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http://www.mjjcommunity.com/forum/threads/129265-Katherine-Jackson-vs-AEG-Live-Daily-Trial-Testimony-Summary/page4Jacksons vs AEG - Day 50 – July 17 2013 – SummaryOutside the presence of the jurors, judge told everyone to follow the rules of the court and that things are getting out of hand. This comment was made in light of the heated exchange between the attorneys in the hallway yesterday while talking to the media and fans. Judge called attorneys for both sides into her chambers for a sidebar. Earlier today, the court sent email to all media members that interviews are to be conducted only in approved areas or outside the building. Yesterday, after session concluded, attorneys for both sides were in the hallway speaking to the media and got angry at each other. Jacksons' attorney Brian Panish and AEG's attorney Marvin Putnam shouted words to each other. Sheriffs were summoned to calm them down. (ABC7)
Before testimony began, the clerk outlined the rules for the courtroom and courthouse, saying no interviews should occur outside courtroom. Superior Court Judge Yvette Palazuelos also called the attorneys into chambers and met with them before testimony resumed. (AP)
When jurors took their seats, Judge Yvette Palazuelos told them they have a better estimate for end of trial to be in mid-September. Judge said attorneys are trying their best to expedite things, but with some days off and lots of witnesses estimate is stretched further. (ABC7) When the judge took the bench, the attorneys addressed the time estimate of the trial. The jury inquired about it yesterday. AEG Live defense attorney Marvin Putnam said he’s going to try to wrap up his case by the end of August, assuming plaintiff’s rest this weekPutnam said he’s weighing how much of a defense he needs to put up, and Palazuelos told him he needed to take as long as he needs. For the first half of September, there are only four days court is in session. Plaintiff’s lawyer Brian Panish noted that if the defense estimate is off by a few days, then that would put the end of their case in mid-September. Palazuelos told the jury she expected the case to end in mid-September, which is later than some jurors thought they’d be here. Palazuelos: “Even though we’re going over a little bit, I don’t think it’s unreasonable.” She told juror to convey any concerns to the court (AP)
CPA Arthur Erk TestimonyAEG crossSabrina Strong, for AEG, doing the questioning.
Strong continued to challenge Erk’s projections of Michael Jackson’s earnings. She focused on estimates for endorsement deals. (AP) Strong asked Erk about sponsorship/endorsement. He estimated MJ would get $317 million in the "This Is It" tour. Erk estimated clothing endorsement to be $50 million and $217 million based on a calculation of a Pepsi deal Beyonce had in 2012. Erk said MJ's clothing would become a fashion statement and that people would want to wear it. Thus the demand. Strong questioned whether Erk really thought MJ, at 50 years old, would be a fashion icon for young audience. He said yes. She then asked if the $50 million figure was speculation. Erk said no that he had reasonable belief shows would happen, clothes would sell. "Speculative is hope," Erk opined. Erk came up with $50 million for clothing endorsement based on earlier deal of $28 million plus inflation/financial adjustments to year 2009. Erk said he relied on news reports regarding Beyonce's Pepsi deal. He didn't actually see the deal himself. Beyonce's most recent gross was close to $120 million. The Pepsi deal was, reportedly, $50 million, which is almost 42% of the tour revenue. (ABC7) Strong challenged all of Erk’s figures this morning, starting out with his endorsement projections. Erk stated his figures were conservative. Erk projected that Jackson would get a $50 million clothing endorsement deal. Strong tried to get Erk to say that was pure speculation. Erk said it was his expectation that Jackson would get an endorsement deal based on his popularity in the 1980s, “This Is It” ticket sales. Strong also challenged Erk’s projection that Jackson would have gotten another endorsement deal worth $267 million. Erk based that figure on a calculation based off the reported $50 million value of a Beyonce/Pepsi endorsement deal. Beyonce’s reported deal _ Erk doesn’t know if the figures are right _ was the equivalent of 42% of her tour revenues. The accountant adjusted his figures for Jackson up based on his assumption that the singer would do a 260 show worldwide tour. Erk assumed that Jackson would get a “Pepsi-like” endorsement deal with several companies, but he’s not aware of any deals pending in 2009. Strong also pointed out that Erk’s numbers were gross figures, meaning that he calculated Jackson would receive the full $267 million. Using gross figures wouldn't account for any sharing of the deal’s profits with AEG Live or some other entity. (AP)
Strong: Do you know if anyone ever used your methodology to estimate endorsement deal?
Erk: No (ABC7)
Strong inquired Erk whether he knows any other artist who has endorsement being 40% of gross revenue. Erk said that most endorsement deals are private, Beyonce's was the only one that was made public through the media. Strong questioned whether Erk always trusted the media reports to be true. He said no, but no one disputed Beyonce's endorsement number. Strong asked if Erk knows for a fact that Beyonce's endorsement deal being 42% of gross revenue is true. "If the reported figures are correct, the 42% is correct," Erk said. "I answered before I didn't see the contract, my firm doesn't have Beyonce, I couldn 't confirm the deal." (ABC7)
Strong asked if Erk thought MJ's image was rehabilitated in June of 2009. "What I do know as fact is that the demand was there," Erk said. "The demand was there, I think that is unquestionable.". "I think AEG was more concerned with people in the US than worldwide," Erk said. (ABC7)
Strong: Was his image rehabilitated by June 2009?
Erk: It wasn't consideration on my part since it sold so many tickets in a short time (ABC7)
Strong: So my question was, do you think MJ's image was rehabilitated to get an endorsement deal?
Erk: If you need a yes or no answer, the answer is yes
Erk: By evidence of selling so many tickers, I have no other way to come to that conclusion, but based on the facts of tickets sold, yes
Strong: You are not aware of any endorsement or sponsorship deal for TII tour being in place when MJ died?
Erk: No (ABC7)
Strong asked if MJ's molestation accusations and trial affected his estimation in the endorsement deals. "The outstanding, unprecedented demand for tickets took care of that," Erk said. Going back to Beyonce, Strong asked if Beyonce ever had negative publicity. "As far as I know, no," Erk responded. (ABC7) In discussing the Beyonce deal, Strong brought up the child molestation trial and Beyonce’s squeaky clean image. The lawyer asked Erk whether he knew of any artist who got a sponsorship deal worth hundreds of millions of dollars who’d been involved in a high-profile criminal trial. Erk said that he did not know of any artist who’d received such a big deal after a trial. (AP) “(Beyonce) has never been a defendant in a criminal trial,” Strong suggested to the jury. “In fact, Beyoncehas never really suffered any negative publicity.” (NYDailyNews)
Strong also asked whether Erk’s merchandise estimates were overly-optimistic due to possible over-inflation of his ticket sales projections. Erk said he didn’t think he over-estimated the number of tickets that would be sold on a “This Is It” world tour. The accountant estimated that concert-goers would spend an average of $19 on MJ-merchandise at each concert. (AP)
After a break, Strong asked Erk about his reliance on an AEG Live budget for his projections. He used a budget prepared on June 24, 2009. The AEG budget estimated Jackson would receive between $22 million and $30.7 million from the London “This Is It” shows. It appeared AEG estimated Jackson would also receive another $8 million in merchandise sales. Erk estimated Jackson would earn $452 million for worldwide concerts, another $121 million in merch and $317m for endorsements. (AP) Strong asked Erk if he relied on AEG's own budget to come up with his estimations. He said yes. AEG's projection of what MJ would take home was a little over $20 million, according to the budget Strong showed. Net Income, amount of money AEG Live projected MJ would take home had he performed all 50 shows at the O2 arena: little over $22 million Alternative budget had projection of a little over $30 million, Strong showed. Strong said the range AEG Live was projecting MJ would take home for performing all 50 concerts at O2 arena was between $22 and $30 million. (ABC7)
AEG projected 750,000 tickets sold and didn't estimate revenue of merchandising. AEG did not project a single dollar in endorsement in this budget or any other budget that Erk saw.
Strong showed a side-by-side demonstrative of AEG's and Erk's projection.
Erk's projection:
Net revenue to MJ, 260 tour $460 million
Merchandising $121 million
Endorsements $317 million
Net number of $890.5 million (ABC7)
AEG's defense asserts that the $1.5 billion figure projected by certified public accountant Arthur Erk is inflated. Erk testified that Jackson would likely work beyond his contract deal for 50 shows at London's O2 Arena and instead perform 260 shows, taking the show around the globe and selling out at every venue. But that's not all. Defense attorney Sabrina Strong showed Erk's calculations for tours beyond that. That at age 56, Jackson would embark on four more world tours - a total of 455 shows - Jackson performing until he was 66 years old.(KABC)
Approximately 13 million tickets sold, 260 shows, merchandising and endorsement estimate. Erk said he relied on email exchanges from September 2008 that included records, movies and others, such as worldwide tour. "It shows they clearly intended to take him around the world," Erk said about the email on the plan, mentions a net to MJ of $132 million. Erk said AEG had no idea of the demand and when the shows were sold out in a matter of hours they knew they could take the show everywhere. (ABC7) The accountant said AEG prepared figures in 2008 showing that Jackson could earn $132 million for a worldwide tour. He said that was in a proposal to Colony Capital and was based on a tour of 186 concerts. This was before “TII” contract was signed. Erk said his projections were much higher than these figures because the success of “This Is It” ticket sales showed the demand for MJ shows (AP) The documents prepared by AEG Live LLC envisioned 186 shows, with Jackson earning $132 million for his performances — far less than the $835 million that an accountant who previously testified for the Jackson family had projected the singer would pocket from 260 shows around the globe. (AP)
Strong: Do you know any tour that ever grossed that much?
Erk: No. This would've been world record breaking tour (ABC7)
Strong: You testified in your depo you have no idea whether MJ would be successful at making movies, correct?
Erk: That's correct (ABC7)
Strong asked if Erk recalls Katherine Jackson saying MJ didn't want to do the Moonwalk after he was 50. He said yes.
Strong played Paris Jackson's deposition regarding future plans: Paris says her dad wanted to relax, didn't want to tour anymore. However, Paris also said it was a world tour. "How did you know that? Because he told us we were going around the world," Paris said. (ABC7)
How long did Michael Jackson plan to work? Paris Jackson yawns, and then offers two opinions in a video deposition shown to the jury by the defense.
"He still had a lot of music that he was still working on but he kind of needed to relax," she said.
"So did your dad ever tell you he wasn't going to tour anymore after the 02?" Paris was asked.
"Yeah," she replied.
But later she was asked, "How did you understand it was a world tour?"
"Because he told us," she replied.
"What did he tell you?"
"That we were going around the world on tour," she said. (KABC)
Also on Wednesday, the jury heard videotaped testimony from Paris Jackson.Paris, whose testimony was recorded during a deposition in March, said her father still had hits up his sleeve, but needed to take a break from touring. A lawyer for AEG had asked her about claims her famous dad planned to “retire” from the music business. “He still had a lot of music that he was still working on, but he kind of needed to relax,” Paris said as the jury watched the footage on a huge courtroom video screen.“Did he tell you he wasn’t going to tour anymore after O2,” AEG lawyer Marvin Putnam asked, referring to the 50 shows that were booked at the famous London arena but ultimately cancelled following Michael’s overdose death on June 25, 2009. “Yes,” Paris replied. Jurors then saw a second clip of Paris’ testimony requested by lawyers for her grandmother, family matriarch Katherine Jackson.“Did (your dad) explain to you how long the (‘This Is It”) tour was going to last,” Putnam asked Paris in the second excerpt shown Wednesday.“I assume a long time since it was a world tour,” she said. “Those usually last a long time ... He told us that we were going around the world on tour.” (NYDailyNews)
Strong showed demonstrative with Erk's projection for MJ's future tours:
40 shows at 60 years old
50 shows at age 63
45 shows at age 66
Erk acknowledged MJ did 275 shows between 20-50 years old.
Strong: So you had him do 455 shows over 5 tours until the age of 66?
Erk: 260 shows were reasonably certain to happen, 195 shows was an estimate based on my professional opinion.
Strong questioned Erk: "Are you aware of any other artist doing five tours between age 50 and 66?" "I did not consider that," Erk replied. (KABC)
Jackson redirectErk said AEG's experts in the same field as his charge more than him for the work.
Panish: Has Mr. Jackson ever been proved guilty of any allegations that AEG mentioned?
Erk: No
Panish asked if Phillips, Anschutz, Gongaware did not enter into an agreement with MJ due to concerns of the allegations?
Erk: They entered into the 3 year tour contract as well as movie deal
Panish: Was there any emails AEG, Philips, Gongaware saying they didn't want to make money off of MJ due to the allegations raised?
Erk: I didn't see anything to that effect. (ABC7)
Panish asked Erk if Tiger Woods had some things that could be viewed as negative allegations against him. He said he believed so. As to Tiger Woods, Erk said in 2012, he believes it was reported endorsements went back up to $70 million. Panish: Alex Rodriguez -- has there been allegations against him regarding certain activities? Erk: Yes, surfacing every once and a while. Panish: How are his endorsements? Erk: He's doing fairly well (ABC7)
“Let’s talk about A-Rod. Have there been allegations against Mr. Rodriguez about certain activities?” Jackson family lawyer Brian Panish asked a witness in an apparent reference to the accusations of steroid use dogging the Bombers third baseman. “They’re still coming about, surfacing every once in a while,” responded Arthur Erk, a Manhattan accountant called to the stand by the Jackson family.Panish brought up A-Rod, along with Tiger Woods, to draw examples of mega-stars who made big money after being struck by scandal. “How is he doing?” Panish continued, referring to A-Rod. “At least according to media reports, he’s still doing fairly well,” Erk replied. (NYDailyNews)
Regarding Beyonce and her endorsement deal, Erk said the calculation he made came up to 18,5%, not the 42% Strong said. (ABC7)
Panish asked if MJ's past and the allegation have anything to do with how much money MJ could earn. Erk said he based his opinion on AEG's projection and "if it was good enough for them, it was good enough for me." (ABC7)
AEG spent money before even getting to London, Erk testified. Panish asked Erk 2 assume Phillips estimated MJ would make $50-100 million for London dates if it was consistent w/ his opinion. He said yes .
Panish: Assume Phillips said MJ's earnings could rise to 500 million if he did a world tour? Is that consistent with your opinion?
Erk: Yes (ABC7)
As to future tours, Erk said Paris testified in her deposition (played earlier today) that MJ told her they would tour worldwide. Erk said Ortega's deposition and testimony talked about take this tour on the road, to the world, and that MJ would like for him to go too. Erk said Ortega discussed going to India and Japan with MJ. Panish asked if MJ and Ortega working further together. Erk said MJ wanted to ultimately produce movies.(ABC7)
Erk said AEG had the resources to find out about MJ's financial issues and there's no reason to believe they didn't know about MJ's problems (ABC7)
Erk said he didn't focus on MJ's health because AEG signed the contract and began spending money, which determined the tour would go forward. Panish asked if Erk saw evidence AEG was concerned with MJ's health. Erk said only that he passed a physical, was healthy and ready to go.
Panish: Did Phillips make statements as to whether MJ could perform a worldwide tour?
Erk: Yes (ABC7)
Panish said AEG had questions of Demerol, baby, allegations, trials so he wanted to clear whether there was demand for the tour. Panish showed Gongaware's testimony when he talked about the high demand for MJ's tickets. Panish asked why he took Phillips and Gongaware's testimony into consideration for his projections and calculation. "They were the ones selling the tickets, they should be in the know," Erk said. (ABC7)
Panish: Did you take that into consideration as to whether or not there would be demand for MJ's tour?
Erk: Absolutely
Panish: Was MJ popular and could've sold tickets?
Erk: Absolutely (ABC7)
Panish read a lengthy testimony from Randy Phillips when he said they were all surprised with the demand for tickets and standby people. Strong objected, and added that there's no question about the demand for the 50 show.
Panish: Is there any question in your mind AEG not only believed they could sell out in London but worldwide?
Erk: No question
Panish: Would you describe the demand for MJ's ticket a hope?
Erk: No (ABC7)
Erk went through the email describing what Phillips' plans were. "If London goes smoothly, we could migrate this show to the brand new, state-of-the-art stadium in Berlin, the O2 World," Phillips wrote. (ABC7)
Email from September 2008 plan:
In July 2009 -- If all goes well, we embark on a well routed and spread out worldwide tour taking advantages of the gigantic secondary ticket market, massive sponsoring opportunities subject to how well we have rehabilitated him and very lucrative "exotics". (ABC7)
Mick Jagger is 69 years old, lead singer of the Rolling Stones. He just finished up shows that AEG promoted, Erk said. Keith Richards had a long history of heroine problems, Erk said. He's also almost 69 years old and is touring, doing quite well. Barbra Streisand is 71 and just finished up shows for AEG as well, Erk testified. Erk said Streisand grossed more than $18 million. (ABC7)
Panish showed a spreadsheet with all MJ's monthly expenses. The annual consumption based on actual receipts for MJ -- $7.6 million. Erk said he used $570K/month, which would work out to $6.7 million. He used higher monthly figure, but less annually. For professional fees, Erk said he considered 10-20%, anywhere between $3-5 millions. (ABC7)
Panish: Does people usually lend money for people who can't pay it back?
Erk: No (ABC7)
Erk said MJ had assets to secure loans. Erk explained how the loan of significant amount of money works.
Panish: What was it that secured the debt?
Erk: Primarily his Sony/ATV catalogue (ABC7)
Erk said MJ did not have working income in ten years.
Panish: If you don't have work income, is it possible you're going to spend more than you earn?
Erk: Most likely (ABC7)
Panish: Did you just make-up this world tour idea?
Eark: No (ABC7)
Email from Gongaware:
MJ first draft worldwide tour projection. Here's a first-draft look at worldwide MJ tour. On paper, it starts Jan 9 and runs thru April 2011...Right now we project 186 shows... Net to Mikey $132 million. It's a big number, but this is not a number MJ will want to hear. He thinks he's so much bigger than that (ABC7)
186 shows over 27 months -- Gongaware projection
260 shows over 37 months -- Erk projection
Erk said AEG had 1.59 show per week in their projection and Erk had 1.60 shows per week in his projection. (ABC7)
Panish showed a document Gongaware attached to his projection with a list of tentative venues all over the world. World tour included: Berlin, Hamburg, Munich, Paris, Zurich, Milan, Johannesburg, Dubai, Japan, India, Australia, New Zealand , South America, US starting in Florida, Texas, New Orleans, California, Denver, Utah, Chicago. Panish said this is a document prepared by Gongaware in addition to the 50 shows in the O2 arena. There was a projection of $3-$10 million for private shows. Except with the private shows, Erk says his calculation was similar. Panish asked if shows in AEG's projection were carried over to 37 months, how many shows would that be? Erk: Almost 260 . Panish asked why 37 months. Erk said contract between MJ and AEG was 3 years, and he added a month. (ABC7)
Panish asked Erk is he saw multiple AEG documents detailing plans for worldwide tour. He said yes.
Panish: What are the figures AEG used for worldwide tour?
260 shows for my budget, 37 months
186 shows for 27 months (ABC7)
Erk said that prorating the same amount of shows in 37 months, it is almost 260 shows. AEG projection is $132 million in the low end, $150 million in high end for less shows, less months, Erk said. Erk said he used stadium shows and bigger arenas because of unprecedented demand. (ABC7)
Email from Phillips to Leiweke on April 15, 2009: He is happy and they picked all male and female dancers. I intend to shove those 50 shows up Irving's and Rapino's asses and march on to do another 3 years of a world tour. (ABC7)
Email Thomas Overseen saying he had a client with serious interest in MJ's tour in India. Phillips answered: Thanks, Thomas. MJ will definitely heading your way (ABC7)
Panish asked Erk if he reviewed this email to determine if the tour in India wasn't just a hope, but plan. He said yes. (ABC7)
Erk said Phillips was striking deal with Bravado to rent empty store in Oxford Circle to offer nothing but MJ merchandising. Panish asked if Erk believed it would help sell the merchandise. He said yes. (ABC7)
AEG recrossIn re-cross Strong asked if Erk saw the June 2009 AEG budget and how much money AEG projected for the sale of merchandising. Erk said he saw it and believes it was maybe in the $10 million range or thereabouts. Erk projected $121 million, the expert said. (ABC7)
Strong: And the merchandise projection AEG had was between $8 and $10 million, right?
Erk: Yes, that's what was in the budget (ABC7)
Strong pointed in the email where there was an indication for "a" date in India, not 60 dates in India like Erk projected. (ABC7)
Strong: AEG Live had a lot of hope after selling the show?
Erk: I think it's more than hope
Strong: Wasn't AEG hopeful for a successful tour?
Erk: You're always hopeful (ABC7)
Email from Phillips to Nanoula in June 2008 detailing the plans for MJ's future: Richard, these are just my off the cuff ideas... The email mentions 12-14 new songs and then release of series on new singles. Erk said he doesn't know that MJ finish them. (ABC7)
Strong: Randy Phillips acknowledged that all had to go well, didn't he?
Erk: It appears that way (ABC7)
Strong asked if Phillips hoped he could have massive sponsorship opportunities if all went well. Erk said yes. Erk said he has no knowledge of what AEG tried to do to get sponsorship opportunities for the tour. As June 2009, Strong asked if Erk saw any evidence or sponsorship in place before his death. He said no. (ABC7)
Strong talked about the September 2008 email with $132 million projection. She asked Erk if the email was written without knowing whether MJ would ever agree to it. He said yes.
Back to India, Gongaware projected 3 shows plus one private show. He contemplated 8 shows in Japan plus one private. Strong said Gongaware's projection was not near what Erk calculated. (ABC7)
Email from Phillips to Leiweke: Colony is receptive but skeptical like us as to whether MJ will really work. (ABC7)
Strong: No one at AEG projected the numbers you projected, correct?
Erk: That's correct (ABC7)
Strong: MJ agreed to only 50 shows at the time he passed away in June 2009, isn't that correct?
Erk: Yes (ABC7)
Jackson redirect"He took his children wherever we went," Erk said.
Panish in re-re-direct: What did he tell his children
Erk: We're going on a worldwide tour (ABC7)
Panish asked if selling out in a matter of hours is going well. Erk responded "Yes and then some." "It can always go better, but it was fantastic," Erk said. Panish asked if Gongaware, as good promoter and with the sales he saw, would want more shows. Erk said he would've done as many as he could. (ABC7)
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During arguments late in the day, judge asked AEG if they intend to call Dr. Murray to testify. Putnam responded he has no intention. (ABC7) During arguments on Dr. Brown's testimony, the judge asked AEG's attorneys whether they intend to call Conrad Murray. "I have no intention of calling him," AEG Live defense attorney Marvin S. Putnam said when asked about calling Conrad Murray as a witness. (AP)