My Opinion of the AEG Contract Signed by Michael Jackson

The contract is available here:

http://www.radaronline.com/sites/default/files/AEG%20contract.pdf

My opinion (and I stress opinion) of the AEG "Agreement" with Michael:

First, the date appears to be marked out on the first page for some reason. A date should always be placed on a document, regardless of its possible significance, so hopefully that is in fact the date, otherwise, what a sham. I will consider that mark out the date, however and move on. This document is also referred to as an "Agreement" with very little detailed information provided about specifics which leaves a lot of room for interpretation and misunderstanding, especially on behalf of the non-authoring party, Michael Jackson Company, LLC and more specifically Michael, the lay man. For this document to be potentially worth millions of dollars and months (if not years) of business transactions, it seems to be very small, too small, in fact. It is merely 14 pages, not including certain exhibits (other documents). Also notice this "Agreement" begins with "Dear Dr. Tohme" which a) makes it appear to be a letter, not a contract (why not use a cover letter addressed to Dr. Tohme to introduce a legitimate contract?), b) is not addressed to Michael Jackson, the one with all at stake here (Michael goes on to sign it as the artist and representative for The Michael Jackson Company, LLC--Dr. Tohme does not sign the contract anywhere though through AEG Live's eyes he was the point of contact for the company) and c) it is highly unprofessional in appearance. Most professional letters would state "Dr. Tohme:", which Dr. Tohme has yet to prove he is in fact a legitimate doctor, actually. He apparently is not an attorney, either. Being that this "Agreement" had attention directed to Dr. Tohme, one would assume him as apparently the one who helped negotiate this "Agreement" between Michael and AEG Live, as well as the one who would have had knowledge about this contract and would, or should have relayed understanding to Michael regarding it, which likely should have been an attorney doing this along with a manager--not just someone who is reportedly a businessman with no previous business experience related to the music business known to exist.

Section 1: Definitions:
As far as I know, a copy of Exhibit A which should include what is meant by Terms, Shows, Territory, etc., which are key to interpreting this document is not public.

Section 3: Itinerary of Shows:
Verbatim from the "Agreement":

"Artistco (The Michael Jackson Company, LLC) and Promoter (AEG Live) 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 (The Michael Jackson Company, LLC) to withhold or qualify its approval of any itinerary or 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. Artistco (The Michael Jackson Company, LLC) hereby pre-approves up to thirty one (31) Shows, or such other greater number as agreed by Artistco (The Michael Jackson Company, LLC) and Promoter(AEG Live), at the 02 Arena in London, England between July 26 and September 30, 2009. Subject to the foregoing, Promoter (AEG Live) and Artistco (The Michael Jackson Company, LLC) shall mutually agree on the number of legs of Shows and the number of Shows in each leg during the Term, and Artistco (The Michael Jackson Company, LLC) shall supply a first class performance of Artist (Michael) in accordance with this "Agreement" at all the Shows. Without limiting the generality of Promoters right to schedule Shows throughout the Term or Artistco’s (The Michael Jackson Company, LLC's) obligation to supply a first class performance of Artist (Michael) at all such Shows, in no event shall the number of Shows performed by Artist (Michael) in the first leg of the Tour be less than eighteen (18) Shows unless otherwise directed by Promoter. It shall be unreasonable for Artistco (The Michael Jackson Company, LLC) to with hold 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 (AEG Live) demonstrates to Artistco (The Michael Jackson Company, LLC) that such additional Shows and/or legs are necessary for Promoter (AEG Live) to recoup the Advances in accordance with the terms of this "Agreement". Prior to the commencement of any leg of the Tour, Promoter (AEG Live) shall provide Artistco (The Michael Jackson Company, LLC) with financial models based on estimated Pool Expenses, Production Costs and Pool Revenue based on projections that assume Promoter shall sell tickets to ??? 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 (AEG Live) to recoup all Advances in connection with such leg. As used here In, “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.

My interpretation of this above section of the "Agreement":
The Michael Jackson Company, LLC and AEG Live should attempt (but is not required) to agree to concert dates for each leg for the term. However, The Michael Jackson Company, LLC has no reason to either agree or disagree (effectively have no say either way) with any concert dates changed or proposed to be changed by AEG Live if the changes made or proposed are not longer than 10 weeks, do not exceed more than one show a day, include more than 3.5 shows a week and the locations are in big cities. Please understand the above sentence gives AEG Live the right to have changed/add tour dates so long the change was not more than 10 weeks, did not add two or more shows to one day, did not add more than 3.5 shows in a week and did not occurs in a rural area. The Michael Jackson Company, LLC pre-approved up to 31 shows (that does not mean 31 shows were deemed necessary per the "Agreement") and more could be added if agreed by The Michael Jackson Company, LLC and AEG Live for the London O2 Arena between the dates of July 26th and September 30th, 2009. To me, this is like being pre-approved for a $1 million mortgage loan but you bought a house for $750,000 instead.

Please note: "This Is It" was scheduled to begin July 8th, was then pushed back to July 13th and the first leg was to conclude September 29th, 2009 (approximately an 11 week leg). Figuring in with the July 13th start date, that was to be a total of 27 shows for the first leg. Furthermore, there were 4 shows scheduled in one week, which is against the terms of this "Agreement": July 26th, July 28th, July 30th and August 1st which would is more than the 3.5 shows in one week. It has been stated by Frank DiLeo that before he replaced Dr. Tohme, the concerts were arranged in a format that was much more grueling than the dates that ultimately became the "This Is It" dates (4 or more shows a week).

The Michael Jackson Company, LLC and AEG Live were to come to an agreement on the number of legs and number of shows in each leg (however, remember that AEG Live had the right to change or propose changes so long as they were did not violate the four terms mentioned above (not longer than 10 weeks, etc.). Michael was to give a "first class performance" with each show. Without limiting AEG Live's right to schedule shows throughout the term (I assume the entire worldwide tour), and without interfering with Michael's obligation to give a "first class performance" at every show, in no event shall Michael have performed less than 18 shows in the first leg (he was scheduled for 27) unless AEG Live says there should or could be less done which could have made 10 shows theoretically possible, which is the amount Michael announced in the press conference to do in London, not for the duration of the term with AEG Live. The Michael Jackson Company, LLC had essentially no right to deny the addition of shows to legs of the tour during the term as long as there is not more than one show a day or 3.5 shows in 7 days ("on average", according to the "Agreement") if AEG Live proves to The Michael Jackson Company, LLC that more shows and/or legs are needed to for AEG Live to recoup their advanced costs for the shows. In other words, Michael was not allowed to disagree with the addition of shows if AEG Live found more shows necessary to cover their upfront costs for the tour. AEG Live and The Michael Jackson Company, LLC should attempt but is not required to agree upon the number of needed shows for AEG Live to recoup the advanced money for the shows. Thus, Michael had no genuine say in with this contract so long as AEG did not extended an itinerary over 10 weeks, add more than one show to a day, add more than 3.5 shows in one week or ask for a show in a non-metropolitan area. Michael was bound to oblige to AEG Live's tour schedule if they deemed it needed to gain back costs advanced to Michael. It is possible, then, for AEG to have agreed to 10 shows at the London O2 Arena. Michael did not say this was his final concerts but rather his final shows in London. Though 31 shows were pre-approved at the Arena that does not mean they were set in stone to be done, nor does it say the Artist but rather Artistco (The Michael Jackson Company, LLC) agreed to this number of pre-approved shows. Was it Michael or Dr. Tohme who agreed upon that number since Dr. Tohme is the one who is referenced as the point of contact for The Michael Jackson Company, LLC.

Section 4: Artist's (Michael's) Compensation
4.1 Michael was to be compensation based on contingency means Michael was likely to be paid but it was not guaranteed. Michael was entitled to receive 90% of the (marked out--earnings?, profits? etc.?) on a fully cross-collateralized (http://en.wikipedia.org/wiki/Cross-collateralization) basis, after expenses and revenue were tied together and reviewed. A portion (not all) of his likely-to-be-paid payment was to be paid at the conclusion of each leg (meaning his first portion of payment would have occurred sometime after September 29th, at the conclusion of the first leg of the tour). He was not to be paid after each show which has been customary for some artists. Within ten days of September 29th, AEG Live would have given The Michael Jackson Company, LLC a preliminary statement of the shows, including what money was spent and what was made (expenses and revenues). Within five days after that, The Michael Jackson Company, LLC would be paid some unknown equivalent amount after AEG Live recouped any monies towards the advanced monies given to The Michael Jackson Company, LLC for the shows. The Michael Jackson Company, LLC would be paid some amount of the "Contingent Compensation", "if any" then. The "if any" clause is actually verbatim from the "Agreement". By no later than 60 days (2 months) after the last show of the term (not leg) AEG Live would provide Michael with a final settlement that was fully-cross collateralized (factoring in both expenses and revenue). If overpaid, The Michael Jackson Company, LLC was to return that overpaid amount to AEG Live. AEG Live was allowed to make up for any monies owed by The Michael Jackson Company, LLC. AEG Live was to give The Michael Jackson Company, LLC a list of revenues and expenses twice a month.

4.2 Most of this clause is marked out. However, 4.2.1 refers to Exhibit B (the inducement letter) and Exhibit C (the promissory note). These are not public, as far as I know. Michael 's belongings were not used to secure the promissory note but anything owned by his company was, meaning, if Michael or his company failed to meet the requirements of the inducement letter, then AEG Live would retain control and possession of The Michael Jackson Company, LLC's belongings, whatever those may be. Michael and his company were loaned money by AEG Live against The Michael Jackson Company, LLC's property. The loan was to be repaid based on the agreement above (the Contingent Compensation clause).

Section 5: Promoter's Responsibilities
From "time to time" AEG Live would provide The Michael Jackson Company, LLC with possible concerts dates for each leg of a worldwide tour. Not much else in this section is of significance.

Section 6: Artist Responsibilities
The Michael Jackson Company, LLC should respond to possible tour dates within 5 days (though it does not specify that an agreement was necessary, only that a response shall be made). Michael was to perform at least 80 minutes, "first class", with no shows going over 3.5 hours. The Michael Jackson Company, LLC and Michael himself were to maximize revenue (Pool Revenue). The Michael Jackson Company, LLC was to pay for management, agency and legal fees. Please note, there is an area marked out that covers the name of an entity who was an exception to this clause. Whomever this person or entity was, they were being paid by AEG Live and this was being included as a Production Cost. Otherwise, the Michael Jackson Company, LLC was to pay for all other fees related to management, agency, and legal costs.

Section 7: Ticketing Activities:
The Michael Jackson Company, LLC was allotted 10 complimentary tickets per show. AEG Live was to control ticket sales and as allowed to use secondary outlets for ticket sales. Apparently they used the company Viagogo as an attempt to scalp tickets to the "This Is It "shows in an attempt to maximize gain, with AEG Live to receive 80% of the profits (this information about Viagogo is NOT in the "Agreement" but has been revealed by other sources that can be provided).

Section 8: Production of the Shows
Michael was to work closely with AEG Live concerning the "creative aspects of the design of the Show", through approved parameters and a budget that was agreed upon by both Michael and AEG Live, while also using third-party vendors for assistance with the shows. Furthermore, The Michael Jackson Company, LLC was to pay AEG Live a producer's fee, and AEG Live could deduct that fee amount from amounts to be paid to The Michael Jackson Company, LLC.

Section 11: Approvals
The Michael Jackson Company, LLC and AEG Live had the right, before any show, to pre-approve many items including a) "any itinerary changes including any and all decisions to add multiple dates". Perhaps some clarification should have been made by AEG regarding this clause as is highly vague but it appears to allow the addition of shows and if the terms in Section 3 apply, which they should, then Michael nor is company could deny additions of shows so long as they did not break the four fundamental rules that were stated above. Furthermore, neither The Michael Jackson Company, LLC (nor AEG Live though they did not have many stipulations against them) could essentially deny or delay approval of such changes when approval or consent is required. Remember, consent was required by Michael and the Michael Jackson Company, LLC especially concerning the recoup of advances paid to. Seems to imply that "no" was not an answer for Michael in most instances, in my opinion.

Section 12: Force Majeure
If a show is cancelled from a "greater force" (ex. earthquake) then neither The Michael Jackson Company, LLC nor AEG Live shall be liable. Other sections of this clause are marked out.

Section 13: Insurance
Michael had to agree and cooperate with AEG Live's purchasing life insurance, non-performance and cancellation insurance, etc. subject to confidentiality restrictions. Michael had to consent to physicals performed for these insurances. The Michael Jackson Company, LLC must stand behind Michael being free of any limiting health factors that would have kept him from giving a "first class performance" during the unknown term (is that Michael or Dr. Tohme who stood behind that statement; regardless Michael died a healthy man with some limitations perhaps from mild lung disease). The Michael Jackson Company, LLC had the option to get cancellation insurance if available and approved by AEG Live, to cover The Michael Jackson Company, LLC profits and productions costs that would also, at minimum, equal or be more than any losses from the advances given to The Michael Jackson Company, LLC by AEG Live, with AEG Live to be named as the one paid for losses. The insurance policy would by no means alleviate The Michael Jackson Company, LLC of its obligations to pay back the advances from AEG Live to The Michael Jackson Company, LLC. Whatever AEG Live had given to The Michael Jackson Company, LLC had to be paid back--period--which is understandable. If AEG Live was to recoup the advances given to The Michael Jackson Company, LLC, then the rest of it should go to The Michael Jackson Company, LLC. If The Michael Jackson Company, LLC bought insurance to cover losses, the cost would become a Production cost and would be an expense that again relied on the "Contingent Compensation"--Michael's income for the tour. AEG Live, without permission, could obtain cancellation insurance to cover losses (Pool Expenses). The cost of that insurance itself would be a "Pooled Expense" cost, too. Apparently that would mean the cancellation insurance would be an expense incurred upon The Michael Jackson Company, LLC that again would come out of his possible income from AEG Live for the shows. Question: Did The Michael Jackson Company, LLC, acquire such insurance? All focus has been on the one insurance policy taken out by AEG through Lloyd's of London.

Section 14: Termination
Both The Michael Jackson Company, LLC and AEG Live could terminate this specific "Agreement" if one or the other failed to meet obligations. Death is not a curable event (nor is it mentioned in this "Agreement"). This clause ends by stating Michael and his company are to return advances even if this "Agreement" is terminated.

Section 16: Miscellaneous
16.1 This "Agreement" and the exhibits included (which are not public to the best of my knowledge) are meant to be a final document. Anything said previously, whether a negotiation, statement, representation or agreement is to be part of this "Agreement", but is to be considered inferior to this final document. However, neither AEG Live or The Michael Jackson Company, LLC is to have relied on any other information, orally communicated or not, that is not included in this "Agreement". Those two statements seem to be rather contradictory and vague. The "Agreement" is not to be changed unless done so in writing and signed by the party (either Michael, his company or AEG Live). Obviously some changes were made as the tour did not begin on July 26th as was the original date, as well as other dates. I seriously doubt Michael came up with the 10 show-figure all on his own to which he announced during the press conference, either. Also noticed that 50 shows were not named, either. The only number mentioned was 31 shows and those were pre-approved, not set.

16.3 To keep Michael and his company bound to perform the requirements in the contract, The Michael Jackson Company, LLC granted AEG Live the right to possible full-ownership (including rights, title, and interest) to some property or properties marked out on this "Agreement".

I do not have a background with law and I am not familiar with other written tour contracts, but I would like to know if it is a bit strange to ask for collateral for a tour. If AEG had such belief in Michael and his abilities to perform, which was has been implied by Randy Phillips many times over, then why did they so heavily guard their monetary advances to Jackson? In this "Agreement", very little control was given to Michael and The Michael Jackson Company, LLC. Basically no control was given to Michael or The Michael Jackson Company, LLC when it came to how many shows were to be done. This "Agreement" leaves much room for interpretation for the amount of concert dates, too, and gives AEG the full right to deem the number they feel necessary especially concerning the need to recoup advances for the shows given to Michael and The Michael Jackson Company, LLC. One should keep in mind, this "Agreement" was for a world-wide tour (that likely is what is referred to as the "term") rather than just the shows at the O2 Arena. Michael said he was to do 10 shows in London--not total. He was pre-approved for 31--not obligated to do 31 by this "Agreement". The contract stipulates more (or even less though not so specific) shows could be done so long as certain criteria were met. Did someone lead Michel to believe the criteria could be met with 10 shows in London? It is reasonable to assume somewhere Michael may have believed he was doing 10 shows in London, by someone else's doing. I would like to know who explained this "Agreement" to him, who was present, who wrote it, who typed it up. After all, faxed and photocopied signatures were considered as valid as an original which seems odd considering all parties were in Los Angeles and could sign original documents and that leaves room for error (and/or illegalities). This "Agreement" also closes as a letter (again is this necessary or even correct for a multi-million dollar contract)? Not that it may be of any significance, but Michael's signatures look different (especially the "J" in Jackson) comparing his two signatures. This is likely nothing but worth noting, as Michael signed for The Michael Jackson Company, LLC rather than Dr. Tohme whom the letter/"Agreement" was addressed to specifically. I would love to know how this document stacks up compared to other comparable documents (ex. what did Madonna's tour agreements look like?). I have seriously signed contracts that were much longer (and more detailed) than this for much, much less important reasons. I would also love to know who told Michael what concerning this document. I would also like to know what legal representation Michael had and what their job was concerning this document. A lot of questions remain unanswered regarding Michael and his dealings with certain individuals especially in the last few months of his life. This contract just adds to those questions rather than answering them.