Jackson's missed rehearsals in June triggered concerns that he was slow in learning his dance routines and would have to lip-sync on stage, the newspaper reported.
"MJ is not in shape enough yet to sing this stuff live and dance at the same time," one e-mail from the show's music director read, the paper reported.
A production manager wrote: "He was a basket case. Doubt is pervasive."
A loud warning from show director Kenny Ortega, who worked closely with Jackson on previous tours, came in mid-June, about a week before the star's death. Ortega wrote to Phillips that Jackson had "strong signs of paranoia, anxiety and obsessive-like behavior" and suggested they bring a "top psychiatrist in to evaluate him ASAP."
"It is like there are two people there. One (deep inside) trying to hold on to what he was and still can be and not wanting us to quit him, the other in this weakened and troubled state," Ortega wrote. "I believe we need professional guidance in this matter."
Ortega testified at Murray's trial about his concerns about Jackson's frail condition and missed rehearsals. Those concerns resulted in a meeting six days before Jackson's death in which Murray assured the promoters he would have Jackson ready for rehearsals that next week.
An email from Phillips after that meeting said he had confidence in Murray, "who I am gaining immense respect for as I get to deal with him more."
"This doctor is extremely successful (we check everyone out) and does not need this gig, so he (is) totally unbiased and ethical," Phillips' e-mail said.
A Phillips email sent weeks after Jackson's death called it "a terrible tragedy," but added "life must go on."
"AEG will make a fortune from merch sales, ticket retention, the touring exhibition and the film/dvd," Phillips wrote. AEG Live was allowed to sell Jackson tour merchandise and share in the profits from the documentary "This Is It," which was produced from rehearsal video.