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Michael Jackson could have earned $1.5 billion, accountant says

Michael Jackson could have earned more than tours by U2, Madonna or Paul McCartney, says witness in wrongful death case against AEG.

July 15, 2013|By Jeff Gottlieb
  • Pop star Michael Jackson rehearses at Staples Center in Los Angeles in 2009. An accountant testified that the singer could have made $1.5 billion from his comeback tour.
Pop star Michael Jackson rehearses at Staples Center in Los Angeles in 2009.… (Kevin Mazur / Associated…)

Putting a dollar amount to Michael Jackson's death for the first time, an accountant testified Monday that the singer stood to make as much as $1.5 billion if he had pulled off his comeback concerts in London and then taken his show around the globe.

Despite the controversies in Jackson's life, his earning potential remained staggering, said Arthur L. Erk, a certified public accounting from New York. He said Jackson, who died in 2009, would have easily blown past the money earned by the top-grossing tours that year by U2, Madonna and Paul McCartney.

"Michael Jackson was in a class by himself," said Erk, who has worked with music acts like Notorious B.I.G., Britney Spears and KISS. "He was known as the King of Pop. There's no one who comes close to him."

The testimony marked the first time in the 21/2- month wrongful death case that the attorney representing Jackson's mother and children has tipped his hand on what type of money the family might be seeking from AEG Live, the entertainment behemoth that was promoting Jackson's "This Is It" concerts in London. Jackson died while he was rehearsing in Los Angeles for the tour.

Erk, who testified as an expert witness, said he based his projections on AEG budgets, emails from company executives, Jackson's written notes and testimony in the ongoing trial.

On cross-examination, AEG attorney Sabrina Strong attacked Erk's projections, pointing out that Jackson had a history of drug use, had never toured for as long as the CPA anticipated and had been sued in the past for backing out of concerts and other business deals.

Strong played a short portion of the deposition of Katherine Jackson, the singer's mother, in which she said she was surprised when he announced the "This Is It" concert series.

"Because I know Michael didn't want to do any more," she said.

Katherine Jackson said her son joked that he didn't want to moonwalk on stage when he was 50, his age when he died of an overdose of the anesthetic propofol.

Erk said he wasn't aware of those problems but insisted there was plenty of evidence that Jackson would have gone through with the concerts and that AEG executives certainly thought so.

"He needed the work," Erk said, referring to Jackson's financial problems.

The white-haired Erk, who wore a dark suit, a white shirt and a paisley tie, with a mustache curling over his lip, looked the antithesis of the rock world.

He described his financial calculations as being conservative and said his projections included a 37-month, 260-date tour with the London shows and an average of two concerts a week in Central Europe, Asia, Australia and the U.S. He said he also included a 10-year show in Las Vegas based on Jackson's music, in which the singer would not have performed. He also added in sales of merchandise and endorsements.

AEG sold 750,000 tickets to Jackson's London concerts in five hours, the equivalent of 1.4% of Britain's population. "We could have done 200-plus shows based on demand," Randy Phillips, AEG Live's chief executive, said in an email shown to the jury that revealed both his joy at the quick sale and his worries about the star.

"We so underestimated the demand. Now I have to get him on stage. Scary!" Phillips said.

Erk said the tickets sold in "record-breaking time. It never happened before, and it still hasn't happened again."

Erk calculated that if AEG charged $108 a ticket for the concerts, Jackson's worldwide tour and the Las Vegas show have netted him $1.127 billion. If tickets were $200 each, what were described as his "lost economic damages" would have totaled $1.511 billion.

The accountant also came up with more speculative projections, based on a Phillips email that said, "We have a 4 year plan." In that case, Erk said, Jackson's earnings could have been as much as $1.96 billion.

His more speculative projections had Jackson taking a nearly three-year break after the "This Is It" global tour and then performing in four smaller sets of concerts through 2024, which would have earned him an additional $376 million, including merchandising.

None of the figures take into account the CD and songwriting royalties Jackson would have earned, because he would have received those anyway, said Kevin Boyle, one of the Jackson family's attorney's.

Erk's projections also concluded that the often-extravagant Jackson would have probably spent $134 million in the years leading up to his 65th birthday.

The Jacksons' suit says AEG negligently hired and controlled Dr. Conrad Murray, who administered the propofol. AEG contends that Jackson hired the doctor and that any money the firm was going to pay him was an advance to the singer.

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