Allen Klein

• 1. Introduction

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  Allen Klein was the man who simultaneously managed the Beatles and the Rolling Stones, and he did it by weaponizing the fine print. Born in Newark, New Jersey, on the 18th of December 1931, Klein grew up without a mother, shuttled between grandparents and a Jewish orphanage before his father remarried. He clawed his way into accounting school on the G.I. Bill and spent his career doing something simple: reading contracts more carefully than anyone else in the room. What he found in those documents made him rich, made his clients richer, and eventually made him one of the most hated figures in the history of rock music. He was convicted of a tax crime, jailed for two months, sued by nearly every major artist he ever touched, and eulogized as a villain from central casting. Yet three of the four Beatles chose him over their own instincts. How did someone described as having "all the charm of a broken lavatory seat" become the most powerful figure in the music business? That question drives everything that follows.

• 2. The Orphan Accountant

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  Philip Roth was the only classmate to sign Allen Klein's yearbook at Weequahic High School, where Klein graduated in 1950. That detail captures something true about his early years: he was a loner who paid attention to things others overlooked. A job with a magazine and newspaper distribution company taught him early that profits are routinely hidden from the people who generate them. He carried that suspicion into the music business. After serving in the U.S. Army as a clerk typist on Governors Island, New York, Klein used the G.I. Bill to study accounting at Upsala College, graduating in 1957. His first accounting employer, Joseph Fenton and Company in Manhattan, fired him after four months for chronic lateness and wrote to New Jersey urging the state not to certify him as a CPA. Klein never took the exam. He briefly attended law school, then dropped out. What saved his career was a friendship with music publisher Don Kirshner, a fellow Upsala alumnus, who gave Klein an entree into the world he had been studying from the outside. Klein set up his own firm, Allen Klein and Company, and began building a client list that eventually included Sam Cooke, Neil Sedaka, Bobby Darin, and the estate of Mike Todd. His first test of nerve came with rockabilly singers Buddy Knox and Jimmy Bowen, who were owed royalties by Roulette Records. The co-owner of Roulette, Morris Levy, had organized crime connections and was known to pay artists as little as possible. Klein persuaded him to pay Knox and Bowen in full over a four-year period. Klein and Levy became lifelong friends after that confrontation.

• 3. The Sam Cooke Blueprint

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  Sam Cooke had placed 33 records in the top 100 between 1957 and 1963, including his number one hit "You Send Me", and yet his label, RCA Records, repeatedly refused to open its books for him. Klein forced the audit in 1963, and RCA agreed to renegotiate. The deal Klein constructed for Cooke was genuinely new. Cooke created a holding company named Tracey Ltd., after his middle daughter, which would manufacture his recordings and grant exclusive distribution rights to RCA for 30 years, after which the rights would revert to Tracey. Cooke received a cash advance of $100,000 per year for the first three years, followed by $75,000 for each of two option years. The opening payment came in Tracey preferred stock rather than cash, a structure designed to defer taxation until Cooke chose to sell. What Cooke did not know was that Klein had quietly changed the ownership paperwork, listing himself as owner of Tracey and Cooke as his employee. When Cooke was killed in 1964, his widow sold the remaining rights to Klein, who thereby became the owner of Cooke's entire recorded catalog. As of 2019, according to the documentary Lady You Shot Me: The Life and Death of Sam Cooke, Cooke's family received no royalties or benefits from his music; all royalties and publishing profits flowed to Klein's corporation. The Cooke deal also established the structural template Klein would apply to every client that followed: a company he controlled sat between the artist and the label, holding the money and paying it out over years or decades, while Klein invested the pooled funds and kept the returns above what he owed.

• 4. British Invasion Foothold

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  Mickie Most, a former singer turned producer of hits for the Animals and Herman's Hermits, became Klein's gateway to England in 1964. Klein made Most a million-dollar promise and gave himself just one month to deliver it, with no fee owed if he failed. He did deliver, renegotiating Most's existing contracts and opening new production opportunities at RCA. Most became one of the most talked-about figures in the English recording industry almost overnight. That visibility bought Klein introductions to a string of British acts. He eventually negotiated improved deals for the Animals, Herman's Hermits, the Kinks, Lulu, Donovan, and Pete Townshend of the Who. For each of them, Klein sheltered earnings from Britain's high tax rate by holding the money at the Chemical Bank in New York City, paying it out in installments over periods of up to 20 years. The invested capital earned far more than Klein was obligated to return, and he kept the difference. In the spring of 1965, Andrew Loog Oldham, co-manager of the Rolling Stones and barely 21 years old, watched Klein work and decided he wanted the same man in his corner.

• 5. Rolling Stones: Gains and Grievances

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  Oldham was locked in a power struggle with Eric Easton, his co-manager, and after "(I Can't Get No) Satisfaction" became the Stones' first number one record in the U.S., Mick Jagger gave Oldham the go-ahead to bring Klein in for a contract renegotiation with Decca Records. Decca had offered the band the chance to earn $300,000 if their sales held. Klein countered and secured an advance of $600,000, then forced London Records, Decca's American subsidiary, to sign a separate contract for the same amount. A year later, with Easton removed, Klein renegotiated again and guaranteed the Stones $2.6 million, more than the Beatles were earning at the time. He had also discovered that Easton and Oldham were receiving an 8% royalty on singles sales while the Stones themselves received only 6%, and that the two managers were also taking a 25% commission on the band's total income. Klein made Oldham raise the Stones' royalty to 7% and give up his commission. In 1968 Klein bought out Oldham's remaining share in the band for $750,000. By that same year, however, Jagger, who had studied at the London School of Economics, had hired merchant banker Prince Rupert Loewenstein as a personal financial adviser and a London law firm to investigate Klein's handling of the group's money. The Stones' $1.25 million advance from Decca in 1965 had been deposited into a Klein-controlled company; the fine print did not require him to release it for 20 years. In 1970, Jagger announced Loewenstein would replace Klein. The split launched years of lawsuits. The Stones sued in 1971 over U.S. publishing rights and settled the following year for $1.2 million, essentially the same advance Decca had paid in 1965. Klein's company ABKCO retained the publishing rights to the Stones' early catalog and made a fortune from their all-time best-selling album, Hot Rocks 1964-1971. Further suits in 1974 and 1975 produced additional settlements and the release of several Stones albums under ABKCO's control, including Metamorphosis and Rolled Gold: The Very Best of the Rolling Stones. Relations only began to warm in 1986, when the introduction of compact discs revived the commercial value of the early catalog. By 2003, Klein's son Jody was brokering payment plans and Klein himself was negotiating with Steve Jobs to place ABKCO's Rolling Stones songs on iTunes.

• 6. Managing the Beatles

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  John Lennon's public complaint that the Beatles would be "broke in six months" if things continued prompted Klein to make contact. On the 26th of January 1969, he met with Lennon, who hired him as his financial representative the same day. The next day Klein met the other three Beatles. Paul McCartney preferred Lee and John Eastman, the father and brother of McCartney's girlfriend Linda, whom McCartney married on the 12th of March. George Harrison and Ringo Starr sided with Klein. After contentious meetings in April with both the Eastmans, Klein was appointed the Beatles' manager on an interim basis, with the Eastmans as attorneys. The arrangement collapsed quickly. On the 8th of May, Klein received a three-year contract as business manager. McCartney refused to sign but was outvoted. Klein's first order of business at Apple Corps was to fire many of its employees, including president Ron Kass, and close Apple Electronics. His attempt to remove Neil Aspinall, a longtime confidant of the band, was immediately blocked by the group itself. Klein then fought two expensive battles on the band's behalf. The first was with Triumph, a British investment group that had acquired NEMS, the management company Brian Epstein had founded. NEMS held a 25% stake in the Beatles' earnings. Klein negotiated it down to four annual payments amounting to just 5% of their earnings, in the process triggering a hostile investigative report in The Sunday Times headlined "The Toughest Wheeler-Dealer in the Pop Jungle." The second battle was for Northern Songs Ltd., the publishing company run by Dick James, who held the rights to Lennon and McCartney's songs under a contract that Brian Epstein had not fully understood. James moved to sell Northern Songs to ATV, run by Lew Grade, before Klein could organize a competing bid. Klein tried to pull together a consortium to outbid Grade, but infighting between McCartney and Lennon destroyed the effort. Klein did secure a major victory with EMI. Capitol Records was so impressed by Abbey Road that it agreed to vastly improved royalty terms, and all four Beatles endorsed the deal. Klein also recognized that the shelved January 1969 project, titled Get Back, could be salvaged as both an album and a film, fulfilling the band's outstanding obligation to United Artists. He brought in Phil Spector, famous for his wall-of-sound recordings with artists such as the Ronettes and the Righteous Brothers, to produce what became Let It Be. Apple made $6 million in the month following the record and film's release in May 1970. McCartney, who had not approved of Spector, sued his former bandmates for dissolution of the Beatles' partnership on the 31st of December 1970. The judge ruled in McCartney's favor in March 1971, placing the former Beatles' combined finances in the care of a receiver. Klein's 1973 lawsuit against the Beatles was settled in January 1977, with Yoko Ono representing the former bandmates. Klein received approximately $5 million as a lump sum in lieu of future royalties and repayment of loans.

• 7. Concert for Bangladesh and the Falling Out

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  George Harrison's November 1970 three-disc set All Things Must Pass was a sales triumph, with hit singles in "My Sweet Lord" and "What Is Life". When Harrison learned from his friend and mentor Ravi Shankar about the suffering in Bangladesh, devastated by military violence and a cyclone, he organized a benefit concert at Madison Square Garden within five weeks. Klein worked to persuade invited artists, including Bob Dylan and Eric Clapton, to perform for free and donate their royalty shares to charity, and convinced Capitol Records to grant an unprecedented 50% royalty rate. The Concert for Bangladesh live album and film raised over $15 million. Klein's critical oversight was failing to register the shows as a UNICEF charity event, which denied the proceeds tax-exempt status in Britain and the United States. The IRS attempted to tax the income and held back $10 million for years. An article in New York magazine accused Klein of pocketing $1.14 on each copy of the live album, which was priced at $10. Those allegations accelerated the disenchantment of Harrison, Lennon, and Starr. Lennon felt Klein had not adequately supported his and Yoko Ono's increasingly political work, typified by the 1972 album Some Time in New York City. In early 1973 all three served notice that they would not renew Klein's management contract when it expired in March. Lennon later told an interviewer: "Let's say possibly Paul's suspicions were right ... and the timing was right." Klein retaliated by suing the three in New York to recover loans and costs owed to ABKCO. They counter-sued him in London, citing excessive commission fees, the Bangladesh mishandling, misrepresentation of their finances, and his failure to ensure Apple Records artists prospered. The most striking maneuver came in 1976, when the copyright case over Harrison's "My Sweet Lord" and its alleged similarity to "He's So Fine" by the Chiffons was still unresolved. Klein purchased Bright Tunes Music, the company that owned "He's So Fine", and positioned himself as the plaintiff suing his own former client. The judge ruled that Harrison had infringed the copyright, initially assessed damages of $2,133,316, then reduced the figure to $1,599,987, and finally ruled in 1981 that Klein had retained a fiduciary responsibility to Harrison and could not profit from the Bright Tunes purchase. Klein was ordered to hold "He's So Fine" in trust for Harrison, provided that Harrison reimburse him the $587,000 it had cost to acquire the company.

• 8. Legal Reckoning and Later Life

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  In 1977, Klein and ABKCO's former head of promotion, Pete Bennett, were charged with three felony counts of income tax evasion for 1970, 1971, and 1972. The IRS alleged that Klein and Bennett had sold promotional copies of Beatles and post-Beatles albums without declaring the income, and that Klein had received over $200,000 from those sales. Bennett pleaded guilty to a single misdemeanor charge and testified against Klein. Klein's first trial ended in a mistrial when the jury deadlocked. At his second trial in 1979, the jury found him not guilty of the felony charges but convicted him on a single misdemeanor count for a false statement on his 1972 tax return. He was fined $5,000 and sentenced to two months in jail, which he served in July through September 1980. Starting in 1988, Klein turned his attention to managing Phil Spector's business affairs. Spector's publishing company, Mother Bertha Music, was being administered by Warner/Chappell Music, which was making correct payments, but a company in the chain controlled by Jerry Leiber and Mike Stoller was not passing significant amounts on to Spector. Klein's solution combined a federal lawsuit to recover the owed money with a settlement strategy designed to win Spector co-administration rights over the future licensing of his music. Both goals were achieved. The Verve's 1997 single "Bitter Sweet Symphony" sampled a 1965 orchestral recording of the Rolling Stones' "The Last Time" by the Andrew Oldham Orchestra. Klein, who owned the underlying copyright, refused clearance and sued; the Verve ceded all songwriting credits and royalties to ABKCO. The song was licensed for Nike and Opel advertising and became a reliable revenue source for the company. In 2019, Klein's son and the Rolling Stones returned the credits and royalties to Richard Ashcroft of the Verve. Klein was diagnosed with diabetes at age 40, suffered several heart attacks over the years, and in 2004 broke bones in his foot in a fall and was subsequently diagnosed with Alzheimer's disease. He died in New York on the 4th of July 2009. Five years later, in June 2015, journalist Fred Goodman published a biography titled Allen Klein: The Man Who Bailed Out the Beatles, Made the Stones, and Transformed Rock and Roll.