Michael Jackson’s agreement with AEG – EVERYTHING AT MICHAEL’S EXPENSE! part 2
It is only part TWO of our analysis of the AEG ‘agreement’ but we are already suspecting very strongly that the deal was a fraudulent one.
The first and last pages of this paper are nothing but a letter with numerous grave inaccuracies which are okay for preliminary correspondence but are out of the question for a contract.
It is a cruel irony that if the Artist had been less experienced in contract making he could have probably taken this letter for a contract, but Michael surely signed hundreds of contracts in his life and was able to tell at a glance the final agreement from preliminary documents, so I can imagine that he could easily lose his vigilance thinking – as every normal person would – that this ‘agreement’ was nothing but a Letter of Intent only.
In part 1 we left off at a place where authenticity of the signature allegedly put by Michael Jackson for his company raised so much doubt that I even suggested submitting it to a graphology analysis.
Everything we read in part 1 led us to believe that this ‘agreement’ was deliberately made in the form of a letter in order to lure Michael Jackson into a trap and make him sign at least some paper which could be later turned into a contract. Let me remind you that the letter was addressed to Dr. Tohme who was a legal “nobody” (if it were a contract ) – so the fact that Michael was reading it as a letter to Tohme could have also added to his impression that it was nothing but preliminary correspondence or Letter of Intent.
This so-called contract was signed by Michael Jackson, but in a place allotted to Michael Jackson as the Artist only. And Michael Jackson as the Artist wasn’t the main party to this contract (which is a very surprising fact) – the text of it focused on Michael Jackson’s company as the main contractual party of AEG, and it was exactly the signature under Michael’s company which raised our heavy doubts as to its authenticity.
The strangeness of this document is enhanced by the fact that the authorized representative of Michael’s company or “Artistco” was never named either at the beginning or end of it. The beginning mentioned Michael Jackson somewhat in passing and said only that ‘Artistco’ was to “furnish the services of Michael Jackson” and the end didn’t mention him as an authorized representative either calling him just a ‘name’:
THE MICHAEL JACKSON COMPANY, LLC
Name: Michael Jackson
If there were no other people named in that ‘contract’ we could probably assume that Michael was the authorized representative of his company, but there is another person – Dr. Tohme Tohme – who is mentioned here so often that you begin wondering why his importance is so much overemphasized in this paper.
His presence in this ‘contract’ is all the more strange as the capacity in which he is operating for Michael Jackson is nowhere to be mentioned, and this makes him a complete outsider to this paper (if it were regarded as a contract). However all “notices, approvals and consents” were to be sent solely for his attention and it was only he who was to send Michael’s approvals on all major issues to AEG. This paper gave him so much authority in this deal that it was enough for him to fax Michael’s approval to AEG for the text of it to become final and binding on Michael Jackson.
In part 1 a supposition was also made that since Michael’s signature came on a separate sheet of paper, the inside pages of the ‘contract’ presented to Michael Jackson then could have been different from the one we see now, but since this point cannot be proven by us in any way let us regard it just as a mere conjecture on my part.
Starting part 2 let me say that what we expected this ‘contract’ to begin with or it basic notions which are fundamental for ever agreement like Subject of the contract, Show, Tour, Term of the Tour, Territory it covers, etc. are not to be found in this AEG’s paper. All it says in clause 1 is that these crucial notions will be defined in the attachment to contract, called Exhibit A:
1. Definitions. The capitalized terms contained herein shall have the meaning ascribed to such terms herein and /or in the attached Exhibit A as applicable.
Since all these terms are basic to the agreement and everything in its text depends on their interpretation, the fact that AEG put them into a separate paper shows that by the time Michael was looking at this clause these major issues had not been agreed by the parties and were put aside for further discussion into this attachment.
If we also keep in mind that the attachment does not have a date or Michael’s signature on it (though it should) it could have been added to the contract at any time and therefore there is absolutely no guarantee that what we see now is what Michael saw at the time of signing this paper.
For all we know he could have seen a totally different version of this attachment when he was referencing to it while signing the letter.
Now comes clause 2, which – instead of stating the subject of the contract – all of a sudden is called “Promoter’s rights” (those who know how contracts are made must be feeling the same utter amazement at seeing it here as I do).
Clause 2 is one of the many proofs that what we are dealing with is a mere Letter of Intent. A letter of intent is usually made after some negotiations between the parties have taken place and the party seeking the contract (the one who made the initial offer) suggests fixing in writing some of the agreements reached with the other party by that time. It enables the interested party to state the other party’s intent to do business with them and gives them at least some confidence that one day the final contract will be signed.
Since this is actually what a Letter of Intent is all about it is no wonder that the interested party (AEG) states at the very beginning of their letter the few promises they have managed to squeeze out of Michael Jackson by then – which they fix in the form of their rights.
If you read clause 2 you will see that these promises are not much. The only thing that AEG managed to have Michael Jackson agree to is that AEG (or ‘Concerts West’ as AEG didn’t want to go under its legal name here for some reason) will now have exclusive rights on some aspects of cooperation with Michael Jackson.
By now you know from a Standard Live Performance Contract what crucial information its opening clauses should state – so please check yourselves whether the points enumerated by AEG are important enough for opening any contract at all:
2. Promoter’s Rights. Artistco and Artist hereby grant Concerts West the following rights during the Term and throughout the Territory (both of which are not agreed yet as they will be defined only in Exhibit A):
(a) the exclusive right to promote the Shows in the Territory,
(b) the exclusive right to manufacture and sell, and/or arrange for others to manufacture and sell mutually-approved Artist Merchandise: at each of the Shows and on the official website of the Artist (www.michaeljackson.com) or such other website identified by Artistco, in the event it selects another URL for the Artist’s official website,
(c) the right to solicit mutually-approved Sponsors to any and all Shows and to execute Sponsorship Agreements; and
(d) the non-exclusive right to use the Artist’s name and approved likeness in connection with Promoter’s exercise of any foregoing rights.
Promoter will be allowed to sell off Shows; provided that Promoter shall remain primarily responsible for its obligations hereunder in connection with such Shows, unless otherwise agreed by Artistco.
Artist shall not engage in any live performances in the Territory during the Term, except that Artist may engage in the following live performances during the Term and in the Territory so long as they do not interfere with the Artist’s services in connection with the Tour or negatively impact tickets sales in connection with the Artist’s services in connection with the Tour or negatively impact ticket sales in connection with the Shows: (1) promotional and private shows where tickets are not sold or advertised to the general public; (ii) television and award shoes; (iii) charity and radio shows; and (iv) other mutually agreed upon shows.
The last point about no other performances from Jackson sounded funny to me because it listed as the Promoter’s right the absence of Michael Jackson’s right to make any performances other than those in the Tour. But as soon as I recalled that Michael had another proposal for a show at the time, this point immediately acquired a serious meaning – the rival promoter, AllGood Entertainment said they had a contract with the Jacksons for $15mln. , however Randy Phillips of AEG evidently managed to push AllGood Entertaiment aside and is using this Letter of Intent to triumphantly state that Michael Jackson has agreed to work with AEG on an exclusive basis (or only with them).
By the way AllGood Entertainment sued the Jacksons for breach of their contract but as far as I know the judge ruled that their document was no contract but a Letter of Intent (!) and it didn’t make the obligations contained therein binding on the Jacksons. The litigation seems to be still be going on – which shows how close a contract and a letter of intent can be and how difficult it is sometimes to distinguish one from the other…
The next clause is called Itinerary of Shows and contains an answer to the question how many shows Michael Jackson agreed to or whether he agreed to anything at all:
3. Itinerary of Shows. Artistco and Promoter shall reasonably cooperate with each other in an effort to arrive at mutually approved itineraries for each leg of Shows during the Term; provided however, it shall be unreasonable for Artistco to withhold or qualify its approval of any itinerary of amended itinerary proposed by Promoter if the date range of such itinerary does not exceed ten (10) weeks, the frequency of Shows within such itinerary does not exceed one Show per day and 3.5 Shows per seven-day period, on average, and the locations of the proposed venues are in metropolitan areas.
The above is intentionally worded in such an intricate manner that I bet you didn’t understand a thing here – I had to read it word by word several times too.
After a careful study this paragraph confirmed my suspicions that at the time Michael Jackson was reading and signing this paper the main points of the tour had not been agreed about at all. (“Artistco and Promoter shall reasonably cooperate with each other in an effort to arrive at mutually approved itineraries for each leg of Shows during the Term”…?). All these ‘ifs’ and ‘efforts to arrive’ definitely show that the contract is far from being settled.
Given that it is not yet clear how long the Term will last and how many legs of Shows will there be this clause is naturally only an outline of a future agreement. But AEG uses it to state its strong recommendations as to what future decisions the Artist’s company should take.
AEG recommends that it will be “unreasonable” for the Artist’s company (not the Artist) to refuse their proposal of the itinerary unless they propose something worse than 10 weeks (2,5 months) for each leg of the Tour, more than one show a day (!) and more than 3,5 shows per week (like every-day shows, for example).
So if the proposed itinerary is “worse” than the terms stated here, AEG will regard the refusal to accept it as “reasonable” – but if the leg is 2,5 months long, includes shows every other day and only one show per day AEG says that it will be “unreasonable” to refuse such an itinerary.
Well, the only good thing about this itinerary (which might be considered reasonable only for a young artist) is that now we know direct from the AEG paper that at the moment when Michael was signing it this itinerary was only a proposal, which was yet to be approved by Michael Jackson’s side.
By the way he signed it as an Artist only and we remember that all major decisions here were to be taken by the Artist’s company (which is a separate interesting question).
The follow-up text of the same clause (continued on the next page) says that the Promoter expects the Artist’s company – no, not to finally approve – but only to preapprove 31 shows, or even a bigger number of shows, between July 26* and September 30, 2009, which makes 67 days.
[*Note: So this co-called AEG contract has July 26 as the opening date of the tour? Why was it later shifted to an earlier date of July 13 then? How could it if the date is stated in the ‘contract’ – if, of course, we consider it as such?]
The ‘contract’ also makes a reservation that in no event should the number of shows in the first leg be less that 18.
So despite all those impressive numbers of 18 and even 31 shows the Artist’s company is supposed only to pre-approve all that? Coupled with the fact that they are also expected to agree on the number of legs in the Tour and the number of shows in one leg, all this turns into another huge mountain of proof that what we are looking at is only a preliminary paper.
For some reason the paper stresses again that it is the Artist’s company which will ensure the first class performance of the Artist, not the Artist himself:
Artistco hereby pre-approves up to thirty one (31) Shows, or such other greater number as agreed by Artistco and Promoter, at the 02 Arena in London, England between July 26 and September 30, 2009.
Subject to the foregoing, Promoter and Artistco shall mutually agree on the number of legs of Shows and the number of Shows in each leg during the Term, and Artistco shall supply a first class performance of Artist in accordance with this Agreement at all the Shows.
Without limiting the generality of Promoter’s right to schedule Shows throughout the Term or Artistco’s obligation to supply a first class performance of Artist at all such Shows, in no event shall the number of Shows performed by Artist in the first leg of the Tour be less than eighteen (18) Shows unless otherwise directed by Promoter.
The continuation of Clause 3 (on page 2) definitely looks more stringent than the beginning of it. It is so stringent that even contradicts the previous page as it allows shows to be arranged more often than every other day – which was stated as an absolute limit on page 1.
Why am I speaking of a contradiction? Because 31 shows within 67 days is approximately one show every two days (or 3,5 shows per 7 days of the week), so making a greater number of them within the same period of time will be definitely more than the absolute maximum stated on page 1.
So at first they say they would regard the Artistco’s refusal to perform more often as “reasonable” and now they say they want a great number of shows – and all this within one paragraph but only on different pages of it? Interesting…
The minimal number of shows for the same period is stated as 18. I remember Michael speaking of 10 only, but look – when it is solely Dr. Tohme who is responsible for all “notices, approvals and consents” I can easily imagine the magical way the initial number of 10 turning into 18 overnight…
But what surprises me most is that it is always the Artist’s company which should supply a first class performance of the Artist and should decide on the number of shows for him. Michael Jackson as an individual is practically not present in this ‘contract’ though it is this individual who should be doing all the singing and dancing….
What all these riddles mean we will probably see in the future, but it emphasizes to us more than ever the importance of two points in a contract. A normal contract should clearly state:
- who represents the company and therefore takes decisions for it. Over here it is not clear. From the way they word it it might turn out that they expect Tohme to take decisions for Michael Jackson’s company.
- who should guarantee the “first class performance” given by the Artist – the Artist himself or the company which is represented by the Artist. This has to do with the assets which belong not to the Artist as individual, but to his company. Since Michael Jackson’s company is the major contracting party here, if – for some reason – it does not fulfil its obligations, it will be the Company which will have to financially answer for it by its assets….
In the meantime Clause 3 goes on meddling with the Number of shows to be given by Michael Jackson. Now they say it would be unreasonable not to agree to adding more shows by AEG within one leg of the Tour. Since their desire to increase the number of shows is very strong they suggest that the number of shows should be somewhere in between one show per day and 3,5 shows per week (which might mean occasionally doing a show every day).
Their explanation for all this insistence on totally slavery terms is that they are terribly afraid for the future of their Advances. Let us leave it as it is at the moment making a mental note that later we will need to look into whether AEG had valid reasons for so many worries:
It shall be unreasonable for Artistco to withhold its approval of adding Shows to any given leg of the Tour or adding legs of Shows to the Tour during the Term (so long as the number of Shows in any given leg do not exceed one per day, and 3.5 per seven-day period, on average) if Promoter demonstrated to Artistco that such additional Shows and/or legs are necessary for Promoter to recoup the Advances in accordance with the terms of this Agreement.
Prior to the commencement of any leg of the Tour, Promoter shall provide Artistco with financial models based on estimated Pool Expenses, Production Costs and Pool Revenue based on projections that assume Promoter shall sell tickets to 80 (%) of the sellable capacity of the applicable venues.
The parties shall attempt in good faith to agree upon the number of Shows that need to be scheduled for Promoter to recoup all Advances in connection with such leg. As used herein, “leg” refers to a segment of Shows which are contiguous with each other in terms of time and geographic region (e.g., North America, the United Kingdom, Europe) and are not separated by more than three (3) weeks.
So the parties will only attempt to agree upon the number of Shows? They claim they are signing the final contract now and they don’t even know how many shows will be arranged? All they can say at the moment is that they will make an attempt to agree about it?
If anyone was still in doubt as to the preliminary nature of this paper let us throw this sheet into their face so that they see for themselves that it is not the final contract between AEG and Michael Jackson!
The reason why they want to add some shows is that they are afraid that not all tickets will be sold (their modest projection is 80%) and these sums will not cover the Advances given to the Artist. Before the leg of the tour starts they will make calculation of all costs and present it to Michael’s company. Okay, let’s see what stands behind these innocent ideas.
It is the first time this paper mentions such an important term as a Leg of the Tour. They define it as follows:
- “A segment of Shows which are contiguous with each other in terms of time and geographic region (e.g., North America, the United Kingdom, Europe) and are not separated by more than three (3) weeks”.
So judging by this definition a “leg” may include several locations in each of the three areas? This is a worrisome point as firstly, all transportation will later turn out to be at Michael’s expense, and secondly, if the Artist has to travel and his performance comes once every two days (or even every day) this leaves him very little time to recuperate between the shows.
This text also says that legs should not to be separated “by more than 3 weeks” but doesn’t say a word about the minimal time between the legs – while this point should have been included into the contract by all means as it gives the Artist a chance to recover after the tiresome shows.
Now everyone knows that all shows were to take place in one place in London and all this uncertainty about the Territory for them is just another of those innumerable details which makes it clear that this paper is far from being the final contract. If it were the final contract we would have a clearly set number of shows and a definite itinerary in it, or at least a pile of amendments to the contract with all that information specified there….
Leonard Rowe’s experience as a concert promoter helped him notice another inaccuracy concerning those legs. He says:
- ”a company the size of AEG, with their in-house attorneys, that promotes hundreds of concerts every year, would surely know the simple fact that every show or leg of shows must have a signed contract by the artist before the show is put on sale”.
He doesn’t offer an explanation why this standard procedure was broken in Michael Jackson’s case, but if we see the AEG document not as a contract but as a preliminary paper only all these details will start fitting it – the final contract (or contracts for each leg) was never made by the parties because Michael Jackson most probably refused to sign the final version of it on such slavery terms. And this left them with a Letter of Intent only which they are trying to pass for a contract now.
Another term which is mentioned in the text for the first time is Advances to be made to the Artist. Advances are a completely normal practice under Standard Life Performance contracts and I even remember Joy Butler, Esq. (see the previous post) saying that if musicians don’t recieve a deposit from their Promoter they have the right to cancel their show.
Exhibit A says that Advances are to include advances to the Artist and advances made for producing the show:
1. “Advances” refers to Artist Advances and Production Advances.
Now let me tell you one top important thing.
If you read either the text of the ‘contact’ or its attachments it will be totally unclear to you who is to pay for production of the shows, as this crucial point is simply not stated in these papers.
To be able to get it you need to analyze the texts and make certain calculations on your own. Neither of the AEG texts specifies clearly who is to pay the Production expenses and I myself have noticed it quite by chance.
First I searched the ‘contract’ for this information but it didn’t bring me anywhere – nowhere does the ‘contract’ state at whose expense production is to be made. Besides showing AEG’s delibrate attempt to silence this point it also means that when Michael was reading that paper he didn’t know who was to cover those costs.
Then I searched the attachment – Exhibit A (the one which has no date or signature on it) – but it did not provide any information directly either. I started getting the idea of it only when I read a totally different point in the same attachment called “Artist’s Net Tour Income’. This point says:
3. “Artist’s Net Tour Income” means the Contingent Compensation minus the sum of Production Costs plus the portion of the Contingent Compensation that consists of Merchandise Revenue (defined below), Net Show-Related Broadcast/Recording Revenue (defined below) and Net Fan Club Membership Revenue (defined below).
Let us disregard all those insignificant “pluses” and focus on the big “minus” instead. So the Artist was to receive some Contingent (what the hell is that?) Compensation minus the sum of Production Costs and … wait, if the Production costs are to be deducted from the pay to the Artist, it means that they are to be covered by him? And this is the only way and place we learn that the Production Costs will be at Michael Jackson’s expense?
Yes, this crucial fact is stated only once, in a terribly indirect way and in some attachment the origin and nature of which is also very much dubious as it doesn’t give a date and has no Michael’s signature on it!
Both the fact that all Production Costs were charged to Michael Jackson and the fraudulent manner in which this crucial fact was hidden in Exhibit A were a big shock and a horrible revelation to me. I clearly remember Randy Phillips complaining how terribly expensive the show was – which at the time made me feel even respect for his company as I thought them generous enough to make a grand show worthy of Michael Jackson. I even felt sorry for them that first they spent so much money and then suffered so many losses because of the Artist’s death.
To learn now that that all this time they expected Michael Jackson to pay for the show is an indescribable shock accompanied by a sickening feeling that AEG was only using Michael Jackson without giving him anything back and was ready to betray, deceive and trip him up at the very first opportunity. So much for their proclaimed interity, desire to enter into an honest deal with the Artist and business cooperation carried out “in good faith”. What a disgrace….
All these dirty tricks on the part of AEG make you suspicious about everything else they prepared for Michael Jackson. Why did AEG specify some Contingent Compensation instead of a normal payment to the Artist?
Barron’s Banking Dictionary defines Contingent fee or payment as :
- “Charge made by a professional for services rendered to a client, recovery of which depends upon a successful outcome of the case. The amount is often agreed to be a percentage of the client’s recovery.”
This is a real slap in the face of the Artist. To promise him payment only in case their venture was successful was a clear insult to him. AEG didn’t believe his shows would sell. They probably didn’t believe he would be able to make all those shows. He was probably not too sure of it himself or was afraid that his fans would not be willing to see him after all those years of silence and the damage done by the 2005 trial – and this is probably why he agreed to the insulting term of Contingent Compensation (of course if the text he approved was the same text we see now – now I don’t rule out anything at all)….
But now that we’ve learned that the Production Costs were to be covered by the Artist the main issue for us is the list of expenses included by AEG into these costs. I hear that part of production costs is to be borne by artists anyway (like their own musical instruments, for example), but what did AEG include into production costs here?
Let us examine the attachment (Exhibit A) for AEG’s definition of this term. Point 8 of it will knock you off your feet with what this monster entertainment company included into Production Costs which they expected to be paid by the Artist.
Please remember that we cannot be sure that at the time Michael was signing the ‘contract’ this Attachment to it (Exhibit A) was made available to him. However if he did see it, he surely didn’t approve it as the paper does not carry his signature (or date).
The absence of date is also important as it shows that this paper could be attached to the ‘contract’ at any time.
The text of Production Cost term is not final by the way as it has a reservation saying that the current interpretation of this term will be valid only if mutually approved by both parties. Please read it to see why Michael Jackson didn’t approve it:
8. “Production Costs” means the following costs to the extent they relate to Shows and are mutually approved:
(a) all Artist-related production and related costs including, but not limited to, sound and lights; rigging motors, staging elements, video (if any), pyro (if any), photos and bios of Artist, televised broadcasts, if any,
(b) the cost of all musical instruments of the tour party and the cost of transporting, storing and insuring all such musical instruments;
(c) personnel costs for the tour party (including transportation, feed and accommodations);
(d) salaries, wages; per diems, payroll taxes and expenses, union dues and other labor costs and benefits of musicians and dancers and other non-management members of the Tour Party;
(e) at such time as Artistco obtains the cancellation insurance required by Paragraph 13 of the Agreement and Promoter receives written evidence that it has been named as a loss payee of such cancellation insurance, the mutually approved direct, actual costs of Artist-related management and staffing pursuant to the terms of a separate agreement with TT International, LLC for the services of Dr.Tohme Tohme (not to exceed $100,000 per month);
We are only halfway through this point but are already amazed by its content. So Michael Jackson was to pay all the salaries and wages of the tour personnel, their transportation, feed and accommodation? He was also to obtain (and pay for) a cancellation insurance which, in case the show was cancelled, would name AEG as a “loss payee”, or beneficiary, or the one who receives the money to put it simply?
And what risks did AEG take then while going into a deal with Michael Jackson? Even if the Tour was cancelled they would still receive their compensation from Michael Jackson’s insurance – so why worry so much about whether Michael would perform or not?
Another totally amazing point here is that the Production Costs were to include a $100,000 per month salary for Dr. Tohme Tohme under a separate agreement with his “TT International” Company!
I wonder who this TT agreement was expected to be signed with – Michael Jackson or AEG? Most probably it was Michael Jackson as an open agreement between Tohme and AEG would expose his intentions all too clearly – but the fact that it was AEG who was putting in a word for Tohme in their contract with Michael Jackson is a sign that Tohme was on exceptionally good terms with AEG and was most probably working in their interests.
Why such a conclusion?
Because if you are an Artist and sign a contract with a Promoter it is none of his business who works for you and on what terms.
It is only in case they are awfully interested in the invaluable services of Dr. Tohme who represents the other side that they will include his name into an attachment to their ‘contract’ and demand that the Artist should pay him $100,000 a month – otherwise it would be totally the Artist’s business how much he pays to his assistant….
Aren’t we making totally incredible findings in this totally amazing piece of paper?
If you are not yet knocked out by the amount of Production Costs to be borne by the Artist here are the remaining expenses proposed to him by AEG:
(e) travel and transportation costs including trucking, bussing and freight, and local ground and show transportation for the tour party;
(i) tour design gees and tour creative art;
(g) visa & immigration costs, if any, for the tour party;
(h) all such other costs for which an artist (or its furnishing company) is customarily responsible, including, without limitation; adequate worker’s compensation and liability and other insurance with respect to the foregoing; provided however, in no event shall Production Costs include any other costs associated with management and agency commissions or fees and legal fees of Artist and/or Artistco, all of which shall remain the sole responsibility of Artistco and Artist; and
(i) cancellation insurance, if available and mutually-approved, to cover the risk of loss of Artistco’s profits and Production Costs in an amount which, at a minimum, is equivalent to or exceeds any unrecouped… (text unavailable).
Cancellation insurance again? So it was to cover the ‘risk of loss’ of Profits by Michael Jackson’s company and ‘risk of loss’ of the Production expenses? But in contrast to what you would expect of such an insurance the money received under it would not go to Michael Jackson – who spent his own money on producing the show – no, it would go to AEG instead!
Could they make all this unfair fuss over money issues because of the Advances they gave to the Artist which they so desperately wanted to recoup? Yes, they could, and this will have to be discussed in a separate part.
All I can say at the moment is that I am happy that Exhibit A stating that all production would be at Michael Jackson’s expense is not carrying his signature. Its absence means that he either never saw that Exhibit or never accepted its slavery terms.
And this means that he was fighting the injustice as best as he could and to the very end of his life too.