Michael Jackson Concert Promoters May Recoup Money
AEG's chief executive, Randy Phillips, contended that a combination of insurance planning and the worldwide demand for commemorative tickets and anything else Jackson-related could erase the losses and potentially generate substantial profits for the company.
[Michael Jackson’s Passing]
Michael Jackson's death stunned the Los Angeles-based concert promoter shepherding his most recent comeback, but what first seemed a devastating financial blow could turn into an unexpected boon.
AEG Live had shelled out between $25 million and $30 million in preparation for 50 sold-out London performances, and many speculated that the company would suffer severe losses.
But at a news conference Thursday, AEG's chief executive, Randy Phillips, contended that a combination of insurance planning and the worldwide demand for commemorative tickets and anything else Jackson-related could erase the losses and potentially generate substantial profits for the company.
"For the record, this great company I work for is not bankrupt," Phillips said. "They're not going out of business and they're certainly not in trouble. I'm heartbroken, but the company is fine."
The promoter sold $85 million in tickets for the shows. Days after Jackson's death, AEG offered the nearly 1 million ticket-holders the choice of a full refund or a special ticket that featured a three-dimensional image of Jackson. So far about 40% to 50% have opted for the souvenir ticket, Phillips said. If the rate of ticket-holders choosing the memento over money holds, the company will break even, Phillips said.
"We'll be clean. We'll be out," he said.
AEG can also turn to Lloyd's of London to recover some of its preproduction costs, which included salaries for nearly 200 employees, stages, aerial dancers, elaborate illusions and the price of top-shelf talent such as show director Kenny Ortega and
choreographer Travis Payne.
The company bought a $17.6-million policy covering the first 23 shows. Phillips said the insurance payout would depend upon a coroner's determination of how Jackson died.
"If it was an accidental death, then we have a claim," Phillips said. He added that if toxicology tests now underway determine that Jackson died from an overdose of prescription medication, "we claim the full $17.6 million."
Jackson's performances were to run over a nine-month period at AEG's European showpiece, the O2 Arena.
Phillips acknowledged that the company probably would not be able to fill the 20,000-seat facility for dates this summer, but said he was confident that it could book new acts thereafter.
The least resolved but potentially most lucrative avenues for AEG in light of Jackson's death turn on the enormous interest in his final creative efforts. A camera crew filmed rehearsals for the London shows in high-definition video. The footage is now secured in a vault in AEG's Staples Center. Jackson's estate would get the "lion's share" of any profits from a documentary, but AEG would also get a cut, Phillips said.
Also under consideration is a televised tribute concert in London that would incorporate the staging and choreography for the comeback performances. Jackson invested himself in the most minute details of a show that at the time of his death was running more than two hours long, those close to the show have said.
Ortega and Phillips want to see what they both have called "Michael's last great work" reach an audience, both live and on DVD. Phillips said "everyone you could think of" in the music industry had contacted AEG about performing in such a show, and Jackson's brothers may also have a role.
Lawyers for two executors named in a 2002 will implored a Los Angeles County Superior Court judge Wednesday to empower them to negotiate with the promoter this weekend, saying that tens of millions of dollars were at stake.
The judge said he would hold off until a Monday hearing to make any decision about control of the performer's finances. Now, Jackson's mother is in charge only of securing his "tangible property."
Gary Bongiovanni, the editor of Fresno-based Pollstar magazine, said that with a run-of-the-mill concert cancellation, "you don't have anything but bills."
But in Jackson's case the bills have been accompanied by a commercial boom. On Thursday, three albums by Jackson topped 100,000 copies in sales, according to data released by Nielsen SoundScan.
"There are other revenue streams—When all is said and done it may more than cover their investment," Bongiovanni said.
(The Los Angeles Times)