On 8 April 1994, I woke up with a minor hangover, but nothing too serious. Somewhat groggily I brushed my teeth, put the kettle on, and flicked on the morning news. Bang. There it was: the top story on every channel. "Kurt Cobain, lead singer of Nirvana, has been found dead at his home of a gunshot wound to the head."

That didn't half snap me wide awake. It was only on the drive down to Brixton that the full gravity of the situation hit me. I had already advanced all the box-office money for the upcoming Nirvana shows to put together In Bloom [Parkes was putting on four Nirvana gigs followed by an outdoor festival – In Bloom – headlined by the band]. If we were going to have to refund every Nirvana ticket, it would come to over £250,000. This was the inbuilt danger of my high-risk business model. It had served me extremely well up to now, putting the Academy way ahead of the competition; but it meant that when the shit hit the fan, the walls really got spattered.

The question of what actually happened could determine the entire financial future of the Academy. It came down to this: we were insured for murder, but not for suicide. If it turned out that, as a lot of people were claiming, Courtney Love had shot Kurt, then our box-office money was covered. With murder we were safe. But if it was proven to be a suicide, we were out on our own, totally exposed. This was serious. I was a big fan of both Hole and Nirvana. So even I was a little shocked to catch myself praying, "Oh dear God, please say Courtney did it." Showbiz does funny things to us all.

Amid all this madness, as I was running around like a blue-arsed fly, trying to keep the whole ship from sinking, Pat [a member of Parkes's trusted security team] lumbered up to me with a fistful of Nirvana tickets saying, "Oi, boss, you reckon these will be worth something someday?"

Pat was a fanatical hoarder of Academy memorabilia. The guys and I used to rib him that he was like a proud granny saving her grandchildren's school work; quite funny, seeing as Pat was a 250lb monster who would break you as soon as look at you, but right now I had other things on my mind.

"Yeah, Pat, maybe. Whatever." And I was off on another frantic transatlantic crisis call.

As the day went on, it became increasingly clear that Kurt's death would be declared a suicide. So it now looked as if we were exposed to the tune of £250,000. In my mind's eye, I could see the sharks beginning to circle. The constant phone calls and meetings got steadily more desperate as we struggled to try to keep up with the unfolding events.

It wasn't until late afternoon that Johnny passed me a phone, whispering, "Simon, it's Radio 1 on the line. Zoe Ball wants a live interview." Oh great, just what I need. By this point in the day, I was a complete wreck and in no state to be chit-chatting on the radio. But I thought, "What the hell? At the very least, I can get a bit of publicity for the venue out of this."

Zoe started asking me all the usual questions about Nirvana and Kurt, and what they meant to music fans: all the stuff that has been repeated ad infinitum ever since. Then she threw in some simple question about what the vibe was like right now down at the Academy, and something clicked.

I don't know where it came from, but suddenly the image of Pat asking me if those tickets might be worth something flashed through my mind. I didn't have time to think about it, but I found myself saying, completely off the cuff, "Well, Zoe, you know, it's absolutely extraordinary, we've had Nirvana fans from all over the world frantically calling us trying to buy tickets for these concerts. People from America and Japan are offering us over £100 for Nirvana tickets, as a piece of history."

In the office I could see Johnny whip around and give me a "What the hell are you talking about?" look. I shrugged and winked, "Just go with it, man.' At that point I would have said anything. I was just throwing stuff out there to see what would happen.

And something did happen. Later that evening Johnny came striding into the office and slammed a copy of the Evening Standard down on my desk. The front page was filled by a huge picture of Kurt at his kohl-eyed prettiest, but on page 6 was a prominent story about how crazed Nirvana fans were getting into a bidding war over Brixton Academy concert tickets. My wild claim had been picked up on the news wire, been passed through the Chinese-whisper machine of the popular press, and gone global. All over the world it was being reported that Nirvana fans were paying hundreds of dollars to own tickets to "the shows that Kurt would never play".

Within hours the calls started coming in. People suddenly started to believe there was a sacred Kurt Cobain artefact to be had, or at least a piece of rock history to be sold on for a profit.

Well, as ever, if there's one thing the music business teaches you, it's how to spot an angle. And at this point my back was to the wall. So Johnny and I sat down and started making some phone calls of our own. Over the next few days, ads started appearing in Loot and the NME offering to purchase Nirvana tickets for massively inflated prices. We were inventing a market. In this game sometimes you have to let supply create demand.

Somehow this wheeze of Johnny's and mine worked. The trickle of calls coming in grew into a flood. Anguished American teenagers, Japanese kids barely able to pronounce the words, East End geezers trying to turn a quick buck: people were phoning our box office, desperately trying to buy tickets for concerts that would never take place. They were offering way over the face value of the tickets themselves, sometimes upwards of £150.

The hysteria only snowballed over the following week. People who had tickets were holding on to them instead of asking for refunds, and people who didn't were frantically trying to buy them from us. We had to hire extra staff for the phones just to handle the traffic.

I don't know how we did it, but in the end fewer than 20% of ticket-holders demanded a refund. To those that did, we were happy to refund a ticket for £13.50 and then immediately sell it on for £100. Of course on those four nights we missed out on a large bar take, but on the other hand there were no expenses such as security and paying bands. Not only did we not go under because of Kurt's death, bizarrely we ended up turning a profit on four gigs that never happened.

This is an edited extract from Live at the Brixton Academy: A Riotous Life in the Music Business by Simon Parkes, published by Serpent's Tail, £14.99