The show still goes on
As the ramifications of the abandoned concert series planned by Michael Jackson prior to his death emerge, their effects on the broader touring business become more profound. Dan Daley writes
Michael Jackson’s untimely death in June 2009 shocked the world. It also shocked accountants at more than a few companies. Jackson died less than three weeks before he was to kick off a series of 50 concerts at London’s 20,000-seat O2 stadium on 13 July. The reported US$500m in debt that Jackson died owing was an eye-opener, but a more immediate issue was the US$30m that concert promoter AEG Live had invested in the production, as well as more than US$80m in ticket sales that had to be refunded. Billboard speculated that premium and VIP ticket packages and re-sales would have boosted the gross to more than US$100m. Merchandise sales could have brought in another US$15m.
Then there were the 50 nights that the O2 – owned by AEG – would suddenly go dark, at a cost of hundreds of thousands of dollars a day just to maintain basic services. Cash advances to Michael Jackson have not been disclosed, but they are estimated to be at least US$10m, which, given the King of Pop’s tenuous finances, may or may not be immediately recoupable from what’s left of the singer’s estate.
In terms of sheer dollars, that was just the beginning. This Is It – Jackson’s comeback performance – was to be an elaborate one, involving a huge live band, dancers, circus acts and animals covering 22 sets onstage, supported by an army of audio, video, multimedia, staging and rigging designers and technicians. Most of these service providers had planned on the income from these shows for the rest of the year and into the next, as Jackson’s performances there were scheduled to run through March 2010. Some may have already begun counting the pay from a planned road version of the show. Certainly that was the case with AEG, the world’s second-largest concert promoter after Live Nation, which had predicted profits of US$115m from the London shows and a US$450m gross from the touring edition, numbers that were now up in smoke.
‘There’s definitely some damage done,’ says John Wiseman, CEO of recently formed Chaos Visual Productions in Los Angeles, which had made a multi-million-dollar investment in new 3-D video technology, including a massive 91x30-foot LCD screen that Jackson himself was reportedly amazed by. Mr Wiseman says an industry-standard type of cancellation clause with AEG Live would let the company break even on costs other than the 3-D investment, but that the loss of the multi-date concert series will force Chaos Visual to recalculate its recoupment schedule for that equipment. ‘It’s a very large investment, and it was always going to be used on future projects. But when you have a cornerstone project like [Michael Jackson] suddenly go away, that changes how you manage the debt; it has to be recouped over a longer period of time and more projects.’
But beyond the financial hits that technology services providers may have to absorb on the cancellation of the concerts, there may be a more widely felt loss. ‘What’s truly devastating here is that Michael Jackson was the tip of the spear that pushed the bleeding edge of live performance technology,’ says Mr Wiseman, who worked with Jackson on the HIStory and Bad concert tours. ‘He always moved the bar upward, and he was about to do it again. In terms of video, pyro, lighting – this show would have shifted the paradigm of what a concert is.’
In fact, This Is It could turn out to be a textbook case study in how not to mount a live extravaganza. AEG Live is on the hook for its capital investments into the show to that point, as well as any contractual agreements made with service vendors, thanks in large part to the decision by CEO Randy Phillips to underinsure the production, with coverage reportedly for only the first US$23m in losses. (Perhaps the first monies they need to recoup are from the doctor who certified Jackson as physically fit to perform.) Previous successes with ‘concerts in residence’, including the long runs of Celine Dion and Prince in Las Vegas, may have contributed to an overconfidence bordering on hubris, considering Jackson’s historical flakiness and seeming indifference to litigation.
But it’s also not as if abrupt tour-ending disasters haven’t happened before. Led Zeppelin’s In Through the Out Door tour was cut short in September 1980 with the death of drummer John Bonham. That same year, Paul McCartney was caught at Tokyo’s Narita airport with several ounces of marijuana as Wings were beginning the Japan leg of a world tour. It cost McCartney nine days in jail, US$350,000 in promoter’s expenses for the cancelled dates, and scrapped a pending 1981 US leg of the tour.
McCartney quit touring for nine years after that, which suggests that no-one has to actually die to cause massive economic ripples when a tour goes off the tracks. And at a time when live touring bears increasing pressure to be the main source of revenue for the entertainment industry as disc sales decline, Michael Jackson’s last act may put the brake on some of the more spectacular concert deals of the future.
But the bottom line is that those whose technical talents operate the engine rooms of live performance can’t back off. Better cancellation clauses might help – the industry standard in the US and Europe is usually two weeks’ worth of revenue – but that’s always at the mercy of the market, and a near-10-per cent unemployment rate in the States doesn’t offer much leverage.
AEG Live may have several get-out-of-jail cards to fall back on. While an effort to convert This Is It from a Michael Jackson concert to a Michael Jackson tribute fizzled, it was released to cinema last October in the States (and certainly on DVD and Blu-ray by now), culled from hundreds of hours of high-definition video and multichannel sound recorded during the rehearsals for the O2 shows, which took place at LA’s Staples Center, (also owned by AEG). In addition, and a three-city tour of Jackson’s memorabilia by exhibition promoter Arts and Exhibitions International (again owned by AEG) and scheduled to open in the O2 Arena is expected to earn Jackson’s estate up to US$6m. It’s not music, strictly speaking, but it is a way forward.
In other words, AEG is finding some ways, both crass and creative, to make lemonade out of the lemons handed to it by Jackson’s passing. AEG Live’s mission is live concert production, but in the process compelled by Michael Jackson’s demise of finding ways to recover its investments, it may also be creating some templates for future music-related revenue streams. That’s something the industry can really use about now.
Published in PAA January-February 2010