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AEG on the rebound after a rough year

AEG has seen most of its worldwide operations surge after a rough year that included a corporate shake-up and the Michael Jackson civil trial.

April 20, 2014|By Roger Vincent
  • AEG executives Dan Beckerman, left, and Ted Fikre in front of Staples Center and L.A. Live in downtown Los Angeles.
AEG executives Dan Beckerman, left, and Ted Fikre in front of Staples Center… (Wally Skalij / Los Angeles…)

Last year, Los Angeles entertainment giant AEG weathered a major corporate shake-up, endured a six-month trial spotlighting its role in the last days of Michael Jackson and fell short in its efforts to bring L.A. a pro football team.

Even so, the company — owner of Staples Center, L.A. Live and the Los Angeles Kings hockey team — seems to be on the rebound.

Although AEG has taken a decidedly low profile in Southern California in recent months, the company has seen most of its worldwide operations surge.

Founded by Denver billionaire investor Philip Anschutz just 14 years ago, Anschutz Entertainment Group now has 27,000 employees in 17 countries and continues to grow. One of its biggest new fronts is China, where the company operates arenas in Shanghai, Beijing and Dalian.

"We're coming off our most successful year in 2013," said President and Chief Executive Dan Beckerman, an AEG veteran who took over after former CEO Tim Leiweke left about a year ago.

In addition to noting the company's solid growth, AEG executives also expressed relief that its high-stakes legal battle with the Jackson family ended in October with a courtroom victory.

In an interview, Beckerman and Ted Fikre, AEG's vice chairman, discussed company efforts to secure its position as a global sports and entertainment juggernaut.

"We're really focusing on countries and cities where we have strong existing bases," Beckerman said.

The company is private and does not disclose financial data, but it owns, operates or manages more than 125 facilities, including arenas in England, Germany, France, Sweden, Turkey, Australia and Brazil.

The "overwhelming majority" of company profits come from the handful of arenas that AEG owns, Beckerman said, including the O2 Arena in London, where AEG spent $1 billion to renovate the former Millennium Dome. The facility was built by the government to mark the turn of the century but was widely considered a white elephant until AEG bought it and made it into an entertainment venue in 2007.

Before founding AEG, Anschutz earned a fortune investing in oil, railroads and real estate. He has a reputation for building and selling successful companies. Now 74, Anschutz tried to sell AEG last year and still may want to find a successor or try again to cash out for billions of dollars. He declined to be interviewed for this story.

Anschutz abruptly canceled his announced plan to sell AEG in March 2013 and vowed to more actively manage the company. Despite having residences at L.A. Live and in the Palm Springs area, however, he is rarely spotted in public.

"He's committed to the business," Beckerman said. "He is investing significant capital in new projects and new growth."

AEG's influence in Los Angeles reaches far beyond its headquarters at L.A. Live. It has been one of the key actors in the renaissance of downtown Los Angeles over the last decade and a half. Staples Center and L.A. Live brought life to bleak blocks near the Convention Center and have attracted billions of dollars' worth of residential, hotel and retail construction by other developers.

"They were the great catalyst for reinvigorating the economy, drawing new investment toward the east side of the city and downtown in particular," former Los Angeles City Councilwoman Jan Perry said.

AEG has also been a major presence in civic affairs, including its highly watched campaign to bring pro football back to Los Angeles, in a new stadium to be built on its downtown land called Farmers Field.

But AEG's public profile took a big hit after the charismatic Leiweke's surprise departure as CEO. Also leaving the company last year was Randy Phillips, CEO of the company's live entertainment arm AEG Live — the division that hired Jackson for a 50-concert comeback tour.

The tour sparked a lawsuit against AEG by the Jackson family seeking hundreds of millions of dollars in damages.

The family accused the company of negligence for hiring Dr. Conrad Murray, who gave Jackson a fatal dose of anesthetic. A jury found AEG was not liable for the singer's death. A judge recently ruled that the Jackson family will have to pay AEG's attorneys' fees if the family's appeal of the verdict fails.

AEG all but disappeared from the news in Los Angeles after the trial, but the company hasn't slowed its growth.

One of the keys to profitability is multimillion-dollar sponsorships of AEG arenas, events and sports teams.

British mobile phone provider O2 agreed to pay AEG $11.3 million a year to have its name on the O2 Arena, just as office products company Staples, automaker Mercedes-Benz and other major businesses have bought naming rights to AEG facilities.

Nutrition company Herbalife pays an undisclosed amount to put its name on the jerseys of AEG-owned soccer team the Los Angeles Galaxy and keeps its world headquarters in offices at L.A. Live rented from AEG.

"We've sold naming rights on every continent," Beckerman said.

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