way. He refused the label’s involvement outright and decided to record the songs for Damn the Torpedoes on his own dime, despite already existing in dire financial straits, and swiftly landed himself in over $500,000 in debt. Turns out you can put a price on creative freedom, and it's damn steep.

Buried to the neck in debt and running out of options, Tom Petty continued to fight against the contract with MCA Records. Despite their massive power and influence, he refused to kowtow to the media conglomerate. Petty wanted ownership over his intellectual property and to not be treated like an artist, not a commodity. By taking a stand against MCA, Petty opened the door for other musicians to stand up for themselves in the face of corporate adversity.

Eventually, MCA took legal action against Petty, suing for access to the new songs. They attempted to seize the demo tapes for the new album, but Petty found a loophole: he had one of the guitar technicians hide the tapes in an unknown location so he could honestly say he had no idea where they were when asked in a court of law. This unorthodox approach actually worked – MCA was unable to acquire the hidden tapes, and the record label’s powerful resolve began to crumble.

Petty and MCA Come to a Tenuous Agreement

At long last, after extended negotiations, lawsuits, and court hearings, MCA gave in to Tom Petty’s demands – it was clear he would not be pushed around, no matter what. MCA dissolved his contract, but quickly re-signed him under a new sub-label called Backstreet Records, created specifically for Petty. The contract paid a whopping $3 million and, more importantly, gave Petty creative control over his music. Despite still technically working under the MCA label, he knew this was as good as it was going to get – he quickly accepted the deal.

As it turns out, MCA’s decision to back down was the right move. Damn the Torpedoes was an extremely successful album, selling over three million albums in the US alone. If the record label was looking for a cash cow, it's safe to say they were successful, even after Petty’s resistance – the Heartbreakers and MCA were raking it in. This album shot the band into the stratosphere, making them into genuine superstars. Corporate greed aside, at least Tom Petty was releasing his music on his own terms. That being said, Tom Petty’s battle against commercial gluttony was far from over.

A couple of years later, Petty and MCA butted heads once again. The label tried to boost the price for his new album, Hard Promises, and Petty thought this was completely unfair to his fans. MCA wanted to sell the album for $9.98 as opposed to the standard price of $8.98 – a big leap in cost, especially at the time. Petty refused to release the album unless it was sold for the standard price. MCA quickly gave in, as they now knew better than to mess with Tom Petty.

While not every musician’s battle against The Man will have the same resolution as Petty’s, he set the precedent that it is possible to fight for what you believe in. He stuck to his convictions in the face of immense adversity, putting his career and livelihood on the line in order to get a fair shake. Petty’s David and Goliath story inspired other artists to advocate for themselves, even when the odds are stacked so highly against them. A win for the little guy is a win for the people, and a win for artists everywhere.