Fortune at stake For AEG on Jackson concerts
Show at London's O2 Arena could have grossed $100 milMichael Jackson's planned 50-show run at the O2 Arena in London would have been the highest-grossing single concert engagement. Now it's a major problem for the promoter AEG Live.
More than $85 million worth of tickets have already been sold for the series of performances, which have the now sadly ironic title "This Is It." As much as $30 million has already been spent on production, according to sources close to the situation. So what's at stake for AEG, the world's second-largest concert promoter, can't be overstated.
Concert business executives have estimated that AEG paid Jackson an advance of as much as $10 million. That, plus the production costs, would mean AEG stands to lose as much as $40 million if nonappearance insurance isn't substantial enough to cover this contingency. For AEG, "it's either horrible or really horrible," a concert business executive says.
The shows, which were to begin July 13, would have been Jackson's first solo shows in 12 years. AEG Live, which was producing and promoting them, footed the bill for what the company said was a $20 million production. Other sources say the costs before opening night were closer to $30 million. The total gross from primary ticket sales would've been about $90 million.
Premium and VIP packages and secondary-market sales would have boosted the gross to more than $100 million. Merchandise sales could have brought in another $15 million.
AEG's yearly financial results may now depend on Jackson's cause of death. One entertainment insurance industry insider says that if Jackson died from a drug overdose or a pre-existing condition, the producer could be on the hook for any loss-which would include any money already sunk into the production, as well as the considerable cost of refunding consumers for the 750,000 tickets already purchased. If Jackson signed a contract saying he would return his advance in the event he didn't perform, the company could end up in court with a long line of other Jackson creditors.
AEG Live CEO Randy Phillips told Billboard.biz May 12 that his company was well-insured. "We have one policy in place and we're negotiating for an even larger binder," said Phillips, who couldn't immediately be reached for comment regarding Jackson's death. "We have insured the production costs. In order to get the first part of the insurance in place, [Jackson] had to have a physical, and he passed it with flying colors." AEG CEO Tim Leiweke made similar comments in March at the Billboard Music & Money Symposium.
But a source familiar with the situation says a traditional nonappearance policy was never written. Billboard couldn't confirm that at press time. Even if AEG had a policy, that doesn't mean Jackson's death, and the losses incurred, would be covered. "If it was a pre-existing condition or drug- or alcohol-related, a normal cancellation policy would not cover that, even if he had passed a medical exam," the source says. AEG could be on the hook "if death was from something that's excluded in the policy."
Whatever happens, the $85 million taken in from ticket sales will need to be refunded to the public. It will be messy, as well as expensive, and it will need to happen quickly by law. Phillips told Billboard in March that more than 90% of the tickets have been purchased by U.K. residents, but "the rest is France, Germany, Poland, everywhere in the world. People bought tickets from Botswana."
Ultimately, AEG may have to file a claim against Jackson's estate. And since Jackson has hundreds of millions of dollars of debt, and a couple of multimillion-dollar lawsuits pending, the worth of that estate is very much in doubt.