AEG May Drop £300M
The cancellation of Michael Jackson’s 50-date London run leaves the
Reinsurance magazine reported that the London insurance market had little appetite for covering all the shows, meaning AEG may have to swallow a lot of the costs for the cancellation.
It may be a case of what AEG Live president and chief exec Randy Phillips referred to as “self insurance,” when it was first reported that AEG may struggle to obtain coverage for the entire 50-date run.
The Los Angeles coroner’s office has said there’s nothing suspicious about Jackson’s death, but the full details of what likely caused it may not be known for several weeks.
“The cause of death has been deferred, which means the medical examiner wants additional tests, such as toxicology and other studies,” a spokesman explained. The insurers who did take some risk on Jackson will want to see if there was anything in his system that would invalidate the coverage.
Pollstar has also seen a market report that confirms the insurance world is not expecting a huge claim to land as a result of Jacko’s cancellations.
Phillips was said to be in meetings through June 26 and hasn’t yet commented on the Times story, which claimed the first 10 concerts are believed to have been placed on the London insurance market at a value of £80 million.
It also said that, at the time, Phillips assured insurance brokers that doctors had spent five hours with Jackson, taking blood tests.
“He’s a vegetarian, he’s in great shape,” Phillips said. “The insurance cover, we are working on that now.”
By all accounts, ticket sales were downright incredible. About 360,000 fans registered before sales had even opened. Within hours, 1 million fans had attempted to snap up tickets for an initial run of 10 concerts, which rapidly turned into 50.
Since Jackson’s death, AEG has issued a statement extending “our deepest condolences to Michael Jackson’s family and friends.” Phillips has also paid personal tribute to the King Of Pop, describing him as “talented beyond belief” while conceding that he was “equally insecure.”
Those who bought tickets from Ticketmaster or any authorised site, the venue, or official secondary trader Viagogo – which had a deal to resell 7 percent of the house – will be refunded, as will those who bought with a credit card.
Those who purchased tickets from other sites, including from disappointed fans who were unable to go or bedroom touts aiming to make a few pounds, may struggle to get their money back.
The refunds will be a huge part of the £300 million liability the U.K. paper is estimating, while The Independent said the policy for insuring the whole run could have cost that. It says the final 30 shows had no insurance cover.
AEG, which faces an immediate refund payout of close to £100 million, has said full information on the procedures will be released this week, while Viagogo chief Eric Baker has promised “no fuss” refunds.
The secondary ticketer released a statement saying it will be in touch with fans “in due course,” suggesting it’ll take its lead from AEG.
A few days delay may help spread the load, and maybe even reduce it slightly as some of the former megastar’s more dedicated fans may feel it’s worth hanging on to the ticket for the souvenir value.
Both companies are expected to make official statements and begin the refunding process within the next five working days.
The other huge outgoings are likely to include any production costs the reportedly spectacular show has incurred. These come at a time when that side of the live music industry is being forced to cut its bottom line in order to compete.
The AEG-run venue may absorb the costs of the room, although effectively it makes no difference to Philip Anschutz’s organisation as the money was due only from another part of the company.
At press time it wasn’t possible to get comment on how the venue intends to tackle the problem of filling the book. Acts that could have played the O2 but for the lack of availability due to the MJ shows are likely to have already committed to playing a nearby alternative.
Meanwhile, much of the U.K. print media is trying to take the angle that the 50-show London run could have been an extra pressure that may have contributed to Jackson’s untimely demise.
The argument isn’t getting any leverage from people who actually knew the eccentric icon. Many of those interviewed on television news have said he was very positive and was looking forward to appearing live in England.
The Financial Times reported Jackson’s death is the first of its kind in the digital music era. By June 26 his albums accounted for the entire Top 10 on Amazon.com and seven of the Top 10 albums on Apple’s iTunes store.