Loveman: Stewart Bullied Company

The president of Harrah's Entertainment said Monday that Rod Stewart's entourage bullied the gaming company into a regrettable, $2 million concert deal in 2000 with threats to destroy a high-profile millennium eve concert at the Rio.

Gary Loveman, chief executive of Harrah's, testified in U.S. District Court Monday that in 1999, the gaming company agreed to pay Stewart $3 million for the millennium eve show.

But Stewart's entourage was insistent on being paid $2 million for a second concert at the Rio the following day, and when negotiations over the second show faltered, Stewart's representatives threatened to pull out of the millennium eve concert just days before the event.

"There was some concern (that) Mr. Stewart had threatened not to perform his millennium concert unless he received (a contract) for a second concert," Loveman said.

"I was concerned ... this was a big event for our property," Loveman said. "We felt under great pressure to enter into a second agreement."

With the millennium concert at stake, Loveman said he personally approved a deal for a second concert in which Stewart would be paid a $2 million advance for a concert a year later. Stewart performed the millennium concert as scheduled, but Loveman said Stewart later canceled the second show and kept the Rio's money.

"It's not an agreement I'm happy we entered into," Loveman said.

"Paying people in advance of their services is quite an unusual thing in our world."

"This isn't my money," Loveman said. "It's the shareholders' money. I'm asked to look after it in a responsible fashion."

Loveman told of the soured business deal in the courtroom of U.S. District Judge Larry Hicks Monday afternoon as part of a trial stemming from a 2001 civil lawsuit filed against Stewart by the Rio.

Stewart's attorneys have said Stewart was stricken with thyroid cancer in 2000, forcing the cancellation of the second show. They've also said the Rio was never willing to reschedule the second concert, despite efforts by Stewart's camp to do so.

"I think we are entitled to reschedule," Stewart said in a deposition earlier this year when asked why he didn't return the $2 million to the Rio.

As part of their attempt to show the Stewart entourage threatened to pull out of the millennium eve concert, Rio attorneys have produced during the trial a voice mail from Stewart's personal manager to a Rio attorney.

On the voice mail that was left just days before the millennium eve concert, Stewart's business manager, Arnold Stiefel, was quoted as saying: "This is Arnold. Rod's just seen all the correspondence, and Rod wants to call a press conference tomorrow, and he wants to, you know, announce that he won't be playing in the Rio as his contract has been breached. And, the people who visit the hotel will have to make deals with them at their own risk."

Stewart, when questioned about the voice mail during his deposition, denied even knowing that his personal manager had threatened to pull him out of the concert.

"I hadn't seen any of that," Stewart said in his deposition.

In court Monday, Stewart's attorney, Barry Tyerman, testified Stewart had never threatened to pull out of the show.

"Mr. Stewart was fully committed to performing on the millennium," Tyerman said.

Tyerman said Stewart's business camp was concerned, however, that the Rio was possibly promoting two shows on the millennium weekend even though Stewart only had a contract for one show.

Without a contract for the second show, Tyerman said, Stewart's handlers felt they needed to consider going public, warning consumers that Stewart could not perform a second show on the millennium weekend without a contract.

"We were not going to let Mr. Stewart get the black eye," Tyerman said.

Testimony in the case is expected to continue today.