AEG Live,
Michael Jackson’s concert promoter for his upcoming London residency, is now in a major financial bind.
The 50-show run at the O2 Arena was expected to be the highest-grossing concert of all time. Over $85 million in tickets had been sold for the shows. $30 million has been spent on production, plus the $10 million AEG has fronted Michael for an advance. So the company is looking at a $40 million loss if Michael’s nonappearance insurance won’t cover it.
A concert business executive says of AEG’s situation, "It's either horrible or really horrible.”
Even though AEG fronted Michael the money and paid for production costs, they would have easily made it back on merchandise sales and VIP packages for the concerts.
What it’ll come down to now for AEG is Michael’s cause of death. One entertainment insurance industry insider says, "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."
AEG Live CEO Randy Phillips told
Billboard on May 12th that his company was well insured. He said, "We have one policy in place and we're negotiating for an even larger binder. 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.”
As for the public, they’re completely covered. All of the $85 million in ticket sales will be refunded to the public, and by law, it will happen quickly.
When it comes down to it, AEG may have to file a claim against Jackson's estate. And since Michael has hundreds of millions of dollars of debt, and a couple of multimillion-dollar lawsuits pending, it’s doubtful they’d get the full amount.
