Jacksons vs AEG - Day 49 – July 16 2013

Jacksons vs AEG - Day 49 – July 16 2013 – Summary

Katherine and Trent Jackson is in court.

Court opened this morning with arguments on whether it was proper for AEG lawyers to show Erk a judgment against Jackson. The judgment was related to case filed by concert promoter Marcel Avram against Jackson in Santa Barbara. Plaintiffs objected to its use. Plaintiff’s attorney Brian Panish argued that the $5 million judgment against Jackson wasn’t final -- it had been appealed and later settled. Panish argued it was improper “character evidence” and shouldn’t have been shown to the jury on Monday. AEG’s attorneys argued that the case had been settled for $6.5 million. The appeal was dropped, they said, which made the judgment final. The judge agreed with AEG Live and she wouldn’t instruct the jury regarding the judgment. “Let’s keep going, she said. (AP)


Arthur Erk Testimony

AEG cross

The promoters of Michael Jackson’s highly anticipated comeback concerts were interested in pursuing a 3-D version of a “Thriller” movie and a TV special of one of his sold-out concerts at the O2 arena in London, an accountant testified Tuesday. (LATimes)

An expert who projected Michael Jackson could have earned more than $1 billion on his comeback concerts testified Tuesday that his analysis didn't include a breakdown of the singer's yearly earnings over his lifetime and projected a longer concert tour than the superstar had ever performed. Arthur Erk, a certified public accountant who is an expert in musician's royalties, said his analysis didn't take into account thousands of pages of figures detailing Jackson's spending over the years. The accountant based his calculations on documents prepared by AEG, but on cross-examination conceded that the company never projected the singer would earn more than $1 billion after the "This Is It" shows opened. He said he didn't have information regarding Jackson's earnings over his lifetime. (AP)

AEG Live defense attorney Sabrina Strong's cross-examination focused on trying to show there wasn't historical basis for Erk's projections. (AP)

Strong immediately asked Erk about his testimony that he had used AEG Live’s figures to reach his $1 billion + estimates. A big piece of Erk’s estimates was the idea that Jackson would have done a 37-month, 260 show worldwide “This Is It” tour. Strong started out a question with "Let's be clear" and proceeded to state that AEG Live never projected $900 million in earnings for "TII". Erk agreed with Srong on this and several other questions, including one in which she said AEG didn’t contemplate 260 shows. (AP)

Strong: AEG Live never projected MJ would've earned anything close to the $900 million you estimated, correct?
Erk: That's correct (ABC7)

AEG Live never projected MJ would do 260 shows, Strong asked. Erk agreed. (ABC7)

Erk projected the worldwide tour would go to India, Japan, Central Europe and return Jackson to the U.S. for shows as well. (AP)

Strong also attacked Erk's calculation that Jackson would have spent $134 million between ages 50 and 65. She cited testimony from Jackson's former business managers and accountants in depositions that Jackson was historically outspending his earnings by millions of dollars each year. She questioned why Erk and associates who helped him compile his analysis didn't review tens of thousands of pages that detailed Jackson's spending over the years. Erk said that wasn't part of his job as a hired expert and he relied on figures about Jackson's monthly spending prepared by the singer's accountant before his death. "We boiled down what we thought was necessary to do the calculations," Erk said. (AP)

Strong then began to question Erk about Jackson’s spending, again stating that when he died he was at least $400 million in debt. Strong then mentioned that the Jackson family home in Encino was facing foreclosure in June 2009 and didn’t have access to cash. Erk: “The reason he was going on tour was he was going to get himself straight, pay off his debts and take care of his family.” Strong mentioned that the Jacksons’ Hayvenhurst home was facing foreclosure twice this morning. The 2nd time, Mrs. Jackson shook her head. (AP) Strong talked back about consumption, which is the amount of MJ's expenses. She said MJ was $400 million in debt when he died. Strong asked if Katherine Jackson's Hayvenhurst home was about to go in foreclosure. Erk said yes. "The reason he was going on tour was to get himself straight, earn money to take care of his family," Erk said. (ABC7)

Strong mentioned the deposition testimony of several of Jackson’s business managers that the singer consistently spent more than he earned. (AP) Historically, MJ spent more money than he earned, Strong said. Erk said that based on the accountant's testimony, yes. Barry Siegel is one of MJ's former accountant. Strong said Siegel noted MJ had substantial income coming in and higher expenses going out. Strong asked if Erk knows why Siegel quit his job with MJ. Jacksons' attorney objected to the form of question. Strong then said assuming Siegel quit because MJ couldn't control his spending, if that would've affect his consumption numbers. Erk said no (ABC7) 

Strong talked about Jackson's prolific spending, saying he was $400 million in debt and that his mother's home was in foreclosure. She said that a former Jackson business manager had quit because the singer showed no interest in pulling back on his spending. Strong said that in one instance, Jackson bought a $1-million watch but had to return it because he couldn't afford it.Another former Jackson business manager said Jackson spent $20 million to $30 million a year more than he earned, Strong said. (LAtimes)

The lawyer also mentioned that Jackson had borrowed money against his music catalog. Erk agreed MJ “had loans on his assets.” Strong asked about a note coming due on Jackson’s loan against the SonyATV music catalog in 2009, saying he couldn’t pay it. (AP) Erk said Jackson had a $320-million loan on his portion of the Sony/ATV musical catalog, which includes Beatles songs. (LATimes)
Strong: “Michael Jackson had no ability to meet that obligation, correct?” 
Erk: “Correct.” (AP)

Strong: And that doesn't account for million dollars shopping spree?
Erk: I don't call it consumption, I call it fun money (ABC7)

Strong asked if MJ spent $20 to $30 million a year more than he was earning. Erk said yes. (ABC7)

Strong said $1 billion Erk estimated didn't include repayment of MJ's debts. (Implication is you can't get damages for money to repay debts) Erk said his job was not to consider whether MJ was going to repay his debts. He was hired to estimate MJ's earning capacity had he lived. (ABC7)

Erk said he didn’t consider Jackson’s debts outside $570k a month in expenses, including repayment on Sony/ATV loan.
Erk:”That wasn’t my job to consider that.”
Strong: “You were just asked to calculate how much he would have made.”
Yes, he replied. (AP)

Panish objected to Strong’s questions about the debts and how she phrased certain questions. Judge sustained some of the objections. (AP)

Strong then asked whether Erk considered how much Jackson earned in 2001, 2002 and other years. He said he hadn’t. She asked him whether he had any idea how much Jackson earned in any year of his life. No, Erk replied. (AP) Strong asked if Erk knows how much money MJ earned in 2001, 2002, 2003. He said no and that it had no relevance to his assessment. Erk said he reviewed documents attached to depositions explaining MJ's yearly earnings and consumption. (ABC7) Strong cited at least 71,000 pages of records of Jackson’s expenses that had been produced in the case. Erk said he didn’t go through them. (AP)

Strong asked how much the expert and his firm had billed for work on the case. He said they’d billed $300,000. Erk added that if he’d gone through the expense records that Strong described, his firm's fees for the case would have been in the millions. (AP) Erk said the estimate of cost of his firm's work in this case is $300,000. He didn't review thousands of pages, eliminated all unnecessary. Erk explained he's been doing this for 34 years and it would've taken an untold amount of man hours to go through all the documents. Erk: In me and my partner's experience, we are very good in judgments. We boiled down what we thought was important for the calculations (ABC7) Erk said he had 34 years of experience. “We boiled down what we thought was necessary to do the calculations,” he said.(AP)

Strong said Erk's opinion assumes that MJ would do something he had never done before. (ABC7)

Strong: The artist usually had the final decision?
Erk: Yes, they have final say but consult with the professionals that surround them (ABC7)

"What you're projecting is totally inconsistent with Michael Jackson's history, isn't it?" asked attorney Sabrina Strong (LATimes)

AEG Live attorney Sabrina Strong showed Erk a chart that showed that Jackson's three previous solo tours comprised 275 shows over a 10-year span. She challenged Erk's contention that he was being conservative by projecting Jackson would have performed 260 shows over a three-year period. (AP)

Strong then started walking Erk through Jackson’s solo tour history. She asked him about the “Bad,” “Dangerous” and “HIStory” tours. “Bad” was the longest tour with 123 shows. Jackson was 29 at the time. “Dangerous” was roughly 70 shows; MJ was 33 years old. “HIStory” was 82 shows and Jackson was 38. In total, Strong and Erk said Jackson did 275 shows between 1987 and 2008. (In reality, the 275 shows were performed in a 10-year span between 1987 and 1997, according to figures shown in court.) (AP)

Strong showed Erk's overview of the 260 shows the expert projected MJ would do had he lived, within 37 months. Strong questioned Erk about his 260 tours estimates. She reiterated there's no AEG document saying MJ would ever do 260 shows. Erk said there was testimony that MJ could've done a 48-month tour, which would increase revenue in approximately 30%. The increase would be based on higher ticket sales and merchandising. He didn't include endorsement, which could be higher too. Erk said he didn't calculate how many more shows would be required to fulfill a 48 month tour. Using the simple 30% increase calculation, there would be an additional 78 shows, totaling 338 shows in 48 months. The expert said Randy Phillips, a top AEG Live executive, said in an email they would probably do a four year tour. (ABC7)

Strong asked Erk if MJ's record high of number of shows was 123 shows for "Bad" tour in 1987 when MJ was 29 years old. He said yes. Dangerous tour: began in 1992, MJ was about 33 years old, had 73 shows. Strong said Gongaware testified it was about 70 tours. HIStory tour, 1996, MJ was 38 years old -- 82 shows. Total of 275 shows if added all together. (ABC7)

Strong: Now you have him in one tour, 12 years later, at age of 50, doing 260 shows?
Erk: Yes (ABC7)

Strong then asked about Jackson’s place among other acts in highest-grossing concerts. None of his tours were in the Top 25. Erk explained that Jackson tended “not to go crazy with his ticket prices.” He said he charged less than his counterparts. The accountant also defended his calculations, saying his were in line with what other acts made if you added more shows to their tours. (AP)

Strong said Erk calculated MJ would gross in "This Is It" more than 10 times he ever grossed before in a tour. MJ's highest gross tour is "HIStory" -- $165 million for 82 shows. It ranks number 26 on the highest grossing tours of the all time. Even though HIStory was the highest grossing tour for MJ, he didn't take home any money, according to Paul Gongaware's testimony. (ABC7)

Strong: You estimated gross of $1.5 billion for 260 shows and the highest you know MJ ever did was $165 Million?
Erk: Yes
Strong: And is that conservative?
Erk: Yes (ABC7)

Bad -- $125 million gross. "I can tell you that show was fantastic!," Erk opined on Bad tour. Strong asked if Erk's projection is inconsistent with MJ's tour history. Erk said the show was called This Is It, his final extravaganza. "I packed a lot of shows in to go out with a bang," Erk said. (ABC7)

Regarding the ticket numbers, Strong said that for the 260 tours, Erk's assumption was that it would sell approximately 13 million tickets.
Strong: Just like with the number of shows, MJ never sold anywhere near 13 million tickets, correct?
Erk: Yes 
Number of tickets sold in "Bad" was close to 4.5 million. "HIStory" tour sold about the same number of tickets, 4.5 million. (ABC7)

Erk said he doesn't think the child molestation trial would have any impact on whether people would attend his show. Strong asked if people had issue w/ MJ dangling a baby over the balcony of hotel. He said for a short time yes, but not to affect attendance (ABC7) Strong then brought up Jackson’s child molestation trial and his dangling Blanket over the balcony. Erk said they weren’t factors. Erk said AEG Live expected Jackson’s image to be rehabilitated after initial “This Is It” shows to the point he could tour in U.S. again. (AP) Erk said that the five-hour sale of 750,000 tickets to his 50 London concerts showed that Jackson's popularity had not suffered. AEG's plan, was that after the London shows the singer would perform in Europe and Asia, finally ending the tour in the U.S., he said, "and by that time his image would be rehabilitated.” (LATimes)

Strong asked Erk to agree with her that Jackson’s reputation was better in the 1980s than in late 2000s. Erk replied that the 80s were when Michael Jackson got the term “King of Pop.” (AP)

Strong and Erk argued over whether the worldwide tour was contemplated by AEG Live. 
Erk said a worldwide tour was considered. He said plans for a worldwide tour were mentioned by Kenny Ortega and Paris Jackson in her deposition. Erk said he spoke to Jackson’s son Prince on Saturday night. He said Prince told him his father said, “’We’re going to Asia.” (AP) Strong asked if MJ never agreed to do more than 50 shows. Erk said he doesn't know if he agrees with that. Erk said he spoke with Prince on Saturday and he said MJ told him they were going to Asia. (ABC7) Strong kept insisting that Jackson had not agreed to anything other than the London shows, although Jackson's contract included the possibility of extending the tour. Erk said he spoke to Jackson's son, Prince, Saturday night. "He said his father specifically told him, 'We're going to Asia,' " according to Erk. (LATimes)

Erk said MJ needed to work, needed the money, so had incentive to perform all shows. (ABC7) The accountant added that Jackson needed the money, and that was a “great impetus to go out and do the shows.” (AP)

Strong then moved deeper into projections for MJ world tour. She asked him about “production kills” -- seats that can’t be used in venues. The seats aren’t available because of sight lines to the stage or other factors. Strong used them to challenge Erk’s numbers for "TII" tour. Strong asked about various stadiums, including Luca Oil Stadium in Indianapolis. Seating capacity is 70,000, but is lower for concerts. Strong noted that Erk hadn’t worked on concert tours and hadn't consulted with people who had for his projections. She told Erk to assume that AEG had put on shows at Lucas Oil Stadium and the seating capacity was 51,000 seats. Erk said he didn’t agree with Strong or AEG’s figures, saying more tickets could have been sold for spots on the field at many venues. The accountant had to concede he didn’t really know the seating capacity, and hadn’t talked to anyone who does for his calculations.(AP)

Erk and Strong went back-and-forth over several venues, and the lawyer challenged him on his projection that MJ would sell out every show. Erk said he thought that was possible. “There’s a tremendous amount of pent up demand,” for Jackson shows in ’09, he said. (AP)

Strong: You estimated Mj would've sold 100% tickets for all the show?
Erk: Based on the huge, excessive demand, yes
MJ was on a category of his own, Erk said, he was the King of Pop, could not be compared to any other artist.

Strong: You had MJ selling out Rose Bowl three times?
Erk: Yes

MJ never performed at the Rose Bowl, Strong said. Panish objected saying MJ performed at Superbowl half time there and it was sold 
out. (ABC7)

Strong moved on to Erk’s projection for Jackson concerts in India, including his estimate for 10 shows at Salt Lake Stadium which seats 120k. The lawyer said Jackson only played one show in his lifetime in India. Erk projected him to do 60 shows in India on “This Is It” tour. Strong asked Erk about his research, noting that he based a lot of it on Wikipedia information. The lawyer then asked whether Erk noticed in his online research that the government banned concerts at Salt Lake Stadium in 2009. That detail isn’t currently on the Wikipedia page, but Strong said if it’s true then Jackson couldn’t have performed 10 shows there. Erk said that would have depended on whether a show could have been negotiated to be performed at the venue. (AP) 

Strong asked if Erk used the same price for tickets in all shows, in different countries. He said yes, just adjusted inflation. "There are a lot of wealthy people in India," Erk said. Strong asked if Erk knew the stadium in Salt Lake City was for sports events only and that MJ would not be able to perform one show there. Erk said if there was no negotiation, yes, he would not be able to perform there. (ABC7)

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Erk to resume on the stand. Strong estimates another half day of cross, judge gave 2 hrs

After session ended, attorneys for both sides had a heated exchange of words in the hallway when they were talking to media and fans. Both attorneys were shouting to each other, court clerk asked them to knock it off, called sheriffs. (ABC7) One issue that may come in court tomorrow morning _ a verbal tiff between lawyers on the case in hallway outside the Jackson courtroom. It happened after testimony ended and I believe all the jurors were gone by the time this happened. Plaintiff’s lawyer Brian Panish and AEG defense attorney Marvin Putnam shouted at each other after court. Panish said he overheard Putnam say something, and the attorneys exchanged words. Judge Palazuelos’ clerk came out and calmed things down. The clerk asked Putnam to leave and said she would report the shouting match to the judge and it would be addressed on Wednesday. (AP)