Nightmare for AEG

The L.A.-based concert promoter (part of Phil Anschutz's AEG empire) is out tens of millions of dollars, and it's not at all clear how much of that will be covered by insurance. More than $85 million worth of tickets had been sold for the Michael Jackson concerts in London. Add to that as much as $30 million already spent on production - and Billboard's Ray Waddell, who follows this stuff very closely, has heard that Jackson himself received an advance of as much as $10 million.

AEG's yearly financial results may now depend on Jackson's cause of death. One entertainment insurance industry insider says that if Jackson died from a drug overdose or a pre-existing condition, the producer could be on the hook for any loss-which would include any money already sunk into the production, as well as the considerable cost of refunding consumers for the 750,000 tickets already purchased. If Jackson signed a contract saying he would return his advance in the event he didn't perform, the company could end up in court with a long line of other Jackson creditors.

AEG Live CEO Randy Phillips had told Billboard and other publications that the company was well-insured, though no details were offered. Jackson passed a physical some months back, which presumably would have been required to receive coverage.

But a source familiar with the situation says a traditional nonappearance policy was never written. Billboard couldn't confirm that at press time. Even if AEG had a policy, that doesn't mean Jackson's death, and the losses incurred, would be covered. "If it was a pre-existing condition or drug- or alcohol-related, a normal cancellation policy would not cover that, even if he had passed a medical exam," the source says. AEG could be on the hook "if death was from something that's excluded in the policy."

AEG is a privately held company and Anschutz is an extremely secretive owner, so the real story - and numbers - could be difficult to get at.

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Mark Lacter
Mark Lacter created the LA Biz Observed blog in 2006. He posted until the day before his death on Nov. 13, 2013.
Mark Lacter, business writer and editor was 59
The multi-talented Mark Lacter
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