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 purchased a $17.6-million policy covering the first 23 shows. Phillips said the insurance payout will 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.
