The L.A. company had sunk millions into the star's comeback, despite warnings that it a was a major risk.

A tragedy for his family and a heartbreak to his fans, Michael Jackson's death also represents a blow to the L.A. concert promoter that staked its reputation on and sunk tens of millions of dollars into a lavish comeback that will never happen.

AEG Live billed "This Is It," the sold-out concert series that was to have opened July 13 in London, as the most expensive and technologically advanced arena show ever. It had invested more than $20 million to mount a production that was to have included up to 22 sets, elaborate light shows and high-wire acts. The company, which owns the Staples Center among many other venues, had also set aside 50 nights at its coveted European showplace, the O2 Arena.

With Jackson's death, AEG will have to refund the $85 million worth of tickets that were sold. Gone are the company's expected profits -- an estimated $115 million, according to Billboard -- as well as plans for a global three-year tour that the company had predicted would gross $450 million.

"They are taking a big hit," said Gary Bongiovanni, editor of concert-tracking publication Pollstar.

Among the company's immediate priorities, he said, will be trying to find other acts to fill the O2, a 20,000-seat arena that does not rely on resident sports teams to occupy its seats. Jackson concerts were scheduled to run through March.



"They will be able to re-book some of those shows. But those in July, the building will probably be dark. You have an empty building, and that's going to have an impact on their London operations, certainly," he said.

AEG struggled to get affordable insurance for the shows, given Jackson's history of canceling tours and his 12-year hiatus from performing. Chief executive Randy Phillips vowed to self-insure the shows if carriers wouldn't, and ultimately the company secured coverage for what Phillips called "the first $23 million."

Mary Craig Calkins, a Los Angeles lawyer who specializes in insurance issues, said many entertainment companies get several kinds of policies before a big tour, including one that specifically covers the health of the star or "key man."

"Usually, they would put in place a package that would have multiple aspects to it. If you are headlining Michael Jackson, you have to have Michael Jackson at the show, so we would expect they would have a policy that would cover if he got laryngitis or had a minor traffic accident or died," she said.

AEG officials declined to comment on their insurance or the financial consequences.

"We're dealing with a tragedy. We have no comment on that," a spokesman said.

In an interview last month, Phillips said that when the company announced the Jackson comeback, he was derided by colleagues in the industry.

"Everyone was very unsupportive. . . . You know, 'He'll never do it. You're fooling yourself.' All of that," he said.

Phillip said he persevered, convinced by a physical that showed Jackson was in good health, a contract that bound the singer to show up and a conviction that "in this business, if you don't take risks you don't achieve greatness."

AEG had produced other "concert residencies" for singers, including Celine Dion and Prince, but Phillips had hoped Jackson's performances would cement the company's reputation among artists.

"When you do the greatest artist ever in the history of contemporary music, I think there is a halo effect for us in terms of booking other artists," Phillips said then.

AEG Live is a unit of Anschutz Entertainment Group, which is owned by Colorado billionaire Philip Anschutz.

"The one thing about Anschutz is at least he's a billionaire. It's not going to put him out of business," Bongiovanni said.





source : http://www.latimes.com