Jackson's Death Means Multimillion-Dollar Woes for Concert Promoter

Promoter AEG Live stands to lose millions on Jackson's U.K. concert series.

ByScott Mayerowitz, Nathalie Tadena and Alice Gomstyn
June 26, 2009, 10:55 AM

June 26, 2009— -- The refunding of nearly 750,000 tickets to Michael Jackson's 50-show London concert run is going to be an extremely complex and probably messy process.

But that's only the beginning of the headaches for promoter AEG Live, which stands to lose millions of dollars because of the pop icon's death and will need to scramble to find another act to fill its O2 Arena in London.

The promoter and the primary and secondary ticket vendors are expected to refund money to all fans who purchased tickets for the show, making it hard, depending on AEG Live's insurance policy, for the company to recoup the estimated $40 million it spent to book Jackson and promote the event.

"It's a complex and messy situation, and it has to be resolved quickly, as I understand it, by U.K. law," Ray Waddell, senior editor of touring for Billboard, told ABCNews.com this morning. "It would be bad enough if it were just straight up ticket sales through Ticketmaster, but a significant portion of these sales were through the 'secondary' or resale market as producer/promoter AEG Live partnered with UK reseller Viagogo on these dates."

Tickets to see Jackson's first solo concert tour in 12 years sold out quickly -- with fans around the world snagging seats at the rate of 40,000 an hour. Roughly $85 million worth of tickets were sold. The tickets had a face value of $80 to $125 but were reselling for much more.

VIP tickets -- called the Thriller Package -- were on sale for up to $1,300 and included a champagne reception, seats close to the front and an after-show party.

"These secondary tickets are typically priced much higher than face value. So somebody has to track down each reseller, each buyer and coordinate the refund transaction," Waddell said in an e-mail. "Adding to this is the fact that tickets were purchased from a global market, though the overwhelming bulk were in the U.K. When you throw in the large number of VIP, premium and travel packages associated with this run, it's a mess."

While AEG Live is known to have taken out insurance to cover the millions spent to book and promote at least some of the concerts, the sudden nature of Jackson's death could put any payouts in jeopardy, particularly if his death is ruled to be drug- or alcohol-related.

Full Refunds Expected on Jackson Concerts

The concert series -- dubbed "This Is It" -- was scheduled to start July 13. It was to be the longest single engagement event ever, breaking records for attendance and, of course, profit.

Fans who bought their tickets to the shows directly should be able to get full refunds. For those who bought them through another vendor, the picture is murkier. Credit card companies also offer some level of protections to fans.

A representative of AEG Live, which owns the O2 arena, could not be reached for comment but the company said on its Web site that "A further announcement for ticket holders will be made in due course."

A Ticketmaster customer service line in London said: "Ticketmaster is aware of the news relating to Michael Jackson. We have no official information at this stage. As soon as we have any information we will immediately contact all customers who have booked tickets through Ticketmaster."

"Everyone at Viagogo is deeply shocked and saddened at the news that Michael Jackson has passed away," Viagogo said in a statement. "Our thoughts are with his family, friends and fans. All Michael Jackson tickets purchased through Viagogo will be refunded directly to fans. No forms, no fuss, just refunded. We will be in touch with everyone in due course."

Ticket reseller Seatwave also assured fans they would get a full refund.

"At this time, we would like to reassure you that your Michael Jackson ticket purchase is fully covered by our TicketCover guarantee," the company said on its Web site. "You can claim your complete refund by downloading our claim form."

The ease with which ticketholders will receive refunds depends on where the ticket was purchased, said Richard Webb, lead officer for e-commerce at the Trading Standards Institute in the U.K.

Major established ticket agencies should already have clear terms of purchase and refund in place during any sales transaction, he said.

"AEG took a very large bet on Michael Jackson," said Gary Bongiovanni, editor of Pollstar, a trade publication covering concerts. "There was a real question as to how much people wanted to see him in concert. He had been off the scene for a while, some might have almost seen him as damaged goods, but AEG stepped to the plate. From a purely business standpoint, it was the right move then -- the shows sold out immediately."

Unused Jackson Tickets Could Sell for $1,000 or More

"There are some secondary agencies over here who issue tickets but disappear if problems arise," he said.

He expects it will take about a week before any refund difficulties are reported.

"It's too early to tell if there have been any problems," he said. "It takes a while for the process to work -- the main ticket provider will provide a refund once they receive a refund from the promoter."

Retailers who are members of the Association of Secondary Ticket Agents in the U.K. follow a code of practices and will offer refunds for Jackson's concerts, said Graham Burns, ASTA's chair.

Not all secondary ticket retailers are members of ASTA and can have differing refund policies, he said. Customers agree to these terms and conditions when they purchased the tickets.

But, not all ticketholders are necessarily looking for refunds, Burns said.

"If I had front-row tickets to Michael Jackson's concert, I wouldn't give it up for any amount of refund," Burns said. "The physical ticket is a part of rock history."

Those willing to part with their tickets could see a sizeable payday.

Darren Julien, the president and CEO of entertainment memorabilia auction house Julien's Auctions, estimated that ticket-holders could sell their stubs for between $400 and $1,000.

Unused Elvis Presley concert tickets have sold for between $600 and $800, Julien said.

As "a true legend," Julien said, Jackson is "at the collectability of Elvis Presley."

Unused tickets from past Jackson concerts, he added, could net even more cash than tickets from the canceled London series because they are harder to find.

Julien said that, despite Jackson's death, a previously-scheduled auction of celebrity memorabilia, including Jackson collectibles, from the collection of David Guest will still take place this weekend. Julien said he expected the Jackson auction items to garner between 10 to 20 times more than their original estimates.

Cause of Jackson's Death May Determine Insurance Payout

Ticket refunds might be the least of the worries for AEG Live, a subsidiary of privately held Anschutz Entertainment Group.

AEG reportedly paid Jackson an advance of up to $10 million. The company might be able to get that back from Jackson's estate but could possibly face a court battle from other creditors. Despite his tremendous artistic and financial success, the 50-year-old pop state lived a lavish lifestyle and died with an estimated $400 million in debt.

AEG has also already sunk millions of dollars into production costs for the concert series that was just a few weeks away from starting. Waddell reported in Billboard that those production costs could run $20 million to $30 million.

Large concert promoters often take out insurance policies in case the headliner fails to perform. Randy Phillips, CEO of AEG Live, recently said his company had bought insurance for the first 23 days of the run and that negotiations were ongoing to cover additional tour dates.

Questions about how much insurance coverage the promoters could get surfaced last month when Jackson pushed back the opening dates of the concert. Organizers said the delay was due to complex logistics and production issues although questions emerged about Jackson's health.

Phillips said at the time, "I would trade my body for his tomorrow. He's in fantastic shape.''

However, if Jackson's death was caused by a pre-existing condition, or if it was drug- or alcohol-related, the insurance policy might not pay AEG Live for its losses.

The Los Angeles coroner's office started an autopsy today and plans to announce preliminary results later in the day, but a full toxicology report is not expected to be available for six to eight weeks.

"The likelihood is very slim that we'll have any results to release today because of the extensive level of the tests we'll be performing," assistant chief coroner Lt. Ed Winter said this morning.

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