Jackson's Concerts Highlight Risky Business

July 6, 2009— -- The mess of cancelled concerts and mass ticket refunds that follow the death of Michael Jackson have turned the spotlight behind the stage and onto some of the most risk-prone players in the music industry: concert promoters.

Even before Jackson's death, music, insurance and legal circles were buzzing about the risk that concert promoter AEG Live was taking on by staging Jackson's 50-concert London series.

"He's been sued so many times, was known not to show up, had health problems, and was believed to have drug problem," a Jackson associate told ABCNews.com. "Nobody would touch him."

Jackson's dubious reputation stemmed from no fewer than three lawsuits filed against him by concert promoters angry about concert cancellations, as well as worries that the pop star was addicted to Demerol, OxyContin and other drugs.

AEG's Jackson woes aside, experts and industry watchers say that, generally, what makes concert promotion such as risky business is concerns about ticket sales. Because the profit margins for promoters are so slim -- generally in the range of five percent or less -- they rely on close-to-capacity crowds to stay in the black.

"It can be very expensive," said Gary Bongiovanni, the editor of the concert magazine Pollstar. "Lots of promoters are gamblers by nature."

But, sometimes, as Jackson's case has shown, ticket sales take a back seat to other problems. While a death like Jackson's represents the worst-case scenario, everything from minor illnesses to major health problems to security concerns have scuttled big concerts.

Security concerns have loomed especially large at hip hop concerts, in particular. In 2002, for instance, police shut down a rap concert featuring L.L. Cool J, Nelly and Ja Rule, and arrested 30 people after suspected gang members attacked audience members with metal pipes. Last year, in Washington State, riotous fans overturned a police car during a concert by the rap duo Dead Prez.

Rap and hip hop concerts can attract "gang-mentality types of people," said Eric Moody, an entertainment insurance broker at Frankel & Associates Insurance Services in California.

"They're a lot more prone to fights and disputes," he said.