Allen Klein: The Man Who Transformed Rock & Roll

by Fred Goodman

  Mick and Keith were now making significant additional income as the Stones’ songwriters, but the math was correct regarding record royalties: management still received 50 percent while the five musicians split the other half equally. Since Easton was out of the picture, Jagger wanted Eric’s share—25 percent—to go to the band. Klein, however, placed the money in escrow pending settlement of Easton’s suits against himself, Machat, Oldham, and the Rolling Stones.

  Whatever role Oldham had played in the beginning, he wasn’t fulfilling it now, and there was certainly an argument to be made that the underage Jagger and Richards had been taken advantage of with the original contracts—even if Oldham himself had been only nineteen. Nor could there be any doubt regarding who was making the Rolling Stones valuable, both artistically and commercially.

  Dejected, drugged, disoriented, and undergoing shock-therapy treatment, Oldham resigned toward the end of 1967 and went deeper into his tailspin. “You don’t want to lose the second-biggest group in the world when you’re twenty-three if you can help it,” he said with pithy understatement. “It has ramifications.” Announcing the split, Jagger predicted the band would not be hiring another manager. “Allen Klein is just a financial scene,” he said. “We’ll really be managing ourselves.”

  Continuing to handle the Stones’ business while steering clear of any other duties was exactly what Klein wanted. It was, after all, an extremely unusual situation: Allen was definitely administering the band’s business and had his hands on all the financial and marketing levers but he wasn’t contractually the business manager for the Rolling Stones—Oldham was his client. And active or not, Andrew was still due a share of the Stones’ income, and Klein would get his 20 percent there. And of course, ABKCO made money manufacturing the Stones’ records and would continue to be their music publisher for at least the next three years. Still, Klein wondered where he really stood. “Jagger came in and said, ‘I’m going to run things, you take care of America and I’ll take care of the rest,’” he recalled. “But I knew that wasn’t going to happen.”

  Jagger’s public statement that the Stones would be managing themselves essentially meant that he would be managing them. No one else in the band had the focus, desire, or power to do it. And once again Mick proved a quick study, able to scale a steep learning curve.

  In public, Jagger presented himself as indifferent to commerce. “I do the minimal amount of business as possible because I’m not actually interested in it,” he said in 2014. But those who negotiated with him had a different experience. Former CBS Records chairman Walter Yetnikoff recalled Jagger challenging him one afternoon in a Paris café to see who could more quickly compute the estimated value-added tax on Stones albums sold in Europe. Yetnikoff lost. “When it came to numbers, Mick was sober as Saint Augustine,” he said. “He’s a skilled negotiator who never lost sight of his advantages as a pop icon.”

  The advisers and aides Mick surrounded himself with were first rate.

  One of Jagger’s priorities was to find the Stones a new producer, someone who, unlike Oldham, had the studio skills to enhance their recordings. The self-produced Their Satanic Majesties Request had proved a shoddy, sloppy affair and surprisingly bloodless. It included one or two memorable moments, particularly “2000 Light Years from Home,” but aping the Beatles had never played to the Stones’ strengths, and hoeing the same psychedelic row as Sgt. Pepper’s Lonely Hearts Club Band produced a thin harvest. The Stones needed to be the Stones—and they needed a producer who could underscore that and bring at least the intimation of discipline to the studio. They selected Jimmy Miller, an American producer who had worked with numerous British bands, including many on Island Records, most notably the group Traffic. Not coincidentally, Island’s founder and the manager of Traffic, Chris Blackwell, was acting as an unofficial adviser to the Stones.

  Blackwell was Jagger’s kind of man. Enterprising and iconoclastic yet oddly patrician, he lived and played on the fringes while remaining glamorous and to the manor born. Raised in a wealthy and prominent Jamaican family—his mother, Blanche, was Ian Fleming’s mistress, their relationship the inspiration for a play by friend and neighbor Noël Coward—he had struck out on his own in the record business, ultimately proving he had extraordinary taste. He scored his first hit record in 1963 with “My Boy Lollipop” by the teenage Jamaican singer Millie Small before moving into rock with the Spencer Davis Group. Straddling two worlds, he continued his association with both rock and ska and reggae; Blackwell and Island would later make worldwide stars of Ireland’s U2 and Jamaica’s Bob Marley and the Wailers.

  “Jimmy Miller came to the hotel to negotiate a producer contract on one of the Stones albums,” said Harold Seider. “And Chris Blackwell came. I was very impressed with Chris, understood that he was thinking and not just a hustler.”

  Miller’s first project with the Stones, Beggars Banquet, marked a key transition for the group as an increasingly erratic and drugged-out Brian Jones faded from the picture. With the exception of some lovely slide work, Jones was all but absent from the album, and Richards stepped to the fore. “He’d show up occasionally when he was in the mood to play,” Miller said of Jones, “and he could never really be relied on. The others, particularly Mick and Keith, would often say to me, ‘Just tell him to piss off and get the hell out of here.’” Though not included on the album, the hit “Jumpin’ Jack Flash” was produced at these sessions.

  After firing Jones, Jagger brought in guitarist Mick Taylor on the recommendation of John Mayall. During their first session together, recording “Honky Tonk Women,” the band received word that Jones had drowned in his pool. They didn’t stop working, but a previously planned free concert a few days later in London’s Hyde Park was recast as a memorial.

  “Honky Tonk Women” proved an enormous hit that went to number one on both sides of the Atlantic and solidified the transition begun with Beggars Banquet. With Miller at the recording console and Taylor replacing Jones, the band found another gear; from 1968 through 1972 the Rolling Stones whipped off an unsurpassed run of extraordinary albums that also included Let It Bleed, Sticky Fingers, and Exile on Main Street.

  Having put paid to the Stones’ creative issues, Jagger turned to the financial side of the ledger, where his key move was to retain British merchant banker Prince Rupert Loewenstein as an adviser. Recommended to Jagger by his friend Chris Gibbs, a London antiques and rare-book dealer, Loewenstein was unknown to Klein until 1968, when Jagger sought Allen’s opinion on having Loewenstein set up companies for the Stones in tax havens like Liechtenstein. Allen advised caution. The Beatles had at one point set up a similar offshore tax dodge but abandoned it, supposedly because government officials in England threatened to tar the band as ungrateful tax cheats. Klein also worried that the money would be beyond the band’s daily control and in the hands of someone else.

  “I never wanted to allow money to go offshore,” he said. “He told me about Loewenstein and that he was planning an offshore company. I said, ‘Look, you want to trust somebody, that’s okay just as long as it’s limited. It’s tough enough to trust someone you know. You can get fucked.’ And that was the last thing. That’s why he went with Rupert Loewenstein.”

  Though both Easton and Oldham had been pushed out of the day-to-day picture, their interest in the Stones had yet to be settled. Klein, Oldham, and the Stones all still faced ongoing lawsuits from Easton. Oldham, in particular, was very nervous. In the three years since his split with Easton, he’d gone to extraordinary lengths to avoid his former partner (and to avoid being served with legal documents), including using a body double and climbing out of an office window. Though Easton apparently found Oldham’s behavior nothing more than disheartening or silly, an increasingly paranoid Andrew fretted about testifying in court. He worried Easton’s lawyers might have him charged with perjury.

  Klein had a totally different view. He was confident that the Stones could dispose of Easton’s action by threatening
to annul the original agreement by stating they’d been minors when they signed it, something Easton and his solicitors were likely worried they’d do. It was a cinch the man would rather reach a settlement with the Stones himself than let a judge decide.

  Still, Easton’s attorneys took a harsh tack and may have counted on anti-American and anti-Semitic sentiments when they portrayed Klein as “a predator in the field of pop artists” who’d interfered with Easton’s relationships. It was Klein’s first but far from his last bloodying in the British courts, and it signaled that the fierce reputation he’d cultivated so effectively in the cloistered world of the music business was crossing over to the general public, where it might be much less advantageous to him, particularly in the UK. That didn’t stop him from remaining cocky and punching back. Klein had Peter Howard inform Easton’s legal representatives that as Yom Kippur was coming up, Allen wanted to get home to New York. Klein threatened to deduct ten thousand pounds from any offer for each day they went without a settlement. Easton ultimately agreed to drop his claims and disavow any future interests in return for two hundred thousand pounds in back royalties being held by Decca. As part of the settlement, all rights and claims in the original partnership and contracts were vested solely with Oldham. But unbeknownst to Easton, Oldham didn’t own them anymore.

  During Easton’s suit, Oldham had received feelers from executives at Decca Records. They knew he was no longer managing the Stones, or even speaking to them. Would he like to sell his interest in their recordings? The idea of getting a big payday was appealing. The Stones had proven surprisingly resilient, but it had been five years—how much longer could this thing go on? Brian Jones was already dead; God knew who was next. What Andrew didn’t like was selling the rights to Decca. The Stones already had no use for him, and if he sold out to Decca, the record company would have no use for him either.

  Instead, Andrew told Allen that Decca had offered him $800,000 for his rights but that he preferred to sell them to Klein, as it might give him a measure of protection and opportunity to have his interests pass to someone working with the band rather than to the record company. “Even if you aren’t with the act, you kind of are,” he later explained. He told Allen he’d be willing to take $750,000 if the deal could be done immediately. It could and was.*

  Buying out Oldham in 1968 and settling with Easton would turn out to be the greatest score in Klein’s career. For approximately $1.5 million—including what he would have been due out of the £200,000 paid out of the Decca funds—he bought a 50 percent royalty share in everything the Stones recorded through early 1971, beginning with their first recordings and ending with two tracks on the album Sticky Fingers. In between, there were eleven studio albums and EPs, two live albums, and numerous compilations. The two-record 1971 hits package Hot Rocks sold over six million copies in the United States alone in the first few years after its release.

  The deal marked a radical change in Klein’s relationships with both Oldham and the Stones. He wasn’t just the Stones’ adviser, publisher, and American record manufacturer anymore; now he was their partner and as such had clearly acquired a conflict of interest. But that was just business as far as he was concerned. With Klein’s relationship to Oldham, the situation was murkier.

  Klein’s feelings and actions toward Oldham were complex and contradictory. He could be abusive and insulting to Andrew, especially when Andrew wanted something. But Klein truly liked him—certainly more than he liked the Stones—and cared what happened to him, and he sought to give him fair and sound advice. And although no one, including the Rolling Stones, could imagine that the band would thrive for at least another forty years, Klein knew that, at the very least, Andrew had made him an offer he couldn’t possibly refuse. In the coming years, as Oldham had to reconcile himself daily with the knowledge that he’d given the golden goose to Klein, their relationship became one of stormy codependency defined on Oldham’s side by his eternal desire for a readjustment and on Klein’s side by his need to balance friendship, fairness, business, and his own sense of himself as the sharpest operator on the scene.

  9

  * * *

  The Prize

  TO PROMOTE BEGGARS BANQUET, Mick Jagger conceived a television special. Dubbed The Rolling Stones Rock and Roll Circus, the program was to feature the group atop a bill with numerous other artists including Jethro Tull, Taj Mahal, Marianne Faithfull, the Who, and the debut of John Lennon and Yoko Ono fronting a unique band boasting guitarist Eric Clapton and drummer Mitch Mitchell with Keith Richards on bass. Filmed near London in a twenty-four-hour marathon session in December 1968, the project never aired, reportedly because the Stones feared they’d been upstaged by the Who.*

  Klein didn’t care whether the program aired or not—that was Jagger’s business. He came to the all-night recording session for only one reason: to meet John Lennon. He achieved his goal, but just. The set was hot and cramped, no place for a conversation let alone a full-blown seduction. Allen had to settle for a handshake and hope that he’d finally registered with Lennon as more than just another outstretched palm.

  Klein was growing frustrated. His obsession with getting the Beatles wasn’t new, but since Epstein’s death, he’d focused his strategy on finding a way to see Lennon. In that regard, Klein’s relationship with the Rolling Stones was clearly a positive; though Lennon had heard all kinds of dark rumors about Allen, he didn’t think it was coincidental that the Stones had become more and more successful throughout their association with him. Even Jagger endorsed Klein in his own tepid and smarmy fashion, telling the Beatles that he was “all right if you like that kind of thing.” The Beatles had apparently been ready to accept Klein into their world when they briefly talked about combining forces with the Stones in a joint venture to include a recording studio and other creative outlets. Those discussions ultimately came to nothing, and in January 1968, the Beatles instead opted to form their own company, Apple Corps, for the same purposes.

  As with so much in the world of Allen Klein and his clients, Apple represented high hopes, lofty goals, and grand illusions but owed its genesis to the more prosaic challenges posed by Britain’s tax laws. Despite the substandard recording, publishing, merchandising, and management arrangements negotiated by Brian Epstein, the extraordinary success of the Beatles meant they were still taxed at the highest rates. In 1966, when Epstein arranged a ten-year recording extension with EMI, the Beatles’ royalties increased. Now fearful of losing two million pounds in taxes, they opted to create a corporation that could both receive the bulk of payment and, hopefully, someday produce additional revenue they could keep. “The amount of money owed by EMI was mountainous,” said Peter Brown, a former Epstein assistant who became director of Apple. “Eighty-five percent or more would have gone to the Exchequer. The structure of Apple was to avoid that.”

  Its basis was a new partnership, Beatles and Company, into which the group’s earnings, excluding songwriting income, would be placed. Each musician owned 5 percent of Beatles and Company, while the new unnamed corporation owned the remaining 80 percent of the partnership, thus shielding them from the lion’s share of taxes. Looking for a business to substantiate the company, Epstein, who’d grown up working in his family’s Liverpool furniture stores, envisioned a retail chain, perhaps something selling greeting cards. The Beatles had no interest in that. Instead, they proposed a creative company, one that might make real use of the band’s cultural cachet and become not just a profitable venture but a transformative one. The seed for Apple was planted.

  Following Brian Epstein’s death, control of his management company, NEMS, passed to his family, most notably his brother, Clive, whose sole goal appeared to be not to blow whatever fortune his brother had made. He was not at all interested in having NEMS take part in Apple.

  Left to their own devices, the Beatles announced the new venture with a May 1968 press conference by Lennon and McCartney at New York’s Americana Hotel. “It’s a business concerning r
ecords, films, and electronics,” Lennon announced, one aiming to get “artistic freedom within a business structure. . . . We want to set up a system whereby people who just want to make a film about anything don’t have to go on their knees in somebody’s office. Probably yours.” Apple was the prototypical hippie corporation: altruistic, optimistic, off the cuff, and clueless. When McCartney invited people to simply mail their work and proposals to the new company, he unwittingly and fatally cast Apple as a psychedelic sugar daddy. “We really want to help people, but without doing it like a charity or seeming like ordinary patrons of the arts,” he said. “We’re in the happy position of not really needing any more money. So for the first time, the bosses aren’t in it for profit. If you come and see me and say, ‘I’ve had such-and-such a dream,’ I’ll say, ‘Here’s so much money. Go away and do it.’ We’ve already bought all our dreams. So now we want to share that possibility with others.”

  It was a lovely sentiment, and in that regard Apple certainly fit the conception of the Beatles that many fans had, that the group was much more than entertainment, their influence pervasive, wholly positive, and improving the world. What started as pop music now felt like social revolution. Everything was possible as the Beatles invited their fans to make a better world simply by dreaming it.