Jacksons v AEG Timeline Top Stories

Implications of Jacko’s death on his business partners

By | Published on Friday 26 June 2009

On a business level, the result of Jackson’s sad death is that all eyes are now on AEG Live, owners of London’s O2 Dome, promoters of Michael Jackson’s upcoming fifty-night residency, and orchestraters of what some hoped would be Jackson’s musical comeback. Their London spokespeople last night declined to comment.

There had been much speculation ever since AEG first announced Jackson’s return to the live stage as to whether the singer was, in fact, up to performing even a handful of shows, let alone the fifty the promoter eventually announced. That led to much reporting on AEG Live’s insurance position, with reports that while the company had secured insurance for some of the shows, or certain aspects of the production, not all the project had been properly insured, insurers concerned about both Jackson’s health and his tendency in recent years to pull out of projects last minute. But AEG boss Randy Phillips was bullish, telling reporters Jackson was in good health, that his talks with insurers were going fine, and that the company would insure it all itself if they had to.

Billboard reckon that over £50 million had been taken in ticket sales to date for Jackson’s O2 shows, most of which will presumably have to now be returned to fans. The US trade mag cites sources that say the promoter had paid Jackson a $10 million advance, and already ploughed $30 million into the production.

While AEG’s insurance position is unknown – and they had previously insisted the project was part insured – many wonder whether insurers will cover the $40 million and any other subsequent costs related to the show’s cancellation (and losses resulting from the fact that one of their flagship venues will now sit empty for at least a couple of months before new events can be booked in). Even if the entire project had been fully insured in recent weeks, some experts say that whether or not the insurer pays up will depend very much on the results of the autopsy. If he died of an existing condition or overdose they may not pay.

With so many questions regarding insurance, people wonder just how big a bill the live music major will be landed with. And if it, or its insurers, need to reclaim the ten million advance, that could lead to some messy litigation and difficult PR. Billboard cite one US live music exec as saying that on a business level alone Jackson’s sudden death will be, for AEG, “either horrible or really horrible”.

There had been plans, of course, to use the London residency as a platform to relaunch Jackson’s career, in a bid to put past scandals behind him. And while the O2 shows, and other concerts mooted for elsewhere in the world, were positioned as Jackson’s last ever world tour, plans to release a new album in amongst all the live activity might have restored Jacko’s status as an active and successful recording artist. Various attempts at new recorded material had been attempted in recent years, none of which saw the light of day, though more recent studio collaborations with younger music stars did seem to be delivering some results which people close to the recordings spoke positively about.

Finally on the business implications, once the shock of his sudden death has passed, Jackson’s demise might bring to a head his much documented debt problems. There have been various reports in recent years that the singer was on the brink of bankruptcy as he defaulted on various loan and mortgage agreements. In the end all of his financial crises were averted at the last minute, though seemingly often secured on possible future earnings and his most valuable business asset, his 50% stake in music publishing major Sony/ATV. If a string of creditors now arrive on the scene calling in debts, some or all of his half of the music publisher may have to be sold. Jackson, presumably, would have hoped that lucrative enterprise would have been able to provide for his three children after his death.

A lot of this is, of course, speculation as yet. But the financial and commercial impact of Jackson’s passing could remain in the news for some time after the shock of his sudden death and outputting of grief and tributes comes to an end.

PS: Another area of interest regards the cancellation of Jacko’s O2 residency will be those who bought their tickets on the secondary ticketing market. While those who bought their tickets direct off promoters will get a refund, those who bought resold tickets may lose out, certainly on the mark up they paid. Of course Viagogo was the official secondary ticketing seller for the residency. I’m not sure what that means, but presumably the idea is there’s some protection if you buy touted tickets from an ‘official reseller’. But I’m not sure the ‘official reseller’ protecting consumers thing has really been tested before. Will be interesting to see how it works.