in my experience (europe), companies budget EVERYTHING they THINK they are going to need. Budgeting something doesn't mean you're going to actually use the money for the exact purpose you are planning. For me a budget is like a forecast, to estimate profits, or the possibility of doing this or that. Budgets change constantly : for eaxample here they talk of a budget with 27 shows. I imagine that at some pint they would have changed it to 50 shows (more income, more spendings). So it's only normal that they change the budget when they know that Murray is going to work, and so get paid.
Ivy, Bouee, the defendants budgeting in exact increments of $150,000 would be extremely odd if they did not hire or have the intention to hire this particular doctor at the rate Michael suggested.
No I don't see it as odd at all. Budgets that I worked with were usually done by month, because where I live most invoices and salaries are usually paid every month. Murray's salary was to be paid every month, so they budgeted 150 000 every month. It sounds absolutely normal to me. You're right it means they were planning to hire him, so they budgeted the expense.
But it says nothing about the contract itself. It makes sense to budget the spending even if you are still negotiating the contract, and so you budget the cost even if you are not 100% sure that the contract will be finalised. You want to know the effect that that spending will have. A budget is really nothing more than a forecast, it's not "reality". Reality of what has been paid or is still pending would be shown in the company's accounting, it's completely different.
I don't work in budgeting at all but I had planned for a group business trip - more than a year ahead. I was required to submit a proposal and an accompanying budget. My company actually asked me to do an itinerary and contact every business and get actual costs. Such as I needed to call a hotel and ask for their group room rates and then put that into my budget. when I submitted that budget , nothing was determined. The company could have said "no" and my phone call to the hotel would not mean that I would actually go and stay there.
3 months before the trip I made the reservations and by that time I was allowed to change my itinerary such as I ended up reserving another hotel. As long as I was under my first budget estimate, they did not mind.
I had to keep track of every invoice, every receipt and I did submit the actual accounting at the end of the trip. My actual accounting and my budgeting weren't the same. I didn't budget enough money for snacks but in real life transportation had been cheaper and I got an extra savings from the hotel. So 3 of my actual costs were different than my 2 budgets and I was under the estimated budget.
So in short, I don't see anything odd about AEG budgeting Murray.
This is also backed up by AEG's opening statement. They did say they budgeted Murray and they would have paid him if Michael had signed on the contract. They aren't denying that they were in negotiations to pay Murray, that there were 3 draft contracts, that they added him to the budget. Their position is that contract wasn't finalized, therefore Murray wasn't hired or paid.
A few things that are not really clear for me from yesterday's testimony- I'm not used to this stuff and I'm not familiar with the contract between AEG and Michael , so maybe I'm not understanding it correctly :
what is so urgent if Michael was supposed to pay them back ? Why Mr Anschutz ? could this mean that the cost of the tour was becoming a problem ?
why in some capacity ?
This was something I wanted to talk about.
Now what we know
- AEG was advancing Michael money
- Michael was going to pay them back
- Some of Michael's assets were collateral (not the catalogs IMO, they are in a bankruptcy remote trust and not owned by MJ Co)
Now some fans assume that because of the above if the concerts did not happen for any reason AEG could have gotten Michael's assets and they would be paid - easily and quickly.
However in
real life it's not that easy. Contract has some details and there are some relevant laws. It would require them to ask Michael for payment several times (several months), then go to court if he doesn't pay, go through court for several months, and if they can get the judge approve a repossession and sale, go through that with still giving Michael months to stop it. And even after that it doesn't mean you can collect a monetary judgment.
Look to Segye Times example. They gave Jacksons $4 Millions for a concert, it didn't happen, in 20 years they couldn't collect a cent, it rose to $12 Million in debt, they got $6 Million when Estate voluntarily paid Katherine's responsibility and the company still trying to collect $6 Million from the rest of the Jacksons.
so even though you can have a court ordered judgment it doesn't mean you can collect it fast or at all.
I'm also thinking if there was any cancellation AEG would have tried to get $17.5 Million from the insurance and that could explain "some capacity" comment.
Now also let me add this. Majority of the AEG emails have been under seal and I did not see them. However some emails have been public. there's a one exchange, that ranges over 15- 20 days, in which AEG Live people are talking about their exposure if Michael doesn't do the shows and they talk about a meeting with AEG Execs (higher than AEG Live) and the budget. At that emails they keep asking "what is the most recent budget" and Gongaware keeps giving them an updated number.
So AEG Live was actively updating their budget.
