The room was filled with laughter and joking. After years of living paycheck to paycheck, we were all in a state of semishock due to this sudden windfall. We felt a great sense of relief and excitement over the fact that we did not have to worry about the company having money; we had what amounted to a blank check from PolyGram to sign acts, increase the company payroll, be creative, and have fun. With a very curious bit of rationalizing, Neil decided not to pay any taxes on his PolyGram money. He was convinced that because he’d given up his Viewlex stock when we left Buddah in 1973, he shouldn’t have to pay taxes on the PolyGram payment. It was a fair trade, to his mind. Everyone laughed and told him that’s not how it worked, even his accountant, but he still insisted that he shouldn’t have to pay taxes on that money.
After we got the payout, we needed to minimize the taxes that would be demanded by the IRS and the State of California. Since the money from PolyGram was not a capital gain (to qualify for that status, we would have to have owned the stock for five years or more), our accountant, Arnold Feldman, came up with some tax shelters. When Neil had launched ArtWorks, Arnold had figured out that if you owned a lithograph (or any type of master print from which duplicates could be made), you could not reproduce it infinitely; the master would begin to show signs of wear, and you would have to stop making prints from it. An unusable master, Arnold reasoned, could be depreciated as an asset. This meant that the owner—in this case, Neil—could claim a deduction on all masters.
With that in mind, we thought that we could shelter the PolyGram money by purchasing master recordings—tapes or acetates used in the mass production of cassettes, vinyl, 8-tracks, and so forth. I therefore ended up owning some children’s recordings that were absolutely terrible, and few of them were ever manufactured or distributed—maybe a dozen or so. After a few years, the IRS threw out the shelters and told us to pay up; California followed suit a year or two after that.
If I had been sawier about this stuff, I would have just paid what was due in the beginning and aligned myself with my own accountant, but we all considered Arnold a friend and thought he knew what he was doing. I had certainly never had this kind of money before, so I listened, and when Neil told me to trust Arnold, I did. Those decisions would haunt me for years; the State of California alone charged me over eighty thousand dollars in interest and penalties.
Bear Stearns also got us into some real estate deals that everyone but me knew would never show a profit. In most cases, only the principal players ever saw a profit, and—silly me—I did not stop to think that the principals here were the Bear Stearns account reps who were handling my stuff. I once called a rep and said I had a feeling about gold and wanted to buy some. He tried to talk me out of it, but I insisted, and I bought ten- or twenty-thousand-dollars’ worth of gold at about one-hundred-forty dollars per ounce. I was ecstatic when it reached over eight hundred dollars. I later found out that Neil had also bought gold, but he knew what he was doing, and instead of hard gold, he bought some kind of contract for one hundred thousand dollars and made considerably more money.
Years later, in 1986, Bruce Bird, Richard Trugman, and I were called to be expert witnesses at a tax evasion trial that involved the masters of The Deep soundtrack, which were owned by the family of Sydney S. Baron (who had passed away after purchasing them). Baron had acquired the masters as a tax shelter, and he thought that since Donna Summer was on the album and the music was largely composed by John Barry, it would be a big hit. He’d made an initial cash outlay and backed the rest of the purchase price with a promissory note for more than half a million dollars. This was an instance of Neil cleverly hedging his risks by selling off an album that, according to our own projections, wouldn’t recoup the sale price. When the album didn’t sell anywhere near enough for Baron to break even, he’d written it off as a depreciation of an asset. The IRS nixed the idea and cut him to shreds. I am sure Donna and Giorgio never knew about this; if they read about it here, it may come as news to them.
The independent distributors who had saved us when we left Warner in 1974 were not at all pleased at how the buyout changed the distribution pipeline. It forced us to indemnify them for returns so we could have a fairly seamless transition to PolyGram. When product was returned, the distributors had to reimburse the retailers for the cost of the albums; Casablanca had been paid for that product when it was first released. But we could not let the distributors hold the bag for unsold product, so we agreed to reimburse them. Fortunately, returns were minimal, thanks to KISS and the disco craze.
I felt bad leaving some of the distributors. I had worked closely with many of them, and I recognized the vital role they’d played in our success. Without them, we would not have survived the departure from Warner in 1974. The major problem with PolyGram acquiring various record companies—the list included RSO, Mercury, Polydor, and us—was that they now had to establish their own distribution company. This proved more difficult than they had expected. They hired a guy from the trucking industry, John Frizolli, to head the distribution company, and he knew less than nothing about the music business. Casablanca was moving product at a good rate on several fronts, but aside from that, plus RSO’s mainstay, the Bee Gees, and the soundtrack of Grease, nothing was really selling well for PolyGram. The company needed to establish a consistent flow of hit product if it wanted retailers to pay them and buy their new artists.
PolyGram had an issue with us from the beginning. Remember, we hated the stiff culture of the corporate world, in which you practically had to ask permission to use the toilet. We didn’t like being managed; we didn’t like bureaucracy; we liked acting like a bunch of delinquents with an expense account. On top of that, a number of our key positions were filled by Jews, and most of the contingent at PolyGram’s corporate headquarters in Europe was German. One of them, in particular (his name was Kurt Kinkler), bragged that he had been a U-boat commander during World War II, which certainly did not endear him to us. This situation struck a discordant note in the relations between Neil, Peter Guber, and numerous PolyGram representatives, although many of the people in the company’s Dutch wing were nice to us.
It was difficult to talk about music and movies with people who had little understanding of our market or our artists. Our culture—the larger American one and the smaller version of it within the walls of 8255 Sunset—was foreign to the PolyGram people. They seemed not to care at all about artists as long as they contributed to the bottom line. This was an attitude with which I was unfamiliar. Buddah had been artist-friendly, we certainly were at Casablanca, and even Warner cared, or seemed to, about artists and their music; if you mentioned an artist, even if he or she was not yet famous, the executives at Warner knew who you were talking about.
Neil and I grew to have so much disdain for PolyGram that we would show up at board meetings in New York tripping on Quaaludes. After one of these meetings, Neil mentioned that he wanted to make me president, and he would become chairman. PolyGram told him they knew I did drugs because I’d been high at the last board meeting (I guess I was slurring more than usual), and they did not want someone who did drugs running the company. But I was already running the company. What did they think I was doing—knitting a sweater? And did they think Neil himself was a squeaky-clean teetotaler? For all intents and purposes, I was already running the day-to-day business of Casablanca; the title bump wasn’t going to change anything.
Shortly after this, PolyGram decided that they should have one of their own people looking over our shoulder. They chose David Shein, a young accountant from New York who initially seemed quite conservative and very pro-PolyGram. It took no time at all for us to change that. I’m not sure what he was used to at PolyGram in New York, or what he expected at Casablanca, but he was one of us in about five minutes. Who doesn’t like going to the best restaurants, driving the fanciest cars, and traveling first class? David became an integral member of the Casablanca team and a convenient, cooperative mole; in espionage parlance, we’d fli
pped the spy. But David did more than just keep PolyGram away from us: he also helped out in our bookkeeping and accounting department; and, with Neil’s brother-in-law, Joey Ermilio, he helped set up a Wang computer system for us—quite a feat, as it took up a space the size of three or four offices.
Some of the PolyGram distribution people were good at what they did—Rick Blieweis and Emil Patron, to name two—but there were only a few people in the company who understood the record business. They were all in awe of Neil, and they did not dare come close to crossing him. They would do whatever we wanted, no matter how foolish it was. Whenever Neil asked, they would invest more money in Casablanca. Peter Guber was similarly revered. As the golden goose in all of this, Peter was left alone—PolyGram certainly did not want to piss him off and have him head out to the beach again.
A few months after PolyGram became involved with us, Neil and Bruce Bird came into my office. Neil explained to me that I was going to throw a party and spend ten thousand dollars. But not really. He and Bruce would help me get receipts totaling that amount, and I would get PolyGram to reimburse me; I would then give the ten grand to Bruce, who would use it to take care of business. I did as they requested, and it was the closest I ever came to payola. I don’t even remember what record they used the money for, but for that amount they could have covered several major-market stations. Of course, they never helped me with the receipts. Just figuring out who I had invited to the party was a pain in the ass—I listed every politician I could think of, plus dead musicians, old war heroes, and Neil and Bruce and their extended families. If anyone was ever questioned about the party, I figured they would just say that they’d been there and it was great.
No matter what corporate umbrella we were under, the sign on the door still said Casablanca, which may as well have been Spanish for “disco boys.” Another French import, Leroy Gomez and Santa Esmeralda, came on board in October 1977, bringing their monster hit “Don’t Let Me Be Misunderstood” with them. When I heard their record, I couldn’t get them signed quickly enough. I almost fell off my chair, and then I got our legal department (then headed by Dick Ettlinger) to take care of the particulars. When all was said and done, it was the best deal we ever made. The entire album cost us thirty-five thousand dollars, with a very low royalty rate of about 6 percent (what they had asked for), as opposed to the new-artist standard of 10 to 12 percent. The record sold millions, almost overnight. “Don’t Let Me Be Misunderstood” was one of those once-in-a-lifetime songs that hit with little assistance; we mailed it to the radio stations, and they jumped on it. But, once again, I made the mistake of not seeing a group perform before signing them. Leroy Gomez was not bad looking, but he was a terrible live performer, and Santa Esmeralda, a pair of women, didn’t have a clue about performing either. We arranged a small preview of the band, and it was awful. I knew then that this act would fizzle after only a few hits.
Disco and movies were absorbing all of our attention, so it was fortunate for us that the KISS ship was being helmed by Glickman/Marks, and they were doing it well. They kept us informed of the band’s touring and promotional plans and consulted us on many matters. KISS’s 1977 summer tour had been their biggest success yet, and at a sold-out three-night stand at The Forum in LA, they’d recorded a follow-up to Alive! The new live album, a two-record set called Alive II, was released on October 24, and it shipped Platinum. KISS had also recently topped Led Zeppelin and the Stones, among others, in a Gallup survey that polled teenagers for their band preferences. KISS had outgrown their next-big-thing status: they were now among rock’s premier acts.
George Clinton and Parliament had been busy as well. Two of their 1977 concerts had been recorded and released in May of that year as a two-disc collection we dubbed P-Funk Earth Tour. Initial copies of the release included a poster and a catchy iron-on decal that read “Take funk to heaven in ’77.” The band toured for most of the year (they were major headliners in most markets), and the mothership even made a special landing in Times Square for a documentary, which was eventually scrapped. After Thanksgiving, we released their album Funkentelechy vs. the Placebo Syndrome (I had long since stopped asking George what these titles meant), which contained what would turn out to be some of their last sizable hits, including their only No. 1 R&B hit, “Flash Light.” We produced an amazing TV spot for the album using some of the animation elements Parliament employed in their live performances.
Donna Summer, meanwhile, had re-signed with Casablanca, and as part of the deal we had acquired the worldwide distribution rights to her current releases and back catalog (thus far, we’d only had North American rights to her current releases). Still riding high on of the success of “I Feel Love,” Donna had spent several weeks on tour in Europe. Then, in early November, we rush-released her next album, Once upon a Time.... Barely five months had passed since her previous LP, but Neil’s perpetual sense of urgency tended to dictate our release patterns, and he was desperate to have a new record for Donna’s fans to buy before Christmas.
In keeping with the grand, larger-than-life vibe of the disco world, we made the release a gatefold double LP, with each of the four sides representing a different musical genre, including a full side of “I Feel Love”-inspired electronica. The concept album told the story of a girl living in a land where everything real was unreal, a fairytale that in some ways mirrored Donna’s own life. One of the album’s singles, “I Love You,” was a major hit in Europe, while the title track, along with “Now I Need You” and “Working the Midnight Shift,” became fan favorites. Though Once upon a Time... didn’t yield a bona fide US hit, the LP sold very well, and it was certified Gold in December.
By the end of 1977, we were racing ahead faster than I’d ever thought possible. In the last twelve weeks of the year, we had more releases—seventeen—than we’d had in all of 1976. And as the clock struck midnight that New Year’s Eve, one of those releases, Donna Summer’s Once upon a Time..., was sitting atop the disco charts. Casablanca, the disco label, had the top disco act and the top rock act. But the question was: Could we survive life at the top?
16 La~La Land
Bent over—Gregg Giuffria—Macho Man—Love and Kisses—
The future Mrs. Cosby—Bill Tennant—A suicide attempt—
Party for the governor—A spy among us—
Dodger game—Helping Cedars~Sinai—
Slots, belly dancers, and NARM
January 1978
Casablanca Record & FilmWorks Headquarters
8255 Sunset Boulevard
Los Angeles, California
Gregg Giuffria, Angel’s keyboardist, was in my office. He and I had developed a good relationship since we’d signed the group in 1975, and he was my primary contact among the band members. Gregg would stop by the Sunset building frequently, walking from office to office to maintain his presence and remind all the various department heads (there seemed to be more and more of them each day) about Angel. As we sat there bullshitting, he mentioned that as he’d been working his way through the building that day, saying hello to anyone who would give him a minute, he’d wandered into the office of Steve Keator (our director of media relations) and found one of our recording artists, in full costume, bending Steve over the desk and screwing him in the ass. He was about as fazed at the sight as I was at hearing about it—which is to say, not at all. That was Casablanca.
Gregg and I were discussing Angel’s latest album, White Hot, which was Casablanca’s first release of 1978. From the moment we’d signed them, nothing had come easy for Angel. Their looks, talent, and drive all spelled sure thing, but at every turn, some sort of crappy luck or bad karma seemed to be awaiting them—most recently, the eleventh-hour cancellation of their movie Angel at Midnight. Gregg was recounting all of the challenges Angel had faced in the past year, including the need to replace bassist Mickie Jones. They’d held secret auditions for the post in LA, and they’d finally found their man in St. Louis native Felix Robinson, whom they knew throug
h another band that Bill Schereck, their tour manager, had been managing.
One of the Casablanca recording acts who also hung around our offices was the Village People. Months after signing the band, Neil and I had finally met that strange cast of characters (which appeared to have evolved since they were assembled for the first LP cover). Jacques and Henri had just finished overseeing the sessions for the second Village People album, Macho Man. Their self-titled first release had set 8255 buzzing, and, as usual, the discotheques had jumped on the bandwagon, but the album hadn’t produced a breakaway hit. Radio was still keeping its distance. The second album would change all that—we knew it the moment we heard the title track. It had passed the Casablanca test immediately: I don’t think I ever had that many people come running into my office at once. The coming months bore out the test’s accuracy. “Macho Man,” the single, peaked at No. 2 on the charts. Finally, radio and retail had caught on to what the clubs had been saying, and the Village People had their first Gold single and Platinum album.
While their popularity and sales soared, relations within this disco hodgepodge were not so ideal. I heard a rumor that Victor Willis (who portrayed the cop and was the only straight member of the original act) was allegedly bullying the others. Complaints also began to surface that group members were only getting paid one hundred dollars per week, causing some friction within the ranks. It was becoming obvious to us that we couldn’t expect them to do everything that was being asked of them (interviews, appearances, concerts) for so little money. Plus, there was their image to consider: music stars don’t live on near-poverty wages.
And Party Every Day: The Inside Story of Casablanca Records Page 24