If the directors of 3A ever entertained any serious thoughts of washing their hands of Jack Utsick by dissolving their own company, a June meeting with the official receiver appointed to sort out the troubled U.S. promoter’s affairs might have given them cause to think again.
In a 66-page report detailing the progress he’s made unraveling Utsick’s global business interests, Michael I. Goldberg – who was appointed by a federal court in Florida in January – said he warned Dennis Arnold, Martyn Stanger and Pete Wilson that he would take legal action against them if they tried winding up their company.
In the five months he has spent sifting through Utsick’s personal finances and his numerous worldwide associations, part of a settlement the Miami-based entrepreneur agreed to with the U.S. Securities and Exchange Commission, Goldberg has taken a close look at all the European live music business ventures Utsick operates under his various "Worldwide" entertainment banners.
Goldberg stressed that his findings have given him no reason to believe that anyone from any of Utsick’s European affiliate companies has broken any state or federal laws.
"Needless to say, the receiver is pleased with the performance of this investment," Goldberg noted when detailing Utsick’s interest in the running of Berlin’s historic 17,000-capacity Wuhlheide Amphitheater. But he’s less than happy with what he discovered when talking to the 3A directors in London or Willem Venema in Amsterdam.
"At the [London] meeting, the receiver learned that 3A was losing money and that Wilson, Stanger and Arnold no longer wanted to be partners with Worldwide Entertainment and were contemplating dissolving 3A," the July 19th report reveals.
Goldberg threatened legal action if they tried that exit route, and told them he would invoke their "non-compete" clauses if they tried to sell the company to anyone else.
If 3A went into liquidation, depending on the circumstances, it’s not certain the non-compete clauses could be enforced.
By the end of his dialog with Wilson, Stanger and Arnold, he had their agreement to either repay 3A’s loans from Worldwide or buy up Utsick’s 49 percent in the company for $1 million. Goldberg gave them until April 1, 2007, to decide.
He also got them to accept that 3A is directly responsible for the £336,000 (US$685,000) it owes the British government in taxes, and if the company is sold within the next year, half the profit would go to Worldwide.
3A is a partnership between Jack Utsick Presents (JUP), which holds 49 percent, with a further 49 percent shared between Wilson, Stanger and Arnold. There’s a floating two percent ownership interest.
It was formed in 2003 after Triple A, the promoting company that Wilson, Stanger and Arnold had run for the previous six years, went bust with debts of about £5 million (US$9.3 million).
Since that June meeting, Wilson said further "amicable conversations" have taken place with the receiver and that he expects a satisfactory conclusion will be reached in the near future.
Although Wilson and Venema reacted to the initial news of Utsick’s financial plight by saying their companies would carry on doing "business as usual," the upshot of their meetings with Goldberg suggests it will be anything but.
According to the receiver’s report, Venema’s The Alternative asked him to extend its funding – beyond the euro 350,000 credit line its already had – or "it would most likely cease operations."
In November 2004, eight months after he was sacked from Mojo Concerts (part of Live Nation) for leaking an internal memo regarding company chief Leon Ramakers’ wish to spend less time at the company’s Delft office, Venema sold 90 percent of his new The Alternative Holding BV company to Utsick’s Worldwide Entertainment for euro 500,000 (US$638,000).
The U.S. company also provided that extra euro 350,000 (US$447,000) as a credit facility. But now Goldberg’s taking the view that it’s time to turn off the tap because letting The Alternative have more cash would "further compound Worldwide’s losses in Amsterdam."
His mandate as receiver empowers him to control all of Utsick’s assets, including his personal finances. Utsick said he needs a US$15,000 monthly "allowance" to cover living expenses, while Goldberg is looking at granting him closer to US$10,000.
The situation in Holland, as it stood as of July 19th, is that the receiver will further investigate Venema’s company’s business dealings over the next few months "to determine if Worldwide has any claims against The Alternative or its principals." So far, Venema hasn’t made any comment.
Utsick’s The Entertainment Group Fund Inc. (TEGFI) has held 75 percent of the management of the Wuhlheide since 1997, when the private company running the city-owned venue spent about euro 10 million (US$12.7 million) on upgrades and then went bust.
TEGFI’s partners are Berlin-based promoter Wolfgang Köllen, who runs the 50-year-old facility and has 15 percent of the company, and Bruce Glatman – a mutual acquaintance – who put the two of them together and holds the other 10 percent.
They have one year remaining on their current lease and an option on another five years, but the horseshoe-shaped amphitheatre in the eastern part of the city is already attracting the interest of Live Nation and SMG.
Goldberg’s told Köllen to confirm they’ll be taking up that five-year option. He has also spoken with Live Nation and SMG.
The Wuhlheide runs a dozen or so shows during the summer season and each one rakes in about euro 70,000. Utsick and his partners already got back about 90 percent of the US$2.7 million they sunk into the project.
Live Nation president and CEO Michael Rapino has confirmed the company met Goldberg and his team in Berlin in June.
"Bruce Eskowitz, our president of global venues, met with them. We’re interested in expanding in Germany and this building would be a good addition," he told Pollstar.
At press time, John Sutherland – managing director and senior vice president for SMG (Europe) – was holidaying in Canada and couldn’t be reached for comment. The company already runs the 16,000-capacity Loreley Open Air amphitheatre, which is on the banks of The Rhine at Freilichtbuhne.
– John Gammon