by Fred Goodman
Realizing he’d just lost the war, Klein congratulated Grade and sued for peace, still hoping to get the best deal he could for the Beatles. Allen was ready to sell Grade enough of the Beatles’ shares for the same terms as the consortium if ATV made the deal with the Beatles instead. He also dangled an attractive carrot: the Beatles would re-sign and extend their deal with Northern Songs if John and Paul could buy back Lenmac and if Apple got the rights to be the American subpublisher. It was a good deal for ATV, the Beatles, and ABKCO, which almost certainly would have administered the American publisher.
To everyone’s surprise, John Eastman sent a letter to ATV saying Klein had no authority to speak for McCartney. Paul had in fact discussed the proposal several times with Klein and the other Beatles, and though he still had not committed his own shares, he was not against it. During a five-hour meeting that night at Klein’s apartment, McCartney made it clear that he’d known nothing about the letter and telephoned Eastman several times to discuss it. Ultimately, McCartney called Grade personally to apologize and back the proposal. “Allen Klein is coming over and he speaks for me,” McCartney said. But it was too late. Grade informed Klein the next day that ATV had voted to accept the consortium agreement. Once again the infighting between the Beatles and their own representatives had scared off an advantageous deal. The best they could do was simply sell, with no chance of negotiating for more rights. (In 1985, McCartney would try to buy ATV Music—and the rights to the Lennon/McCartney songs—himself. He made the mistake of mentioning his opportunity to Michael Jackson, who then jumped into the negotiations and outbid him, buying ATV Music for $47.5 million.)
The Northern Songs debacle underscored two problems. First, the Beatles were saddled with contracts and relationships over which they did not have nearly enough control. Second, the rift in the band was widening. Whether the Eastmans and Klein were abetting it—each was clearly at pains to paint the other as darkly as possible—it was becoming increasingly clear that the Beatles were coming apart.
By May, Allen had been working with the Beatles for over three months without a management agreement. Pointing out that he had already spent considerable time and sixty thousand dollars of his own money, he pressed them for a formal contract. The deal they agreed to on May 8 was informal and unusually straightforward: Klein was exclusive business manager for the Beatles with a three-year contact that could be canceled with three months’ notice at the end of each year. He was to be paid 20 percent of gross income received from any source during that term and 20 percent of all income on deals he negotiated for as long as they ran, whether he was still the manager or not—with a few big stipulations. In particular, he was to receive a percentage of any increases he negotiated on contracts, but he was not entitled to a percentage of royalties on preexisting contracts that he did not improve.
When he took the document to the studio where the Beatles were working on Abbey Road, Lennon surprised Klein by momentarily hedging. John said he wanted to run the note past their lawyers and use it as the basis for a more formal and structured agreement. Allen told him he shouldn’t have to wait anymore—he’d been doing the job for months. Plus, there was a simple annual escape clause built in if they were ever unhappy. McCartney, after earlier suggesting to the others that he might agree to have Klein as the manager if his fee was lowered, now said he didn’t want to sign with Klein under any conditions. He did, however, agree to pose with Klein and the others for a press photo when they signed the agreement so they would at least present a harmonious image for the public.
Although disappointed by McCartney’s decision, Klein wasn’t surprised, and he said he understood why McCartney would rather be represented by family. In any case, he didn’t really see it as a problem; Lennon, Harrison, and Starr had signed as representatives of “Apple Corps Ltd. on behalf of the Beatles Group of Companies.” The foursome was incorporated as the Beatles and Company, with Apple as its successor; he had the signature of three of the four, and that made him officially and legally the business manager. Allen had won his long-sought prize. Besides, Lennon and Harrison, concluding that the Eastmans wanted only to obstruct and frustrate Klein, had dismissed Eastman and Eastman as the Beatles’ attorneys. Allen was firmly in control.
10
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With the Beatles
IN 1966 A HUNGRY Allen Klein had been casting about for acts and opportunities. He and Marty Machat hatched a plan to poach a promising London band, the Small Faces, from the unpredictable and much-feared English manager Don Arden. Not wanting to launch a broadside against Arden, they quietly dispatched Eric Kronfeld, a junior attorney in Marty’s office, to England with instructions to meet the band and sign them. They didn’t tell Kronfeld about Arden or his thuggish reputation.
Though the band was doing well, touring steadily and enjoying hits, its members had made a dreadful deal with Arden, who paid them each just twenty pounds per week. Meeting with them in a basement apartment in Pimlico, Kronfeld found the group interested in going with Klein and Machat but unaccountably nervous.
“A noise would be heard outside the door and they would literally jump and flinch,” he recalled. “I said, ‘What are you afraid of?’ and they said, ‘You don’t understand. Arden has this guy working for him, Mad Tom.’”
Suspecting the band had seen too many bad movies, Kronfeld rolled his eyes and spent the next five hours selling Klein and Machat to them. Convinced he had a deal, Kronfeld went back to his hotel to relax. Before long there was a knock at the door.
“Are you the kid?” His visitor was rough-looking and wore a grimy overcoat. “You the one who met with the Small Faces?” When Kronfeld said he was, Mad Tom opened his overcoat just enough to reveal a sawed-off shotgun. “It’s not a good idea for you to see them again.”
Kronfeld thanked him for the advice and took the first morning flight back to New York.
In 1969, a few months after Klein signed the Beatles, his associate Iris Keitel came back from a recording session run by Mickie Most with some very good news. The successor band to the Small Faces—now called just the Faces—didn’t have a manager and wanted Allen. Their new singer, Rod Stewart, was a Sam Cooke fanatic and excited by the idea of having his idol’s manager as his manager. Klein just shook his head. There was no way he could manage anyone else. Besides, why would he bother?
Indeed, Klein now occupied a position of power in the entertainment business that dwarfed any other person’s before or after: he was the manager of the Beatles and the Rolling Stones. But problems were becoming obvious. First, untangling and rebuilding the Beatles’ business was going to be an all-consuming task. He was just starting on the record companies and trying to figure out how to get money out of their film deal with United Artists, and cutting Apple down to a manageable and sensible operation was sure to be an ugly job. He was determined to do everything right; he would prove their great champion and construct the kind of lucrative, far-reaching deals that confirmed his mastery and brilliance. “He did want to enhance their monetary position and their career,” said Harold Seider.
The second problem was just as thorny. Mick Jagger and Keith Richards weren’t going to play second fiddle to anyone—especially not the Beatles. Klein and Jagger clearly weren’t made for each other, and their mutual antipathy was a constant and increasing current sparking the relationship.
Marty Machat’s son Steven recalled Jagger telephoning his family’s house in Roslyn, New York, when Klein was visiting there. “Is Allen there with your father?” Mick asked.
Steven excitedly ran to Klein and told him that Jagger was on the phone for him. But fifteen minutes later, the teenager noticed one of the phone lines blinking, and he picked it up to discover Jagger still waiting for Klein.
When Steven reminded Klein that Jagger was on the phone, Klein waved him off. “Tell him I’ll be there,” he said.
“I think he’s upset.”
“He’ll wait.”
Looking back, Machat
still shakes his head over the obvious snub. “My dad said Allen lost all interest in the Rolling Stones. All he wants is the Beatles.”
“He’s only been here three months and he’s sorted out seven years of crap,” Lennon enthused to Time. “This guy talks our language. He just says, ‘Where is it?’ and ‘When do I get it?’ and ‘How much do the tax boys take?’ It’s as simple as that.”
Klein’s brass-tacks knowledge of the business and take-no-prisoners tactics appealed to Yoko Ono, who insisted Lennon have a dedicated protector. “Yoko told me that when she and John came to me, they were looking for a real shark—someone to keep the other sharks away,” Klein told Playboy. “Now she says sometimes I’m too moral.”
“There was a hierarchy,” said Al Steckler, who handled creative affairs at ABKCO, working with the musicians and overseeing the artwork and packaging on their albums. Klein was eager to find opportunities and enhance Harrison’s and Starr’s careers, but it was Lennon’s light that drew him, personally and professionally. They bonded. “Allen was there for John. They had the same sense of humor—John was so insightful, so wickedly funny. And Allen loved John’s songs,” Steckler said.
Klein was fully aware that he’d broken the hustler’s cardinal rule, but he couldn’t help himself. “I fell in love with Lennon,” he admitted.
As did everyone at ABKCO, who marveled at the three Beatles’ extraordinary abilities to retain their humanity while living in the world’s most closely observed fishbowl. Though prone to mood swings and tirades born of pressures and frustrations, Lennon clearly relished his celebrity—he’d earned it—but he also nursed a horror of succumbing to pretension. It was immensely important to him to remain just a guy named John. He was remarkably successful in that quest. One of attorney Peter Howard’s fondest memories in his nearly fifty years of working for Klein would be ducking out of the London office to shoot games of snooker in a nearby pub with Lennon. In New York, Paul Mozian had replaced Schneider as Allen’s assistant and now found himself accompanying the Beatles as they explored Manhattan.
“They liked to just walk around New York and tried to live unencumbered,” he said. “Especially Lennon. He loved talking to people on the streets and signing things.” Indeed, John’s casual just-folks attitude sometimes made Mozian nervous. The New Yorker was horrified when a trusting Lennon paid for a newspaper at a corner kiosk by holding out a wad of bills and inviting the vendor to take whatever was needed; Mozian put a quick stop to the practice. Harrison also enjoyed exploring New York, but he preferred to blend in and avoid attention. While George was eating at a Nathan’s hot-dog stand with a friend of his, the journalist Al Aronowitz, a stranger noticed them. “Gee,” he said, “you look just like George Harrison!” The Beatle gave him a quizzical look. “Really?” he asked. When another person made the same remark a few minutes later as they walked down the street, Harrison replied, “Gee, that’s so funny! You’re the second guy to say that.”
Lennon’s ability to visit New York had not been a given, particularly at the beginning of the group’s association with Klein. As part of their honeymoon in March, John and Yoko had greeted the press in their suite at the Amsterdam Hilton dressed only in pajamas for what they dubbed the bed-in for peace. The weeklong conceptual-art event, intended to bolster the peace movement, proved a worldwide media sensation, and the couple wanted to stage a second bed-in in America in May. But the United States would not issue John a visa because he had been arrested in England the previous year for possession of hashish, a charge to which he’d pleaded guilty and paid a fine of a hundred and fifty pounds. Turned away by the U.S., John and Yoko instead held the bed-in in Montreal.
That fall, Lennon returned to Canada after concert promoter John Brower made a cold call and invited him to come as a guest to an all-day show in Toronto at which his idols Chuck Berry, Bo Diddley, Little Richard, and Jerry Lee Lewis would be performing. Lennon stunned Brower by saying he wasn’t royalty and couldn’t imagine himself sitting in the reviewing box. “I wouldn’t feel right,” he said. “I’d want to play. Can I play?” Lennon didn’t even want any money—just a chance to play with his new group, the Plastic Ono Band, which featured Eric Clapton, bassist Klaus Voormann, drummer Alan White, and Yoko. Klein, however, insisted that Brower grant Lennon all rights to record and film his performance, and he hired the noted documentarian D. A. Pennebaker to shoot the show.
Meeting Lennon in Toronto, Klein found him extremely nervous about performing a concert for the first time in three years—so nervous that he threw up backstage. More unnerving to Allen was the news John had for him: he was quitting the Beatles.
Klein begged Lennon not to say anything in public about his intention to quit the band. Allen was in the midst of renegotiating the Beatles’ recording agreements and the last thing he wanted the record companies to hear was that the band was coming to an end. Though John informed the other Beatles of his plans a few days later at the Apple office in London, he agreed to keep mum in public for the sake of the negotiations.
The recording contracts were substandard. Aside from the fact that they paid the Beatles a fraction of their true value, the primary agreement was an exceptionally ambiguous contract that Epstein had signed with EMI in Britain in 1967 after the band’s initial five-year contract ended. It yoked the Beatles to EMI for ten years and obliged them to deliver a total of sixty-eight tracks. The Beatles had already given EMI sixty-eight tracks, and Klein maintained in his discussions with EMI chairman Sir Joseph Lockwood that they’d fulfilled their obligation and should get a new and vastly improved deal. Not surprisingly, Lockwood read the contract differently—they had to deliver a minimum of sixty-eight tracks and he had the right to sell whatever the Beatles recorded over ten years at an already-agreed-to price.
Klein was in no hurry to challenge Lockwood in court, as he expected he’d lose. Instead, he took a page out of his own playbook in hopes of prying a concession out of EMI. Forgetting about Britain for the moment, he suggested that Lockwood let the Beatles and Apple make a new and fairer deal in North America with EMI’s subsidiary there, Capitol Records, where they received just forty cents an album. Lockwood, perhaps sensing that he needed to keep the relationship positive—or maybe just eager for Klein to be someone else’s headache—agreed.
It was a good win. North America was by far the Beatles’ biggest market. And nearly as important, the worldwide sublicensing rights to the Beatles’ recordings were administered through Capitol, not EMI. That meant Allen could improve the price on every record the Beatles sold outside of EMI’s home territory.
Klein and the Beatles had a big ace up their collective sleeve when they sat down with Capitol: they had just delivered Abbey Road, which the label expected to be huge and wanted to release at a dollar more than the normal list price. And though there had been recent years when the singer Glen Campbell had sold more records for Capitol than the Beatles, Abbey Road was clearly its crucial moneymaker for the year. Klein suggested there were more good titles to come, including a compilation of singles not found on other albums, Hey Jude. The last thing he wanted Capitol to hear was that John Lennon wasn’t interested in the Beatles anymore.
Instead, he said that the group records were likely to be complemented by solo projects. There had already been a few decidedly noncommercial releases by individual Beatles, including Apple’s first title, Harrison’s instrumental soundtrack album, Wonderwall Music, as well as several albums by Lennon and Ono, among them Unfinished Music No. 1: The Two Virgins, with its outrageous and unmarketable cover portrait of them naked.
It was unlikely that the prospect of similar solo projects excited the Capitol executives. Instead, Klein got them to agree to a unique system. The Beatles would restart their current ten-year agreement with Capitol in 1969. Klein didn’t want an advance—the Beatles weren’t that cash poor—but he did want a better royalty rate. Provided the albums sold at least five hundred thousand copies, the group would receive fifty-six cents per alb
um for the first two years, then seventy-two cents after that—a big improvement. Though John Eastman had written to Capitol saying Klein didn’t speak for McCartney and suggesting there should be a separate contract for each of the Beatles, everyone was pleased with the terms Klein negotiated and all four Beatles signed. “If you’re screwing us,” the skeptical McCartney quipped, “I don’t see how.” In an unusual wrinkle, Capitol would also release any solo project by the Beatles during that period, but the label would have to make a choice: it could consider the album one of the Beatles records the company was owed and pay the fifty-six-cent royalty rate, or it could refuse to count it as a Beatles album and pay a much higher royalty rate of two dollars.
Obviously, no record executive would have traded The Two Virgins for a chance to get Abbey Road. But Capitol declined to count the soon-to-be-released Plastic Ono Band album Live Peace in Toronto against the Beatles cap, which proved an expensive blunder—and another indication of Klein’s creativity. The album was a hit and the company paid $1.5 million in royalties right out of the box—about what Capitol would have paid on three million Beatles albums.
Once again, Klein set up the contract as a buy/sell agreement that inserted Apple and ABKCO into the equation as the manufacturers. Instead of Capitol pressing Beatles records, ABKCO would do that for Apple, and Capitol would buy them from ABKCO and sell them to record stores. Along with providing an additional revenue stream on the records, the arrangement had other advantages for both Klein and the Beatles: they didn’t have to worry if the manufacturing numbers Capitol gave them were real, and they were paid monthly rather than twice a year.