AEG Trial Session 50: Plans for a Global Tour + Download Paris Jackson Deposition Video

At the start of today’s session, and in the absence of the jury, the judge referred to the heated exchange from the previous day between the lawyers for both sides. They had traded fiery remarks in the courthouse hallway among members of the media and fans. The judge told them today that they must respect the rules. He also noted that, beforehand, emails had been sent to journalists reminding them that they could only interview the defense attorneys in the designated areas of the courtroom or outside the building.

The judge also announced that the proceedings in this case are expected to be completed in the middle of September. After that, the accountant, Arthur Erk, returned to the stand. Sabrina Strong, the defense attorney for the company, questioned him again and continued trying to challenge Erk’s estimates regarding Michael’s potential earnings.

Strong questioned Erk’s projected income from advertising (267 million dollars + 50 million dollars in clothing ads). She said the total was estimated at 317 million dollars. Erk stated that the clothes Michael promoted were popular among young people.

Strong asked Erk whether he truly believed that the fashion of a 50-year-old Michael Jackson would be interesting to young people?Erk: “Yes.”

Strong then asked whether the 50 million dollar figure was merely speculation. Erk rejected that and said he reached such a conclusion logically. Erk said Michael’s clothing was well received. He added that the ticket sales for the This Is It tour showed just how popular Michael was. Erk said he based the figure on an advertising contract he had estimated in 2012. Strong tried to show that the negative controversies surrounding Michael and his 2005 trial had a negative impact on companies’ willingness to sign advertising deals with him. She said Beyoncé had never had negative controversy. Then she asked Erk whether he knew of any artist who, after a criminal case, had signed advertising contracts worth hundreds of millions of dollars. Erk said he didn’t know.

Erk: “What I know is that there was demand. There’s no question about that. I think AEG was more concerned about American audiences than people around the world.”Strong: “Was MJ’s image reconstructed to the point that it could land an advertising contract?”Erk: “I didn’t spend much time thinking about it, because he sold a lot of tickets in a short period of time.”Strong: “My question was whether MJ’s image had been reconstructed enough to sign an advertising contract?”Erk: “If you need a yes-or-no answer, your answer is yes.”

Erk also defended his numbers, calling them conservative. He said that every viewer at each concert would spend at least 19 dollars on memorabilia and items related to Michael Jackson.

Strong asked Erk whether he knew, according to AEG’s estimate, how much Michael’s net profit would be from performing fifty concerts. Erk said yes—more than 20 million dollars. Strong cited a figure between 22 and 30 million dollars and asked Erk to explain the major discrepancy between his numbers and AEG’s. Erk said that although AEG had sold 750,000 tickets, it had not accounted for advertising revenue and merchandise sales.

Erk said that at age 56, Michael would begin four other tours and, by age 66 and retirement, would have held a total of 455 concerts: including 260 concerts in TII, as well as 40 concerts at age 60, 50 concerts at age 63, and 45 concerts at age 66. Erk said that achieving 260 concerts on the This Is It tour was, from a rational standpoint, certain. He accounted for an additional 195 concerts based on his professional judgment.

Strong: “Do you know of any other artist who, from age 50 to 66, had five tours?”Erk: “I didn’t factor that in.”

Erk said that in his estimates he relied on emails exchanged since December 2008. Those emails discussed a global tour and the making of a film. Erk said the company had doubts about demand, but once 750,000 tickets sold within a few hours, they were confident they could take the tour anywhere they wanted. The company, in an email with Colony Capital, had discussed a tour with 186 concerts—before the This Is It tour contract was signed.

Erk: “It’s clear they intended to take Michael around the world.”

Those emails mentioned a net profit of 132 million dollars for Michael, but even that figure was far less than Erk’s estimate.

Erk’s estimates were displayed on the court monitor:

Net tour income (with 260 concerts): 460 million dollarsAdvertising income: 317 million dollarsMerchandise sales income: 121 million dollars

Strong: “Has any tour ever had income like that?”Erk: “No. This tour would have been record-breaking.”

Strong: “In your deposition, you said you weren’t sure MJ’s filmmaking career would be successful, right?”Erk: “That’s right.”

Strong: “Do you remember that Katherine Jackson said MJ didn’t want to dance at age 50?”Erk: “Yes.”

Strong showed the Paris Jackson deposition video.

In the video, Paris—yawning from exhaustion—says her father had been working on many songs and that after the This Is It tour he needed rest and wanted to step away from work. She says he didn’t want to do another tour after that.

At Katherine Jackson’s attorney’s request, the second part of the clip was also shown. In this video, Marvin Putnam, the company’s attorney, asks Paris how long This Is It would take. Paris says she doesn’t know how long the This Is It tour would last, but she thinks it would be very long because it was a “global” tour, and global tours take a lot of time. Paris emphasized that her father had told her it was a “global” tour.

Putnam: “What did he tell you?”Paris: “He said that we’re going around the world for the tour.”

After Strong, Brian Panish took the floor to question Erk.

Panish: “Were Mr. Jackson found guilty of the charges that AEG mentioned?”Erk: “No.”Panish: “Did the charges cause the company not to sign a contract with Michael?”Erk: “Actually, they entered into a three-year contract with him and a commitment to make a film.”Panish: “Was it ever mentioned in any email that they didn’t want to make money from MJ because of the charges?”Erk: “I didn’t see anything like that.”

Panish asked whether Tiger Woods, the golf champion, had faced negative controversies. Erk answered yes, but said that in 2012 Woods’ advertising contract brought in 70 million dollars. Panish referred to Alex Rodriguez, a baseball player in the United States, and asked about the impact of doping allegations on his income. Erk said that while allegations against Rodriguez come up from time to time, his advertising income is very high.

Panish asked whether Michael’s allegations would affect his future income. Erk stated that he calculated Michael’s future income based on AEG’s estimates and said:

“If that number was acceptable to them, then it’s acceptable to me as well.”

Panish pointed out that Randy Phillips, the company’s CEO, had estimated Michael’s income in London at 50 to 100 million dollars, which could rise to as much as 500 million dollars if a global tour took place. He asked whether that estimate matched Erk’s calculations. The answer was yes.

Panish asked whether Kenny Ortega and Michael would also collaborate on future projects. Erk said Ortega had spoken with Michael about a tour in India and Japan, and they were supposed to work on making a film.

Erk said AEG could easily access Michael’s financial information, and there was no reason to think the company didn’t know about Michael’s problems. However, Erk said he hadn’t conducted research into Michael’s health, because when the company signed the contract and allocated a budget for it, it was determined that the tour would happen.

Panish asked why the testimony of Phillips and Paul Gongwer was important in his calculations. Erk explained that they were company executives and responsible for ticket sales, so they were aware of the issues. Gongwer, in his testimony, had referenced high demand for tour tickets.

Panish: “Was MJ popular and could he sell tickets?”Erk: “Absolutely.”

Panish read part of Randy Phillips’ testimony, in which he said that all of them were surprised by the high demand for tour tickets. Strong objected and said they had no doubt about the high demand for London concerts.

Panish: “Do you have any doubts about this—that AEG wasn’t just confident about London, but also about sales in other places?”Erk: “No, I don’t have any doubts.”Panish: “Do you think they were only hoping for ticket sales?”Erk: “No.”

They then reviewed several emails.

In an email dated September 2008, Phillips wrote that if the London tour went well, they would go to the new O2 World stadium in Berlin.

They then discussed Michael’s ability to perform tours at older ages. Erk said Mick Jagger, the Rolling Stones singer who is 69, had recently finished a tour that AEG supported. Keith Richards is also 69; he has a long history of heroin addiction and still tours—and has been successful. Barbra Streisand is 71, and she had recently finished her shows for AEG.

Panish then addressed Michael’s debts and the loan he had taken from the bank. He asked Erk whether, generally, loans are given to people who can’t repay. The answer was clearly no. Erk said Michael had assets that served as collateral for the loan—most importantly, the Sony/ATV catalog.

Erk said that over the past ten years of Michael’s life, he had not had work income and had been living off royalties. Erk also said that over the last few years of Michael’s life, his living expenses had exceeded his income.

Panish: “If you don’t have work income, is it likely that your spending will exceed your income?”Erk: “Most likely, yes.”

Panish: “Is the idea of a global tour something you came up with?”Erk: “No.”

In an email, Gongwer provided a draft of Michael’s global tour plan as follows: from January 2009 to April 2011—186 concerts. Michael’s profit: 132 million dollars. “That’s a big number, but not the kind of thing MJ wants to hear. He thinks he’s bigger than that.”

In earlier sessions, Gongwer had testified that he called Michael “Mikey” out of friendship and closeness. Brian Panish objected, saying that name was meant to mock Michael.

In the email, Gongwer predicted a 27-month global tour with 186 concerts. Erk reached the figure of 260 concerts over 37 months based on that. Panish asked why the number 37. Erk said MJ’s contract was three years, meaning 36 months, and he personally added one more month. Erk said the average number of shows calculated by AEG was 1.59 per week, and that number was 1.6 in his calculations.

Gongwer attached a list of tour venues around the world to his estimates: Berlin, Hamburg, Munich, Paris, Zurich, Milan, Johannesburg, Dubai, Japan, India, Australia, New Zealand, South America, and the United States starting with Florida, Texas, New Orleans, California, Denver, Utah, and Chicago.

In Gongwer’s calculations, several private shows with income of 3 to 10 million dollars were also included.

Erk said he included larger venues than O2 in his calculations because demand for the tour was unprecedented.

Panish: “Did you see many documents from AEG about a global tour?”Erk: “Yes.”

Email from Phillips to the Loewic team, April 15, 2009: “He’s happy. They selected all the male and female dancers. I want to have a three-year tour.”

Email from Thomas Ursin: “I have a client who is seriously eager to hold MJ’s tour in India.”Phillips’ reply: “Thank you, Thomas. MJ will definitely come to you.”

Before questioning Erk, Panish asked whether, after reading these emails, he concluded that holding the India tour was a plan—not just a wish. Erk confirmed.

Erk said Phillips was in the process of contracting with the company Brawado to supply Michael Jackson products in Oxford Circle, Philadelphia. Under that contract, the stores in that area would sell only Michael Jackson items.

As part of the defense, Strong pointed out that Gongwer had predicted three concerts and one private show in India, and eight concerts and one private show in Japan, while Erk’s estimate did not match those numbers. Erk said Michael would perform 60 concerts in India.

Strong also referred to an email from Phillips to Loewic stating that they were skeptical about Michael agreeing to the tour.

Email: “Colony (Capital) is receptive, but they’re also like us—they doubt MJ will actually do it.”

Then Panish asked Erk again: “What had MJ told his children?”Erk: “He said, ‘We’re going on a global tour.’ He took his children with him wherever he went.”

Panish referenced the rapid sale of 750,000 tickets for the London tour within 5 hours, and Erk described it as excellent. Panish asked him whether, after this success, it was likely that Gongwer would pursue the sale of more tickets. Erk said that in such circumstances they would try to sell as many tickets as possible.

At the end of the session, the judge asked the company whether they wanted to subpoena Dr. Murray as a witness. Putnam’s answer was no.

Source: eMJey.com / LA Times & AP & CNN