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“If he pulled out of the tour, AEG would take control of his company and its catalogue of songs”

September 8, 2012

The above headline concerning Michael Jackson  is a quote taken from a newspaper article recently published by musicweek.com. One of the readers accused me of not quoting the reference sources, so here it is (to read the article please click on the link).

A valuable discussion about AEG is now taking place in the post about Randy Jackson, however since it does not belong there I decided to shift some of the comments into a new post. These comments are my replies to Susan Joyce’s and other people’s questions about AEG.

If any other readers besides Susan have the same questions let me explain the way I’ve always seen the situation with Michael Jackson’s valuable assets and a possibility of AEG getting hold of them as a result of their “contract” with Michael. Of course this is my opinion only, but it is based on an extensive research I’ve made of the subject.  Susan Joyce  raised this question twice:

AEG could only be reimbursed what they had paid out to date in production and advances to Michael. If MJ’s musical estate (ATV and Mijac) together were worth say…..$800 million and Michael owed AEG a total of $100K, that is all AEG could collect. AEG would never own any of Michael’s musical estate.”

… I will try and explain it using an example this time. If you owned a company with a net worth of $1 million and you defaulted on your home mortgage which carried a first loan of $200K and second loan of $100K, the mortgage company could only sue you for the total amount of loans only i.e., $300K. The mortgage company, by law, has no legal standing to take your $1 million business and could NEVER act on your behalf or your sole representative

Susan,

Report by the Estate filed on 17.02.11 says that after Michael’s death they owed AEG the sum in excess of $40 mln. The actual advance to MJ was only $6,2 mln. while the rest must have been the expenses on producing “This is it” show borne by Jackson (click to enlarge)

The overall sum which the Estate repaid to AEG on behalf of Jackson was in excess of $40mln according to their first financial report. This was the sum which Michael would have had to return had his contract with AEG been severed. Those millions were made up of the $6,2 advance given to Michael under the Promissory Note and production costs which were fully placed on Michael’s shoulders (which is a complete outrage in and of itself).

Under pressure from Chernoff Randy Phillips admitted at Murray’s trial that all production costs were full Michael’s responsibility.

Now let us make a sort of a projection of the events that would have taken place in case of cancellation of that “contract”.

AEG reserved the O2 Arena for Michael and would have surely claimed compensation for their losses in connection with their arena being vacant during the period of those 50 concerts. They would have claimed loss of anticipatory profits, and this we can be sure of. 

How much is that alone? One third of a billion? Half a billion? More? To get to the right figure we need to know the sum AEG got from the tickets sold plus the anticipated profit from the shows including all related merchandize, the film footage released, etc.

“Michael’s death is a terrible tragedy, but life must go on. AEG will make a fortune from merch sales, ticket retention, the touring exhibition and the film/dvd” [Randy Phillips]

In fact Randy Phillips said it himself in one of his emails that they would make a fortune out of all the events related to Michael’s concerts, and this is true not only for the situation arising from his death but the tour cancellation as well.

One more possibility of a lawsuit against Jackson is that they could have sued him for “fraud” as regards his health and their payment for the multi-million insurance policy from Lloyds.

Add to it minor things like the $150,000 monthly salary to Murray which they would have also charged to his account (multiplied by several months) and the same with the $100,000 monthly salary to Tohme (initially payment to Tohme was their responsibility, but as a result of a trick with production costs it also became Michael’s business) – and I think that now everyone will understand that after adding up all those sums it is simply impossible to calculate the resulting multi-million amount which Michael would have had to pay back.

Sorry, I forgot the legal fees for the many months of litigation with AEG.

Paul Gongaware, an AEG Live executive who knew Jackson, emailed colleagues a strategy memo. Wear casual clothes, he told them, “as MJ is distrustful of people in suits” and expect to talk “fluff” with “Mikey.

Inevitable as those lawsuits were, even without them AEG had full access to everything Michael had. According to their Promissory note for the advance of $6,2 mln. if Michael delayed payment by 5 days a major default would occur and Michael would pass to AEG everything he had or would ever have.

There are three interesting points as regards this default event:

1)  the default of payment was to be declared if the Artist filed for Bankruptcy . The fact of bankruptcy did not release Michael Jackson of the obligation to pay all his advances back.

2) the default of payment could arise in case Michael did not pay at least one monthly repayment installment. It is interesting that the “contract” never said a word about any monthly repayments of the advance money, however the Promissory note mentions them, but somewhat in passing. What these installments are and how are they to be paid is a huge mystery because there is no schedule showing how much each installment is and what the dates of repayments are.

But let us suppose that a monthly repayment was to be $1 mln. If Michael was unable to pay this $1mln, five days later a full default of payment was to be declared, as a result of which Michael was to pay the full sum which was in excess of $40mln.

3) if Michael’s company could not pay (which of course it could not), the “contract” had a tiny reservation for such a case hidden in some funny miscellaneous clause which said that AEG would have access to all Artist’s assets as an individual. This was a direct road to all other Michael’s assets, even his ATV catalog, shielded by two Trusts.

Since the catalog was well protected, access to it could be made only as a result of a lawsuit. However this was no problem as the above projection shows it.

The Promissory Note also said that as a result of a default AEG would become the full Attorney-in-fact acting on behalf of MJ Company LLC. AEG was to receive full rights and receive them irrevocably (the rights were never to be returned).

Let me say it again that though the Promissory note emphasized that the matter concerned only Michael’s company and not the Artist individually, the contract contradicted this point and said that it did concern Michael as an individual (and therefore covered all his belongings).

There is a short piece I wrote about it in this post summing up AEG’s contract: https://vindicatemj.wordpress.com/2012/03/13/the-aeg-contract-with-michael-jackson/:

  • We can argue over the value of the Michael Jackson Company LLC as the Collateral in 2009 or in the future, but it doesn’t really matter much. Out of the many points specified in the Promissory Note the major one is that if it came to the worst AEG was to become an attorney-in fact for Michael Jackson’s company with “full authority” to take any action – up to “filing financial statements relative to the Collateral without the signature of the Holder” (Michael Jackson).
  • What we see here is a full Power of Attorney provided to AEG. It could enable them to act not only on behalf of MJ Company LLC, but according to the contract (remember that “miscellaneous” clause?) represent him where the Artist had “an interest in” as an individual. And this could include other Michael Jackson’s assets, probably even his ATV catalog…

Here is part of the Promissory Note speaking about the collateral (over here it looks like it is limited to Michael Jackson’s company only, while in reality it is not):

Page 4 of the same Promissory Note  mentions for the first and last time certain “regular scheduled monthly payments required until the Note is paid in full”. No schedule is provided – either here or anywhere else.

To our great surprise we find the point about repaying the money in “Prepayment” clause:

The Miscellaneous clause from the Promissory Note you see here  is not the same as the Miscellaneous clause in the “contract”. Over there it is the crucial part of the whole document on which everything depends. This is what I earlier wrote about point 16.3 of the contract Miscellaneous clause:

But point 16.3 outplays them all. It ties together Artistco (MJ Company LLC), the Artist (the individual) and a lien (one of its meanings is “the possibility to arrest the assets of the other party”).

It says that to secure the obligations of the Artist and his company AEG is granted rights to Collateral which gives them a Lien (right to arrest) the property and assets of the Artist’s company “wherever located”, owned “now or acquired later” and investment property, securities, claims and all other payments of  money in which the Artist’s company and the Artist have an interest:

Point 16.3 of the Miscellaneous clause from AEG’s “contract” with MJ (click to enlarge)

  • “To secure the faithful performance of Artistco of Artistco’s and Artist’s obligations under this Agreement (including to repay the Advances), Artistco hereby grants Promoter a lien in all Artistco’s right, title and interest in, to, and under the following properties, assets and rights, wherever located, whether now owned or hereafter acquired or arising, and all proceeds and products thereof (all of the same being hereinafter referred to collectively as, the “Collateral”): contract rights or right to the payment of money in which Artisco and /or Artist has an interest, insurance claims and proceeds, commercial tort claims, securities and all other investmenet property, and all general intangibles (including all accounts receivable and payment intangibles). Artistco shall reasonably cooperate with Promoter in its efforts to perfect such security Interest”.

The main idea of the above is that the Artist’s company is responsible for both itself and the Artist. Therefore the Collateral pledged as a guarantee of their obligations includes everything the Artist’s company and the Artist had or will ever have.

*  *  *

Another detailed conversation about AEG took place with Ivy of MJJCommunity exactly a year ago, in September 2011. You’ll find it in the comments section to this post: https://vindicatemj.wordpress.com/2012/03/03/branca-aeg-and-karen-faye/

The order in which the comments were made at the time has now been slightly changed in order to group them together by subject. Some have also been shortened. Ivy’s comments are in quotes.

We discuss the issues of tremendous importance.

Helena,

As you know I am one of the people that believes Michael’s catalogs was never collateral. Although we cannot list what MJ Co LLC owns, we can show the entities that owns Sony/ATV and Mijac and it’s not MJ Co LLC. I’ll do it as soon as I can – and post a link to it- by using 2006 Prescient lawsuit (lawsuit about 2006 refinancing of the loans) as well as recent probate fillings. It will show the ownership structure of the catalogs from 2006 to this date. And Lyton Guest is right that the catalogs (and assets) are divided and put into trusts to protect them from creditors. You’ll see that in the Prescient lawsuit , the 2006/2007 formed New Horizon Trusts will be referred as “bankruptcy remote structure”.

Ivy,

I’ve looked up what the Estate’s report says about Michael’s ATV share. Here it is:

  • Sony/ATV. Michael had also pledged his fifty percent interest in Sony/ATV as security for a loan issued by Barclays Capital***.
  • ***The loan is also administered and serviced through two bankruptcy remote trusts which Michael Jackson established in connection with his financing transactions. Michael Jackson’s interest in Sony/ATV is owned by a Delaware statutory trust (“Trust II”). Trust II is intended to be only a security device. The beneficial owner of Trust II is another Delaware statutory Trust (“Trust III”). The Trustee of Trust II is Wells Fargo Delaware Trust Company. The Estate is the sole beneficiary of Trust III.”
  • The Executors successfully negotiated with UBS to refinance the loan secured by the Estate’s interest in Sony/ATV. The negotiations resulted in an amended agreement with Sony to the benefit of the Estate, and a new loan at a substantially lower interest rate for the Estate, which is locked in for the period of the loan.

I was not sure how trusts operate and looked it up. Trusts date back to the times when knights left their valuables to someone “in trust” so that these people would take care of their heirs in case they do not return from a battle. This explains the idea of trusts pretty well, however I wondered whether the guarantees provided by them were indeed that solid. One site says that the guarantees are uncertain (so that creditors can still claim those assets):

  • “You considered establishing a Trust and have some of your assets transferred to it in order to secure yourself, but the fees are huge, and the benefits quite uncertain.” http://freedomfromtaxes.com/AssetProtection/

Here is an article which says that only one type of a trust provides a full guarantee against creditors – if it is irrevocable and made for another beneficiary:

“Is Property in a Trust Safe From Bankruptcy?
By Mary Frazier, eHow Contributor | updated May 29, 2011

There are many different types of trusts, and whether trust property has protection from bankruptcy depends on the type of trust. The broad category types of trusts that have issues with bankruptcy are revocable and irrevocable trusts.

Revocable Grantor Trust
When a grantor establishes a revocable trust he creates a taxable entity and places assets in the trust. A revocable trust grantor has the right to amend, modify or revoke the trust at any time. Because of this, the trust grantor by definition is the owner of the trust assets, and owns the trust property from a legal and tax standpoint. Since the revocable trust grantor owns the trust assets, the trust property has no protection from bankruptcy. For example, a person cannot place $2 million in a revocable trust, file bankruptcy and expect that the assets in trust are bankruptcy protected.

Irrevocable Grantor Trust
When a person places assets in trust and creates a trust agreement that is irrevocable, the person as the trust grantor effectively gives up control of the trust assets. The trust grantor can no longer modify, amend or revoke the trust assets. Some trust grantors create irrevocable trusts, where the grantor is the trust beneficiary that receives a benefit from the trust for his lifetime. If an irrevocable grantor trust structure is proper, it is possible to afford bankruptcy protection. However, this type of trust is complicated to create and difficult to enforce creditor protection. A person with creditor issues cannot create an irrevocable grantor trust, file bankruptcy and expect the assets to be safe.

Irrevocable Beneficiary Trust
A trust created by a trust grantor for the benefit of another person typically has protection against bankruptcy of the grantor and the trust beneficiary. The grantor no longer owns the property and the trust beneficiary never owns the trust property. A trust beneficiary has a benefit of some type from the trust, such as receiving trust net income for his lifetime. Proper creation of an irrevocable trust protects the trust assets from beneficiary bankruptcy.

Spendthrift Trust Language
In order for any trust to have proper protection against bankruptcy, the trust agreement must contain specific verbiage known as spendthrift language. Spendthrift language varies by legal drafter, but the basic components state that trust assets cannot be pledged, assigned or alienated by a beneficiary or his creditors. This language is critical in the trust agreement, since it prevents bankruptcy creditors from attaching trust assets to settle beneficiary debt. http://www.ehow.com/info_8507634_property-trust-safe-bankruptcy.html

The Estate says that Trust III is the beneficial owner of Trust II, so the way I understand it Trust II “created another trust for the benefit of another person” – and this is how Trust III came into being. So if it is “properly created”, has “spendthrift language”, and is actually made for the benefit of another person [not MJ?] then it does protect the catalog well, which is good. Only I am not sure that Michael would have trusted his catalog to anyone else.

On the other hand if the Trust protects the catalog so well from anyone, why was all this fierce campaigning against Sony then?

Helena,

My understanding and please correct me if I’m wrong, It protects the catalog from bankruptcy and third-party creditors but not from defaulting on the loan payments. So although Michael was highly unlikely to lose his catalog for a $40M debt to AEG, he could have lost it due to non-payment of the loans. Michael’s “they are after my catalog” statement was based on the belief that they were creating accusations about him to hurt his income capabilities so that he would default on the loans and Sony would get the first dibs to purchase his half.

Update – I think that losing the catalog due to non-payment of the loans does not rule out the possibility of losing it also through paying hundreds of millions of dollars to AEG in settlement of their “losses’.

In case of default on the loan payments it would be the bank who would have the right to Michael’s share, and not Sony. Sony would simply have the right to be the first to buy it, nothing else.

Sony had the right to obtain half of Michael’s share (or 25% of the catalog) any time anyway, but never used this possibility either when Michael was alive or dead. For the full story please go to this post: https://vindicatemj.wordpress.com/2012/08/28/john-branca-and-randy-jackson-two-outcomes-for-michael-jacksons-finances/

Helena,

…The main concern or misconception of the fans is that if Michael didn’t perform and cancelled the deal, AEG could have gotten his catalog. It’s important to correct that misconception if we have been mistaken.

Ivy,

My claim that Michael could lose his catalog due to his association with AEG isn’t a misconception. What I asserted and continue to assert is that AEG’s various contract papers are structured in such a way that at any time of a default they could lay their hands on all belongings of Michael’s company LLC. It didn’t have anything at the time – $5,5mln. listed there now look like the sum later returned to it by Tohme but apart from that it was zero, I guess.

Kathy Jorrie, AEG’s attorney

But even if the company had a zero on its accounts in case of a default AEG was becoming Michael’s attorney-in-fact with huge rights to acquire his other property. In fact the “advances” were for a sum bigger than $40mln. and this is what they wanted back (most probably with compensation of their damages, interest, loss of profit, etc. plus the fees of the attorneys as the Promissory Note said). It could have been a huge trial of the century with lots and lots of millions involved. To prove whether Michael could or could not lose his catalog as a result of that we need a huge team of lawyers to look into this matter and make a sort of a reconstruction of possible events.

However the first assignment of these lawyers would be to check the validity of the AEG contract at all. In my opinion the contract was not valid, and that is why in reality AEG could not acquire the catalog (this is what I reassured my readers of). So all we can analyze are the intentions of AEG – after all they consider their contract valid, so their papers are worth analyzing as they show the train of thought of these people.

Considering that Tohme was regarded as the manager of MJ’s company LLC (all confirmations were to be sent through or by him) and that he obtained two Powers of Attorney from Michael (as we learned just recently) but was actually working for AEG, we absolutely cannot rule out that he wouldn’t have devised a fraudulent scheme to reconsider the terms under which the catalog was kept in those trusts.

I don’t know what Tohme was up to but all this dirty mess around Michael proves that there was some game at play. The irregularities we see in the AEG papers are not made just for nothing – there must be a reason for them. It would be best if AEG and Tohme themselves told us what they were up to, but if they do not, we will have to analyze the situation ourselves. If it wasn’t his catalog another goal could be ruining Michael altogether and making him work for them until the end of his life, and this is why I think we should not necessarily focus on the catalog only.

You seem to be analyzing the situation as if the papers and people around Michael were absolutely clean – which is the worst misconception of all. The validity and correctness of AEG papers leave much to be desired. Tohme was supposed to be working in Michael’s interests as he was his manager, but the contract says his services were to be paid for by AEG (!) – so who did he work for then? Later, in the attachment to contract, the AEG corrected this point by placing all production costs on Michael’s shoulders (while the contract had different stipulations about this matter). The production costs included Tohme’s salary, so by this single move Tohme suddenly began “working” for Michael again.

The whole thing is a complete mess, which could be created only intentionally. I repeat, only intentionally and in such dirty waters it was easy matter for Tohme to do some dirty business behind Michael’s back and probably even reconsider the terms under which the catalog was kept by those trusts. Remember that he had those two Powers of Attorney….

To make my position clearer to everyone I will repeat that since I consider the contract invalid, Michael’s catalog was not in danger. However the AEG contract (even if it is void) does show the company’s intentions, and there are strong signs that these intentions were far from honest.

Helena:

I believe they are becoming “attorney-in-fact of the Artist’s company” and not Michael Jackson. Again all their reach and control is to limited to MJ Co LLC and what it owns. Details are important.

Ivy,

Yes, details are important. So please do not forget that the contract refers to both the Artist’s company and/or the Artist as the responsible parties (while the Promissory Note speaks of the Artist’s company only). It is one of those innumerable discrepancies between different parts of the AEG deal which give a reason for thinking that it was not quite valid.

However, valid or not, point 16.3 of their contract says that “as a security” AEG will have rights to everything the Artist has in terms of assets and debts:

  • “all Artistco’s right, title and interest in, to [ ] assets and rights, wherever located, whether now owned or hereafter acquired or arising, and all proceeds and products thereof (referred to collectively as, the “Collateral”): [ ] right to the payment of money in which Artisco and /or Artist has an interest, insurance claims and proceeds, commercial tort claims, securities and all other investmenet property, and all general intangibles (including all accounts receivable and payment intangibles).”.

Helena:

“Also the good thing about being in 2012 is that we have new information that we can add and make corrections. Yes recently we learned that Tohme had 2 Power of attorneys but we also learned that Michael had cancelled his power of attorney’s in April 2009. So Tohme was no longer a threat in regards to fraudulent schemes including transferring Michael’s assets and/or signing up Michael for never ending concerts.”

Ivy:

We are discussing the AEG contract and not the drastic measures Michael took to save the situation (like Tohme’s dismissal, cancelling the Powers of Attorney and rehiring Branca). I’ve noted it already that the contract papers should be regarded only as a kind of evidence of the intentions the AEG and Tohme had towards Michael Jackson. In life, especially with Branca handling this business, everything could have turned out totally differently.

.. But why is it only the catalog that everyone is focusing on? What we should look at is the reason why the “contract” with AEG was made in such a way that it was totally unclear who, for example, would pay the production expenses – the contract implied AEG and the Definitions (listed in a separate attachment) stated that they were Michael’s responsibility. Considering the amount of those production expenses the matter was crucial for Michael! And let us not forget that artists are not obliged to put in their money in the show at all because if they do, what will they need producers for?

Helena:

Actually I wouldn’t say “at all”, because you would see different cost sharing according to the artist’s popularity and demand. Even for example the Immortal tour is a 50-50 cost sharing between MJ Estate and Cirque.

Ivy,

The Immortal project is different – Cirque du Soleil is a production company which could do without the Estate and then the Estate would receive only royalties for the music rights. But the Estate chose to invest their money in order to share the profit too and the profit might be huge here, so their decision was absolutely correct.

But when a single artist (like Barbara Streisand for example) makes a show she is not obliged to invest her own money into it. Each is doing his own job – she sings, the producer puts in money and arranges the whole thing. Otherwise all singers would be producing their shows themselves or arranging them through agents who would order the arenas, take care of the tickets, advertising, etc. There might be variations here, but generally producers do put in their money, don’t they?

If the words “at all” are not too accurate I can withdraw them as I myself said in my posts that there should have been a certain agreed budget between Michael and AEG and if it was exceeded due to the artist’s “ideas” he would be the one to pay for them. The producer is not responsible for every artist’s ‘whim’ as they also have their limits.

But in this case ALL production costs were Michael’s responsibility – with nothing to be borne by AEG! AEG was acting only as a kind of a bank which provides the money and does its own accounting – while Michael was supposed to pay for everything they spent. He was supposed to check their expenses later, but was there a way to check up whether they quoted the best price for each service and found the best subcontractors? What if they charged him double for something which cost twice as little?

When we want to buy something we prefer to buy it ourselves, because our “agent” can go to the most expensive shop and make a purchase at an unnecessarily high price (at our expense!). However we won’t mind it if our partner buys something expensive but covers his expenses himself, right? And we won’t mind it either if we share the expenses too, because the fact that he is also paying makes us sure that our partner looked for the best combination of quality and price, right?

The problem with AEG contract is that Michael most probably did not know (at least initially) that he was to bear responsibility for all production costs. This becomes clear to us from the discrepancies between the contract and attachments to it. The production costs are enumerated in the attachment only, which is not even signed by either of the parties. The contract on the other hand is rather vague as regards who is to pay for production.

Those production costs were also directly connected with the division of money between the parties. Roughly speaking AEG was to receive a fixed per cent of the gross money collected minus their small expenses, while Michael was to receive what remained after 1) AEG deducted the money due to them 2) the production costs were deducted from profit and returned to AEG. Michael was probably to receive not even the whole of what remained after all those deductions, but only 90% of it (the rest would go to AEG again).

Firstly, the fact that AEG deducted their percent from the revenue collected from tickets made them interested in selling a bigger number of shows, because their share only increased after collecting a bigger amount of money, while Michael’s share decreased after that (the production costs for a bigger number of shows grow considering the salary of the whole staff, their accommodation, taxes, travel expenses, etc.).

Secondly, AEG were interested in boosting the production expenses. The more they spent the less Michael ultimately received, while the amount of the production expenses per ce did not really matter to AEG – all production expenses were to be returned to them by Michael in full anyway.

Wasn’t it much more fair to 1) share the production expenses and 2) deduct production expenses from all money collected and only then divide the profit as all normal people do?

Since the above crooked division of profit becomes clear only after you read the attachments to the AEG contract I think it was something Michael either never saw, or saw much later. The Definitions attachment where the whole thing is stipulated is not signed by either of the parties.

… The contract in general is made in such a way that one might think it is not a contract, but an ultimatum. Add to it the facts of discrepancies between different documents and a grave suspicion in forgery, and you have a complete picture of a huge set up.

The question is why? Why did they do it that way? If it wasn’t the catalog (which was so well protected that even Sony could not evidently obtain it, right?), then what was the reason?

Did AEG want to put Michael into slavery for the rest of his life and does this reason sound better than their desire to get his catalog?

Helena:

Why would Michael be in slavery for the rest of his life?

Ivy,

To answer your question I need to write a new post about point 14 of the Definitions attachment to AEG’s contract (the attachment is not signed by the parties either). Point 14 is called “TERM”.

I will retype it here with practically no comment for everyone’s individual scrutiny first. It is mind-boggling to imagine that the Expiration date of the term of AEG’s “cooperation” with Michael Jackson was due only half a year ago, on December 31, 2011 (!) and even after that AEG still had the right to prolong the term and in their own discretion at that!

  • 14. “Term” means the execution date through December 31, 2011, or the conclusion of a Worldwide touring cycle which includes Shows throughout the major touring territories of the World as mutually selected by Artisco and Promoter, whichever occurs later (“Expiration Date”), provided however, Promoter shall have the right , in its sole discretion, but not the obligation, to (a) extend the Term beyond the Expiration Date by written notice (a) until such time as Promoter recoups one hundred percent (100%) of the Advances; or (b) end the Term prior to the Expiration Date, in which event the Term shall be defined to and on the date(s) selected by Promoter, notwithstanding the Expiration Date.
  • To exercise its right to extend the term under the foregoing provision, Promoter must give written notice of its desire to extend the term prior to December 31, 2011. For the avoidance of doubt, Artistco and Promoter shall have all of their respective rights and obligations under this Agreement with respect to any mutually approved Shows that have been scheduled prior to the Expiration Date and are to be performed after the Expiration Date as the result of Promoter’s decision to extend the Term regardless of whether or not Promoter recoups one hundred percent of the Advancesprior to the completion of such Shows.
  • Notwithstanding any of the foregoing, in the event the Term is extended by the provisions of the paragraph beyond December 31, 2011, Artistco shall have the right to end the Term on the New Expiration Date (defined below) by giving Promoter written notice by facsimile transmission (the “Buy-Out Notice”) of Artistco’s desire to end the Term on the New Expiration Date, which Buy-Out Notice may be given on December 31, 2011, or any date thereafter, and upon receipt of such Buy-Out Notice, the Term shall then end on the later of (a) the date of Promoter’s receipt of the Buy-out Notice, or (b) the completion of any mutually-approved Shows previously scheduled (such later date being refined to as the “New Expiration Date”), but only so long as Artistco pays to Promoter an amount equivalent to any unrecouped portion of the Advances as of such New Expiration Date by no later than ten (10) business days from … (the last line is missing).

Did you notice any rights belonging to the Artist? (I didn’t)

And how do you like the “Buy-out Notice”? Nice wording, isn’t it?

Did you notice that Promoter has the right to unilaterally prolong the term at their desire (by just notifying the other side)?

Did you see that they can notify the Artistco of their “desire” prior to December 31, 2011, but Artistco has the right to submit the “Buy-Out Notice” only on December 31, 2011? The Artist’s rights begin only on that date instead of prior to it with AEG having a priority?

And the Artist will be released of his obligations only after he completes all the shows “mutually approved” and “previously scheduled” by ArtistCo and AEG, won’t he?

And who is Artistco by the way? Michael Jackson or Tohme who was deciding everything for him at the time?

Could the shows “previously scheduled” mean that Artisco would approve, say, another 50 shows after the AEG’s “desire to prolong” expressed prior to Dec.31 (before the Artist’s “Buy-Out Notice” sent on Dec.31 only)?

So that the Artist has to complete these new added shows even after December 31, 2011 because what he says on the day of Dec.31, 2011 does not matter any longer?

And only when he fulfils his new obligations he will be finally free, and this will be called a new expiration date?

If he is alive of course by that time?

And he cannot get his freedom before the New Expiration Date even if he repays all the advances back?

And this is because “..shows that have been scheduled prior to the Expiration Date and are to be performed after the Expiration Date as the result of Promoter’s decision to extend the Term regardless of whether or not Promoter recoups one hundred percent of the Advances prior to the completion of such Shows?

And the territories for such shows will be again selected by Artistco and Promoter (and not the Artist)?

But it will be his company which will bear all costs for transporting the equipment, travel and accommodation of the staff, etc. because all “rights and obligations” will remain the same for the period of January, 2009 up to December 31, 2011 and an indefinite period after that?

Helena:

“Did you notice that Promoter has the right to unilaterally prolong the term AT THEIR DESIRE ”

— I guess we are reading it differently. My understanding is that they have the right to extend the date UNTIL one hundred percent (100%) advances are recouped. In my opinion it’s an conditional extension ability. It even includes that it can end earlier than that and that artist can do a “buy out” meaning pay the remaining advance balance and not do the concerts. They estimated Michael to earn $2 Million per concert (Murray restitution number). So it seems like he could have paid advances + production costs by doing 20 shows. So I don’t think he would be slaved for life.

As for the contract I actually do agree that it’s not a favorable contract for Michael for things such as making him pay all the costs , delayed payments to him etc. but also at the same time I don’t think it was to the point of making him work with no end in sight or would put him on the street with no assets.

Ivy:

This is why I said the point called “Term” needed a full post, and not just a comment. Taken separately one sentence can mean that they had the right to extend it unilaterally until 100% of the advances was paid. But AEG’s papers are made in such a way that one thing contradicts the other and numerous points allow opposite interpretation. For example, the sentence you referred to is followed by a sentence which allows a different interpretation of the same thing:

  • “Artistco and Promoter shall have all of their respective rights and obligations under this Agreement with respect to any mutually approved Shows that have been scheduled prior to the Expiration Date and are to be performed after the Expiration Date as the result of Promoter’s decision to extend the Term regardless of whether or not Promoter recoups one hundred percent of the Advances prior to the completion of such Shows.”

Helena:

It even includes that it can end earlier than that and that artist can do a “buy out” meaning pay the remaining advance balance and not do the concerts.

Ivy:

This is a highly negative point! What it essentially says is that the Promoter has the right to unilaterally terminate the contract before the expiration date whenever they want to! They terminate it, and Michael is forced to pay all the advances back without making concerts and without a possibility to earn money!

And as regards the Buy-out notice it means that the Artist could be free if he repaid the advances but only after he performed all the shows, including the newly added ones:

  • “upon receipt of such Buy-Out Notice, the Term shall then end on the later of (a) the date of Promoter’s receipt of the Buy-out Notice, or (b) the completion of any mutually-approved Shows previously scheduled (such later date being refined to as the “New Expiration Date”), but only so long as Artistco pays to Promoter an amount equivalent to any unrecouped portion of the Advances”

You say that,

“They estimated Michael to earn $2 Million per concert (Murray restitution number). So it seems like he could have paid advances + production costs by doing 20 shows. So I don’t think he would be slaved for life”.

I regard it as the Estate’s not too far-sighted approach to the matter. They wanted the restitution to be big and didn’t focus on the numerous obstacles hindering Michael in making money under this ‘contract’. By saying that MJ could earn that much they practically said that the contract was valid, with which I categorically don’t agree. Fortunately they dropped that restitution altogether. Probably they understood the mistake made.

*  *  *

This discussion was closed by Mona who asked me to send her a link to the contract as a whole and whatever other documentation I had on this.

Here is a link to the documents containing AEG’s contract with Michael Jackson, AEG’s contract with Murray and all related papers. The source is Joe Jackson’s suit against Murray and AEG (which is now dismissed as a double to Katherine’s). Double or not, but it has all the documentation we need on the subject:

http://www.scribd.com/doc/59105659/Notice-of-Motion-and-Motion-for-Leave-to-File-First-Amended-Complaint-FULL-AEG-CONTRACT-P43

On pages 43-70 you will find the full AEG contract with attachments to it. There are many other interesting documents in this package – for example, Conrad Murray’s correspondence with AEG people (beginning with page 71), his expenses allegedly covered by AEG (page 76), the search warrant of Murray’s premises dated August 7, 2009 (only 7th of August!) and Murray’s contract with AEG (p.119 and p.137).

*  *  *

Following the recent new developments with AEG emails and prior to the civil court hearings of Katherine Jackson’s case against AEG the media (suddenly for me) began to confirm what I’ve been writing about all along:

Time will show what’s what. Considering the super power and influence of our opponent let us hope for a miracle to help us. Let Michael Jackson’s true supporters from all over the world pray for the truth to be finally uncovered.

In God we trust.

22 Comments leave one →
  1. November 16, 2012 2:03 am

    Is this true? That Michael was going to buy a 29 bedroom home spreading across 16 acres in Vegas http://edition.cnn.com/2012/11/14/showbiz/jackson-assistant-lawsuit/index.html Perhaps he was attempting to turn it into that children’s hospital? – Rodrigo

    The contract does not say how many rooms there are in the house Michael wanted, but it does give an address for it – see page 4 of the contract in this post: https://vindicatemj.wordpress.com/2012/03/13/the-aeg-contract-with-michael-jackson/

    I think you are right. Those fifteen millions could very well be for a hospital – it was Michael’s best dream. Even in a half-conscious state under sedation he says to Murray that he is going to do it, to which Murray replies “I know you would” (as if he doubts that he ever has a chance to do it). But Michael was sure and was very much willing to. He had a point about it in the contract!

    MJ: Elvis didn’t do it. Beatles didn’ t do it. We have to be phenomenal. When people leave this show, when people leave my show, I want them to say, “I’ve never seen nothing like this in my life. Go. Go. I’ve never seen nothing like this. Go. It’s amazing. He’s the greatest entertainer in the world”.

    I’m taking that money, a million children, children’s hospital, the biggest in the world. Michael Jackson’s Children’s Hospital. Gonna have a movie theater, game room. Children are depressed. The — in those hospitals, no game room, no movie theater. They are sick because they are depressed. Their mind is depressing them. I want to give them that. I care about them, them angels.

    God wants me to do it. God wants me to do it. I’m gonna do it, Conrad.

    CM: I know you would.

    MJ: Don’t have enough hope, no more hope. That’s the next generation that’s gonna save our planet, starting with – we’ll talk about it. United States, Europe, Prague, my babies. They walk around with no mother. They drop them off, they leave — a psychological degradation of that. They reach out to me – please take me with you.

    CM: Mmnh-mmnh

    MJ: I want to do that for them.

    CM: Mmnh-mmnh

    MJ: I am gonna do that for them. That will be remembered more than my performances. My performances will be up there helping my children and always be my dream. I love them. I love them because I didn’t have a childhood. I had no childhood. I feel their pain. I feel their hurt. I can deal with it. Heal The World, We Are The World, Will You Be There, The Lost Children. These are the songs I’ve written because I hurt, you know, I hurt.

    (13 seconds, silence)

    CM: You okay?

    (8 seconds, silence)

    MJ: I am asleep.

    Like

  2. Rodrigo permalink
    November 16, 2012 12:58 am

    Is this true? That Michael was going to buy a 29 bedroom home spreading across 16 acres in Vegas?
    http://edition.cnn.com/2012/11/14/showbiz/jackson-assistant-lawsuit/index.html

    Perhaps he was attempting to turn it into that children’s hospital?

    Like

  3. October 25, 2012 12:54 pm

    And this is about yesterday’s hearing in the AEG case:
    http://edition.cnn.com/2012/10/24/showbiz/jackson-aeg-hearing/index.html

    Like

  4. September 25, 2012 6:08 pm

    Sorry for my usual typos.

    Like

  5. kaarin22 permalink
    September 25, 2012 6:01 pm

    Tom Barrack´s specialty is buying uo sc distressed property. First Michael jackson´s property was distressed. And now AEG is also distressed. Barrack did well with Netherland for 24 mln or so. Now has several offers for 100 mln, but is not selling.

    Like

  6. kaarin22 permalink
    September 25, 2012 5:49 pm

    Dial and VMJ this is not surprising at all. According to info (no longer available) on Wikileaks Tom Barrack owner of Colony Capital and old friend of Thome has been behind or in on any and all Michael Jackson ´s life and transactions for the past 3-4 years of his life. Colony Capital with a worth of 30 billion can afford the deal..And why just this point in time for selling AEG.T hey got rid of the human being Michael Jackson and want to avoid any responsibility. Certainly this move will make the legal situation more complex. I wonder if anybody else has shown interest in buying AEG.

    Like

  7. September 24, 2012 11:09 am

    “I am more interested in how this sale of AEG affects Mrs. Jackson law suit against AEG. It is not against Anshultz, but AEG which to most are one and the same. However, corporate responsibility or liability and personal are two different things. Now there are new reports of a possible buy out by Colony, if the report can be considered accurate.”

    Dial, yes, Colony, the old friend of Tohme Tohme, is named as a possible buyer, so it might be a deal “between friends” done for the sole purpose of taking AEG from under the blow. I am also worried about this maneuver from Anschutz – it will possibly affect Katherine’s lawsuit as the corporation will no longer be a liable party and will leave only the personal responsibility of Randy Phillips and other executives. However the lawsuit is not against them personally, but is against the corporation, and will it still hold if the corporation is in other people’s hands?

    I hope people understand that these maneuvers alone show that the AEG people know their guilt and are taking desperate measures to avoid responsilbility for Michael’s death. They are ready even to sell in order to avoid that lawsuit!

    KEEP THE FAITH, guys. Even AEG with all its money is answerable to God.

    Like

  8. September 24, 2012 5:09 am

    I am more interested in how this sale of AEG affects Mrs. Jackson law suit against AEG. It is not against Anshultz, but AEG which to most are one and the same. However, corporate responsibility or liability and personal are two different things. Now there are new reports of a possible buy out by Colony, if the report can be considered accurate.

    Like

  9. September 24, 2012 1:30 am

    “AEG is being put up for sale. It´s is getting curiouser and curiuoser.” – Kaarin

    Here is an article which makes some guesses why this is happening. The supposition that AEG is making too little profit is a smokescreen of course, but the same text makes an interesting point – it turns out that to some stars AEG probably pays 110% of the profit. So it was only Michael Jackson whom they wanted to pay peanuts?

    “Sale of Promoter AEG Would Radically Alter Concert Business

    These days, touring stars such as Jimmy Buffett have enough leverage to negotiate 110 percent of the overall ticket sales, leaving promoters to cover their own expenses through service fees, beer and parking – costs that have ballooned in recent years and irritated music fans.”

    “Possible buyers for the Anschutz Entertainment Group, according to reports and concert-business sources, include Live Nation itself and music companies such as the Universal and Warner record labels; private-equity firms such as Thomas H. Lee Partners, Bain Capital and Colony Capital; and wealthy businesspeople like Patrick Soon-Shiong, Liberty Media’s John Malone and longtime concert-promotion investor Robert Sillerman.

    When Anschutz offered AEG for sale Tuesday, the company stipulated that it not be broken up into pieces – which suggests, sources say, that top executives such as Phillips and AEG President Tim Leiweke could stay in their existing positions even after the sale. Reports have estimated the company could draw between $6 billion and $8 billion, which could put the company out of reach for entertainment-only entities such as Live Nation or Universal.

    AEG’s recent bad press regarding Michael Jackson’s final days may be an additional reason for its sale. During preparation for Jackson’s O2 shows in 2009, Phillips told reporters Jackson was in great health; however, a few weeks ago, the Los Angeles Times printed emails that indicated Phillips knew more than he was letting on. “MJ is locked in his room drunk and despondent,” Phillips had written to his boss, Leiweke. “I [am] trying to sober him up.” The emails came out after two insurers sued AEG, trying to nullify a $17.5 million policy the promoter reportedly took out on Jackson.

    Some in the concert business speculate Anschutz, a deeply religious billionaire, may be embarrassed by what has come out – and may still come out – regarding the Michael Jackson tragedy. “He’s a guy that doesn’t like the limelight,” says a source.

    But Gary Bongiovanni, editor-in-chief of concert-business magazine Pollstar, disagrees, recalling AEG’s bookings of morally questionable pop stars such as Marilyn Manson and Rob Zombie.

    “Anschutz is supposedly a highly religious man, a very conservative billionaire,” he says. “However, he has not let his politics influence the operations of the company, as far as I can tell.” In the end, Bongiovanni knows exactly who will buy the company: “It’s going to have to be somebody who can write an enormous check.””

    http://www.rollingstone.com/music/news/sale-of-promoter-aeg-would-radically-alter-concert-business-20120921

    Like

  10. kaarin22 permalink
    September 23, 2012 9:20 pm

    AEG is being put up for sale. It´s is getting curiouser and curiuoser.

    Like

  11. September 22, 2012 12:07 am

    How very interesting – AEG is being put up for sale.

    The company includes AEG Live of course. My guess is that they want to get rid of the company at a good price before further damage is done to it by all the attention to it during the civil trial with Katherine Jackson.

    The second reason is most probably to quietly get rid of some top executives who were involved in the emails scandal and are connected with Michael Jackson’s death (Randy Phillips, Paul Gongaware and others), as the new owner will not be obliged to keep them in their posts.

    The third reason (the one I hope for) is that Philip Anschutz is willing to distance himself from the atrocities committed against Jackson by his own people.

    The only thing I wonder about is who will willingly take upon themselves the costs of the civil trial against AEG? The article below says that “whoever steps into the shoes of Mr. Anschutz will have the same obligations.”

    The article also says that Tim Leiweke is President and CEO of AEG. According to lawyer Kathy Jorrie who testified at Murray’s trial, Tim Leiweke was the one to provide her with the list of medical equipment required for Michael Jackson even before she ever spoke to Murray.

    In short it was AEG who knew of the equipment and provided the list – not Murray. And I didn’t know that Tim Leiweke was holding such a high post in the company.

    It is interesting that the story is all about sports and there is not a single word about Michael Jackson. Though they mention the Staples centre where Michael was rehearsing and the O2 Arena where he was going to perform.

    Interesting that they talk about everything except the elephant in the room.

    Excerpt:

    “AEG’s assets also include L.A. Live, a 27-acre sports and entertainment district in downtown Los Angeles anchored by the Staples Center and Nokia Theater, which regularly hosts the X Games, ESPYS, MTV Video Music Awards, Grammys and movie premieres. AEG also owns The O2 arena in London, which was used during the 2012 Summer Olympics.

    Additionally, AEG owns and operates a network of more than 100 arenas, stadiums and clubs in countries on five continents. The company also includes AEG Live, which produces music tours, festivals and special events, including the Coachella Music & Arts Festival, Stagecoach and New Orleans Jazz & Heritage Festival. AEG Live owns, operates or exclusively books 35 venues.

    AEG transformed the city’s landscape with the building of Staples Center and the addition of the LA Live entertainment complex, helping to revitalize a long-neglected downtown and bring energy and several championships to its sports teams.

    Opened in 1999, the Staples Center is among the world’s busiest arenas. It hosted six playoff games in four days for its main tenants — the NBA’s Lakers and Clippers, and the NHL’s Kings, who won their first Stanley Cup in June”.

    http://espn.go.com/los-angeles/nba/story/_/id/8397131/anschutz-entertainment-group-owner-los-angeles-kings-staples-center-los-angeles-galaxy-sale

    Let us keep our fingers crossed that the truth prevails. KEEP THE FAITH, guys.

    Like

  12. September 14, 2012 12:18 am

    “Could it be that Frank Dileo as Michaels manager at the time was the go-between Michael and Branca?” – Kaarin

    He was. Here is an excerpt from the official John Branca’s site:

    “And then, a little more than a month before Jackson died, the call came from Jackson’s former
    manager, Frank DiLeo. Branca says DiLeo told him Jackson sought his input on what kind of deals
    they could begin working on; Branca drafted an agenda and met with Jackson on June 17 at the
    Forum in Inglewood, where the King of Pop was rehearsing for his big comeback.
    “I hadn’t seen him in several years,” Branca said. “We hugged each other. He said, ‘John, you’re back.’
    It was very emotional. I showed him the agenda.”
    It was what Jackson wanted, Branca said — including a concert movie, books and merchandising
    deals.
    “That agenda is exactly what John McClain and I are doing now,” Branca said, “for the estate.”

    Besides the fact that it was Frank Dileo who called Branca we also see here information about Branca meeting Michael on June 17. Some bloggers claim now alluding to Kenny Ortega’s words that Michael missed the rehearsals for a full week before June 19 and “they could not have met”.

    I don’t know the details yet, but for this to be true or not true certain conditions have to be met:

    – information from Ortega should be correct
    – Michael could be present at the forum but refuse to go on stage to dance and sing
    – he could even say that he had to attend to some business and therefore stay away from the rehearsal

    – Branca must be a complete fool to mention a specific date knowing that it can be refuted at any time
    – he must also be a double fool to fix this date forever by turning the text into a pdf file and leaving it for three years on his own site
    (http://www.johnbranca.com/pdf/MJ_executor_Branca.pdf)

    My supposition is that Kenny Ortega, say, somewhat over-exaggerated Michael’s absence from the rehearsals.

    By the way the fact whether Michael did or did not hire Branca does not matter really that much – under 4 (four) existing wills Branca would have become an executor of the Estate all the same.

    Like

  13. September 13, 2012 10:44 pm

    Kaarin, I recall that Kenny Ortega said that the film being meant to be Michael’s private footage and for Michael’s private library only. So firstly, it was private and secondly, it was Michael’s footage (or the one belonging to him).

    But if it was meant to be Michael’s from the very beginning of it, why did it suddenly become the ownership of AEG? Especially if their so-called contract with him said that all videos were to be included into the Production costs which were to be covered by Michael?

    Why did the rehearsal footage suddenly become AEG’s ownership? Especially if it was meant for Michael and his private library from the very beginning?

    Michael Jackson’s ‘accidental’ film

    Oct 21, 2009, 12:01 GMT

    Michael Jackson’s ‘This Is It’ film came about as “an accident”.

    Kenny Ortega – the choreographer behind the 50 planned London shows the ‘King of Pop’ was rehearing for when he tragically died in June – revealed the documentary was pieced together from private footage of the star rehearsing and was never intended to be released to the public.

    He said: “The recordings were made so we could use them, then the tapes were destined for Michael’s private library. They have a real unguarded honesty to them.

    “At first I got so many messages from fans around the world asking to see the shows, asking to see the footage and eventually I realised the journey wasn’t over and we had to do this.

    ‘High School Musical’ director Kenny, 59, also claims Michael was getting progressively healthier as he practiced for his mammoth comeback and amazed the performers he had recruited to join him on stage.

    He added in an interview with BBC Radio 1: “He had dancers less than half his age – he was 50 years old and still he would have them falling to their knees in amazement of his moves.”

    http://www.monstersandcritics.com/people/news/article_1508402.php/Michael-Jackson-s-accidental-film

    Like

  14. Rodrigo permalink
    September 13, 2012 10:25 pm

    Yes it did. Look at some the pictures with the kids, he was wearing a t shirt and jeans. So much for the hater’s cry of him dressing in women’s clothing lol

    Like

  15. September 13, 2012 10:09 pm

    “did Michael even know there would be a comercial movie made of his rehearsals?”

    Kaarin, I am sure that Michael did not know of those plans, otherwise he wouldn’t have worn those rags in which he danced. He was very conscious of how he looked on stage and was always very well-dressed in concerts, though wore most casual clothes when his fans did not see. If he had known what clothes we would see him in he would have died then and there. No, wrong, he would have shaken his head in disbelief that we are able to still love him that way.

    The way he was dressed at the rehearsals only added to us seeing him not as a star but as a human being, didn’t it?

    Like

  16. kaarin22 permalink
    September 13, 2012 10:04 am

    Could it be that Frank Dileo as Michaels manager at the time was the go-between Michael and Branca?.Frank was on holiday when first contacted by Michael.Anyway the 2 wills that were found both named KJ as guardian of the children and in both Joe and the siblings were left out.The Jackson familly is quite large with 8 siblings ,and their numerous children,
    jeremy had 8 when I last heard about him. Most important is the quality of work the estate managers have done,

    Like

  17. kaarin22 permalink
    September 13, 2012 12:48 am

    Sorry, it was Frank Dileo who ´became Michaels manager some time prior to his death.
    Has anybody investigated all of Frank Dileo´s pepers after he died? I think not.

    Like

  18. kaarin22 permalink
    September 11, 2012 3:47 pm

    I recall seing the letter where Michael discontinued Thome´s services.So he must have employed somebody in his place ,ie Branca.-Re the movie TII, did Michael even know there would be a comercial movie made of his rehearsals? Usually a movie has 1, one, producer,
    TII had a long list of 10 or so, co-producers assistant, associate producers etc.All expecting money, and was Michael to pay for them too?.-I am surprised AEG had the guts to ask for payment on that insurance. Please look up the conditions that would render it null and void.
    I got the address from this blog,but cannot remember in which post it was.They listed;
    death(by natural causes)no-contract, fraud, somewhere else force majeure,and accident.
    The word manslaughter was nowhere.

    Like

  19. September 9, 2012 10:11 pm

    GC, why don’t you say it directly that some bloggers are “proving” that Michael could not rehire Branca on June 17, 2005? I’ve been looking for some other information but came across the ridiculous piece which claimed that Michael never rehired Branca.

    Why not say it openly instead of speaking in riddles?

    Like

  20. September 9, 2012 10:58 am

    “next article>> show us documents that MJ rehired Branca 8 days or 1 months b4 he died…” – GC

    GC, I deal only with the documents which are open to the public. If contracts between employers and employees were accessible to everyone I would seek for an agreement between MJ and Branca, but I am afraid that this information is not freely available to all.

    And I do not have any “insiders'” information either – all I do here is analyze the facts which are in full view of everyone.

    Like

  21. September 9, 2012 6:41 am

    next article>> show us documents that MJ rehired Branca 8 days or 1 months b4 he died…

    Like

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