Opinion

The Great Debate

Michael Jackson’s troubled financial legacy

Alexander Smith– Alexander Smith is a Reuters columnist. The opinions expressed are his own –

Michael Jackson’s will is bound to be as bizarre as the rest of the singer’s turbulent life. But one thing is for sure, the arguments over his deeply flawed financial legacy will keep lawyers busy for years.

Top of the list will be sorting out Jackson’s sell-out comeback tour, which was due to kick off next month. There are bound to be losses, insurance claims and the prospect of an empty London O2 Arena for 50 nights during the peak summer period.

Music industry bible Billboard reckons promoter AEG Live could lose as much as $40 million if its insurance is insufficient to cover what has already been spent on the production. That’s assuming they have to give refunds to the 750,000 fans who have paid big money for tickets. And that doesn’t count the cost of hotel reservations and flights from across the world.

Then there’s the small issue of the $500 million in debts that Jackson is reported to have left behind.

Fee bonanza spells more trouble for banks

Alex Smith-GreatDebate– Alexander Smith is a Reuters columnist. The views expressed are his own –

Investment banks are going to have a lot of explaining to do. After the lows of 2008, and despite the mauling they’ve had from politicians and the public, 2009 is going to be a bumper year for those that lived to tell the tale. The banks have pocketed an incredible $16 billion in fees in the second quarter, according to Thomson Reuters first half data on deals and fee income, released on Friday. Click here for related news.

True, this is down from Q2 2008, when fees were almost $24 billion. But it should not come as a surprise to anyone who has been watching — often in disbelief — the huge amount of capital raising that has been going on in both the equity and bond markets.

Time for fund managers to act

Alex Smith-GreatDebate– Alexander Smith is a Reuters columnist. The opinions expressed are his own –

It is time for shareholders to start behaving like the owners of listed companies rather than appearing as hapless bystanders as corporate disasters unfold around them.

In the U.S., the SEC move to allow institutional investors to nominate directors is a small but welcome step in the right direction. To some degree it echoes existing arrangements in Sweden, where shareholders already play a greater role in nominating and approving directors.

Piech must decide which car he’s driving

Alex Smith-GreatDebate– Alexander Smith is a Reuters columnist. The opinions expressed are his own –

Ferdinand Piech needs to decide whether he’s driving a Porsche, Cayenne or a VW Touareg. The Volkswagen chairman and part owner of Porsche cannot continue to drive both. He should step down as chairman and hand VW CEO Martin Winterkorn the wheel to negotiate any merger talks between the two carmakers.

Piech’s shareholding in the Porsche holding company leaves him hopelessly conflicted. However hard he tries to balance his responsibilities, Piech is always going to be left open to accusations of double dealing and almost certainly to legal challenges by minority shareholders should a deal be struck.

Bankers can’t kick the sporting habit

Alex Smith– Alexander Smith is a Reuters columnist. The opinions expressed are his own –

People are up in arms about bankers receiving bonuses when the banks they worked for have gone down the pan. But isn’t it just as shocking that so many state-backed financial firms still subsidize the eye-popping wages of sporting superstars through rich sponsorship deals?

It’s the same story on both sides of the Atlantic. Citigroup, which received $45 billion from the U.S. government, is sticking with a $400 million marketing deal from 2006 which includes the naming rights for the new home of the New York Mets baseball team, which will be called Citi Field.

  •