I.B. BAD ON AEG LIVE’S MULTIMILLION-DOLLAR GAMBLE

AEG Live’s Randy Phillips will be risking millions merely on the buildout/preproduction costs for Michael Jackson’s projected run at London’s O2 Arena, which is now up to 50 dates, as British handicappers take bets on whether Jackson will complete the run, or even show up. While Jackson has passed his physical and has been insured against the possibility of sickness or injury, his physical health isn’t the issue here, and there’s no way to insure against erratic behavior.

On the other hand, although Jackson has a history of failing to honor his commitments, he’s believed to be strongly motivated in this case, because doing the dates will provide the cash-strapped artist with truckloads of cash to help him cut into the enormous debt he’s accrued. If he gets through the run, the 50-year-old Jackson could pocket as much as $400 million from touring the world in partnership with AEG Live.

If the company does manage to pull off a Jackson tour of any duration, it will be like printing money, say concert biz insiders. These same insiders question whether AEG Live is a profitable operation, noting that the money is in popcorn and parking at the parent company’s owned and operated venues, but an extensive Jackson tour would put the concert promotion division solidly in the black.

Phillips and Jackson were briefly in business together two decades ago, when the King of Pop hired Arnold Stiefel, Phillips’ boss at the time, for management. But after only a few days, Jackson dumped the Stiefel/Phillips tandem in favor of Sandy Gallin.

As for AEG’s other priority, derailing the proposed merger of Michael Rapino’s Live Nation and Irving Azoff’s Ticketmaster Entertainment, the odds are on the combined Live Nation Entertainment passing regulatory, the barrage of negative press notwithstanding. Noters note that the FTC and SEC have blocked such alliances in the past only when it was clearly determined that a merger would hurt consumers, and it will be difficult if not impossible to make such a case convincingly with LNE. In terms of the other key issue in the matter, LNE can hardly be called a monopoly—not when the primary accuser is Live Nation’s powerful, deep-pocketed rival, AEG.

The bad blood between AEG and LN has escalated since the proposed merger was announced, in part because AEG was slated to be Ticketmaster’s original partner, but Phil Anschutz couldn’t close the deal.

Looking at the big picture, until recently, ticketing companies and concert promoters took the heat for exorbitant markups on ticket pricing, but recent media scrutiny has shown that these businesses were the fall guys for the real culprits and primary beneficiaries: the acts themselves. The stars were able to feast on that small but significant portion of the ticket-buying public for which price was no object. For these super-affluent fans, peeling the big bucks for choice seats and other premiums derived from the same impulse as booking the most expensive suite in a four-star hotel or spending $250k on a Mercedes Benz—and as long as there was a demand for top-dollar ticket packages (the equivalent of the airlines’ first-class/business-class/coach tiered pricing system), the big acts were happy to meet it. But it will be much more difficult for major artists do so with such impunity now that they’re no longer shielded by their former scapegoats, on whom the stars placed the blame even as they raked in the dough.