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Allen Klein (December 18, 1931 – July 4, 2009) was an American businessman whose aggressive negotiation tactics affected industry standards for compensating recording artists. He founded ABKCO Records. Klein increased profits for his musician clients by negotiating new record company contracts. He first scored monetary and contractual gains for Buddy Knox and Jimmy Bowen, one-hit rockabillies of the late 1950s, then parlayed his early successes into a position managing Sam Cooke, and eventually managed the Beatles and the Rolling Stones simultaneously, along with many other artists, becoming one of the most powerful individuals in the music industry during his era.
Rather than offering financial advice and maximizing his clients' income as a business manager normally would, Klein set up what he called "buy/sell agreements" where a company that Klein owned became an intermediary between his client and the record label, owning the rights to the music, manufacturing the records, selling them to the record label, and paying royalties and cash advances to the client. Although Klein greatly increased his clients' incomes, he also enriched himself, sometimes without his clients' knowledge. The Rolling Stones' $1.25 million advance from the Decca Records label in 1965, for example, was deposited into a company that Klein had established, and the fine print of the contract did not require Klein to release it for 20 years. Klein's involvement with both the Beatles and the Rolling Stones would lead to years of litigation and, specifically for the Rolling Stones, accusations from the group that Klein had withheld royalty payments, stolen the publishing rights to their songs, and neglected to pay their taxes for five years, thus necessitating their French "exile" in 1971.
After years of pursuit by the IRS, Klein was convicted of the misdemeanor charge of making a false statement on his 1972 tax return, for which, in 1980, he was jailed for two months.
In early work experience with a magazine and newspaper distribution company, Klein showed skill with numbers, and learned about how profits were often concealed from those who had been crucial in generating them. Eventually he realized that much the same situation existed in popular music, where labels routinely took much profit from the transitory careers of the artists who created the profit-generating music, paying them less than Klein thought they should.
Klein enlisted in the U.S. Army in 1951, and served as a clerk typist on Governors Island, New York. After military service, and with the assistance of the G.I. Bill, Klein majored in accounting at Upsala College, graduating in 1957, and was hired by a Manhattan accounting firm, Joseph Fenton and Company. He was assigned to assist Joe Fenton in an audit of a music publishers' organization, the Harry Fox Agency, and several record companies, including Dot Records, Liberty Records, and Monarch Records. In an early setback to Klein's career, Joseph Fenton and Company fired him after four months because of chronic lateness. The company wrote to the State of New Jersey urging officials not to approve him as a Certified Public Accountant, and Klein chose not to take the examination. He briefly attended law school but soon dropped out.
Aided by his friendship with music publisher Don Kirshner, a fellow Upsala College alumnus, Klein worked as an accountant for the next several years, assisted by Henry Newfeld, a CPA who was a friend from school and the Army, and Marty Weinberg, another CPA, under the name Allen Klein and Company. Klein's clients included Ersel Hickey, Dimitri Tiomkin, Steve Lawrence, Eydie Gormé, Sam Cooke, Buddy Knox, Jimmy Bowen, Lloyd Price, Neil Sedaka, Bobby Darin, Bobby Vinton, Scepter Records, and the estate of Mike Todd. A key early contact was attorney Marty Machat, who frequently did legal work for Klein.
In June 1958, Klein married Betty Rosenblum, a Hunter College student seven years his junior. The couple had three children.
Klein acquired a reputation as a tough negotiator who could bring money to his clients. Two of them, rockabilly singers Knox and Bowen, were owed royalties by Roulette Records. Morris Levy, co-owner of Roulette, was feared because of his organized crime connections. He was known to pay artists as little as possible. Klein persuaded him to pay Knox and Bowen the royalties they were owed over a four-year period. Klein's success with the Knox and Bowen negotiation brought him new clients, and he and Levy became lifelong friends.
Klein secured Cooke a genuinely groundbreaking deal. Cooke created a holding company, Tracey Ltd., named after Cooke's middle daughter. Klein, Cooke's manager, sneakily changed paperwork and listed himself as owner instead (and Cooke as his employee). Cooke trusted him to protect him against crooked music executives but Klein used that trust to his own advantage.
Tracey manufactured Cooke's recordings and gave exclusive rights to RCA to sell them for 30 years, after which the rights would revert to Tracey. Cooke received a cash advance of $100,000 per year for three years, followed by $75,000 for each of two option years. Instead of being paid the first $100,000 in cash, Cooke was paid in Tracey preferred stock, which would be taxed only when he sold it. The deal benefited Cooke, but also greatly benefited Klein, who ended up owning the rights to all of Cooke's recordings made since the contract renegotiation when Cooke was killed in 1964 and his widow sold Cooke's remaining rights to Klein.
Klein's successful negotiations on Cooke's behalf brought him new clients, including Bobby Vinton and the Dave Clark Five. As with Cooke, Klein arranged for his clients to be paid over a period of time to reduce their tax liability. This also benefited Klein, who took advantage of the earning potential of money over time to "make money from the money."
According to the 2019 documentary Lady You Shot Me: The Life and Death of Sam Cooke, Klein had a predatory relationship with Cooke. As of 2019, Cooke's family received no royalties or benefits from his music. All royalties and publishing profits go to Klein's corporation.
His victories for Most won Klein access to several key English musicians. He eventually negotiated vastly improved deals for The Animals, Herman's Hermits, the Kinks, Lulu, Donovan, and Pete Townshend of the Who. But Klein's help came at a price. To shelter his clients' money from Britain's high taxation rate on income earned abroad, Klein held it for them at the Chemical Bank in New York City and paid it to them over periods of time of up to 20 years. Klein invested that money, which earned far more than Klein was obligated to pay his clients, and kept the difference, thereby maintaining control over the money.
When Klein examined the Stones' management contract with Easton and Oldham, he found that the two were receiving a disproportionate share of the group's income: not only did Easton and Oldham receive an 8% royalty on sales of the Stones' singles—the Stones themselves received only 6%—but they also received a 25% commission on the Stones' income. At Klein's insistence, Oldham increased the Stones' royalties to 7% and relinquished his commission. Klein offered the Stones a million-dollar minimum guarantee, paid over a 20-year period to reduce the Stones' tax liability, to let him become their music publisher, based on his faith in the Jagger–Richards songwriting team. He also arranged for a level of tour support and publicity far above anything the band had previously experienced for the Stones' 1965 American tour in support of the album December's Children.
Jagger, who had studied at the London School of Economics, gradually became distrustful of Klein, particularly because of Klein's ability to insert himself as a profit participant in the group's ever-growing financial affairs. For example, in 1968 Klein very profitably bought out Oldham's share in the band for $750,000. By 1968 the Stones were so concerned with how Klein was handling their finances that they hired a London law firm, Berger Oliver & Co, to look into it, and Jagger hired the merchant banker Prince Rupert Loewenstein as his personal financial adviser. Another possible factor in the Stones' dissatisfaction with Klein was that when he began to manage the Beatles he focused more of his attention on that band's affairs than on the concerns of the Stones. In 1970, on the occasion of needing to negotiate a new contract with Decca, Jagger announced that Loewenstein would replace Klein as manager.
The split between Klein and the Stones led to years of litigation. In 1971 the Stones sued Klein over U.S. publishing rights. The suit was settled the following year, with the Stones receiving $1.2 million as a settlement of all U.S. royalties earned up to that point (essentially the $1.25 million advance that Decca had paid the Stones in 1965 that Klein had been withholding since August 1965). But the Stones were unable to break their contract with Klein, who held an additional $2 million of their money to be paid over a 15-year period, ostensibly for tax purposes. Klein's company, ABKCO Records, continued to control the rights to publish the Stones' music and Klein made a fortune off the band's all-time best-selling album, Hot Rocks 1964–1971.
In 1972, Klein alleged that some of the songs on Exile on Main Street had been composed while the Stones were still under contract with ABKCO. As a result, ABKCO acquired ownership of the disputed songs and was able to publish another Rolling Stones album, More Hot Rocks (Big Hits and Fazed Cookies). In 1974 negotiations over royalties led to a payment of $375,000 to the Stones and ABKCO's release of an additional Rolling Stones album, Metamorphosis. In 1975 more lawsuits and negotiations resulted in a $1 million payment to the Stones for non-payment by Klein of songwriting royalties, and the release of four Rolling Stones albums, including Rock and Roll Circus and . In 1984 Jagger and Richards sued to break their publishing agreement with ABKCO because of non-payment of royalties. The judge encouraged the two sides to reach a settlement.
Starting in 1986, when the introduction of compact discs brought great profits to the music industry, relations began to improve between Klein and the Stones. In 2002, the Stones' album Forty Licks and the Licks Tour, celebrating the band's 40th anniversary, incorporated songs owned by ABKCO. The Stones agreed to a five-year payment plan suggested by Klein's son, Jody. In 2003, Klein negotiated with Steve Jobs to make ABKCO's Rolling Stones songs available on iTunes.
Klein contacted John Lennon after reading his press comment that the Beatles would be "broke in six months" if things continued as they were. On January 26, 1969, he met with Lennon, who retained Klein as his financial representative, and the next day met with the other Beatles. Paul McCartney preferred to be represented by Lee Eastman and John Eastman, the father and brother respectively of McCartney's girlfriend Linda McCartney, whom he married on March 12. Given a choice between Klein and the Eastmans, George Harrison and Ringo Starr preferred Klein. Following rancorous London meetings with both Eastmans in April, Klein was appointed as the Beatles' manager on an interim basis, with the Eastmans appointed as their attorneys. Continued conflict between Klein and the Eastmans made this arrangement unworkable. The Eastmans were dismissed as the Beatles' attorneys, and on May 8 Klein was given a three-year contract as the Beatles' business manager. McCartney refused to sign the contract but was outvoted by the other Beatles.
Once in charge of Apple, Klein fired many of its employees, including president Ron Kass, and replaced them with his own people. He closed Apple Electronics, which was headed by Alexis Mardas. Mardas resigned his directorship in May 1971. Klein's attempt to fire Neil Aspinall, a longtime confidant of the Beatles, was immediately thwarted by the band.
Klein was hit with his first crisis in managing the Beatles when Clive Epstein, brother of Brian and chief heir to NEMS, the management company Brian had founded, sold NEMS to Triumph, a British investment group managed by Leonard Richenberg. NEMS held a 25% stake in the Beatles' earnings, which Klein and the Beatles desperately wanted to buy out. This led to tough negotiations with Triumph. Klein ultimately secured the Beatles' rights in their previous work for just four annual payments amounting to 5% of their earnings. But in the lead-up to those negotiations Richenberg commissioned a hostile investigative report on Klein, which The Sunday Times ran under the headline "The Toughest Wheeler-Dealer in the Pop Jungle".
An even more important battle to secure the Beatles a financial situation commensurate with their acclaim was with Northern Songs Ltd., the publishing company. Northern Songs was managed by Dick James, whom Brian Epstein had rewarded with the Beatles' publishing rights in return for helping them get placed on a TV show, Thank Your Lucky Stars, early in their career. But James had constructed a contract that gave him an outsize share and Epstein had not understood its implications. James knew that Klein would soon eliminate his perks, so he quickly offered to sell Northern Songs to ATV, run by entertainment mogul Lew Grade, rather than allow Lennon and McCartney an opportunity to buy back publishing rights to their songs. Klein worked feverishly to pull together a consortium that would beat Grade's offer, but infighting between McCartney and Lennon derailed his efforts.
In September 1969, while Klein was renegotiating the Beatles' unsatisfactory recording agreements with EMI, Lennon told him of his plans to quit the group. It was agreed that this was the wrong time to either make or announce such a move. EMI was loath to renegotiate, but its American subsidiary, Capitol Records, was so impressed by Abbey Road that it agreed to vastly improved royalty terms. McCartney joined his bandmates in endorsing the deal Klein had secured.
Abbey Road proved to be the Beatles' last true collaboration, but Klein recognised an opportunity in the band's shelved January 1969 album and related documentary project, both titled Get Back, to get another album release out of the splintered band while also fulfilling its obligation to provide one more film to United Artists, the studio that had released A Hard Day's Night and Help!. Phil Spector, the producer famous for his "wall of sound" recordings with artists such as the Ronettes and the Righteous Brothers, was eager to sign on as producer for the album, which was eventually titled Let It Be. McCartney did not approve of Spector, but the other Beatles did. This proved to be McCartney and Klein's last face-to-face meeting. Apple made $6 million in the month following the May 1970 release of the record and the film.
Unhappy with production decisions on the Let It Be album and the other Beatles' decision to hire Klein as their manager, McCartney went public with his plans to leave the Beatles in April 1970. He wanted to be released from his partnership with Lennon, Starr, and Harrison, who had in recent months been a steady three-to-one majority against McCartney's proposals. The Eastmans convinced McCartney to sue his former bandmates for dissolution of the Beatles' partnership, which he did on December 31, 1970.
The judge ruled in McCartney's favor in March 1971. He decided that the combined financial affairs of the former Beatles should be placed in the care of a receiver until mutually acceptable terms for their breakup could be found. Klein thereby retained a position in the post-breakup solo careers of Harrison, Starr, and Lennon, but was no longer in charge of their affairs as a partnership.
Starr, Harrison, and Lennon soon became disenchanted with Klein. By mid-1972, Harrison was incensed at the outcome of Klein's handling of the Bangladesh relief effort. Aside from the question of its charity status, unwelcome attention had been drawn to the project after an article in New York magazine accused Klein of pocketing $1.14 on each copy of the live album (priced at $10)—allegations that raised suspicions among the three former Beatles with regard to his conduct in their business affairs. Lennon also felt betrayed by Klein's lack of support for his and Yoko Ono's increasingly politically focused work, typified by their 1972 album Some Time in New York City. In early 1973 Lennon, Harrison, and Starr served notice that they would not renew Klein's management contract when it expired in March. Early the next month, Lennon told an interviewer: "Let's say possibly Paul's suspicions were right … and the timing was right."
Klein responded by suing the Beatles and Apple Corps in New York to recoup the loans he had made to his three former clients and other costs owing to ABKCO. They then sued him in the London courts, citing excessive commission fees, the mishandling of the Concert for Bangladesh, his misrepresentation of their individual financial standings, and his failure to ensure that Apple Records' artists prospered under his control. While the suits were ongoing, Klein made a play for the U.S. portion of Harrison's publishing company, Harrisongs, in late 1974, without success. He also attempted to influence the outcome of Lennon's arrangement with music publisher Morris Levy regarding an alleged copyright infringement (of the Chuck Berry song "You Can't Catch Me") in Lennon's 1969 Beatles composition "Come Together". Lennon's song "Steel and Glass" from the 1974 album Walls and Bridges was his thinly veiled dig at Klein.
Klein's 1973 lawsuit against the Beatles was settled out of court in January 1977, with Ono representing the former bandmates. Klein received a lump sum payment of approximately $5 million in lieu of future royalties and as repayment of the loans that ABKCO had made to the Beatles.
Harrison had been sued for copyright infringement in 1971 because of the alleged similarity of his song "My Sweet Lord" to "He's So Fine", which had been recorded by the Chiffons in 1963 and was owned by Bright Tunes Music. The case was still pending in 1976; as an alternate strategy to access Harrison's US publishing, Klein purchased Bright Tunes and thus became the plaintiff in the lawsuit against Harrison. The judge ruled that Harrison had infringed on Bright Tunes' copyright, and the ruling was upheld on appeal. The judge initially assessed damages of $2,133,316, which Harrison would have to pay to Klein, then reduced the figure to $1,599,987, but finally ruled in 1981 that Klein still had a fiduciary responsibility to Harrison and should not be allowed to profit from his acquisition of Bright Tunes. Klein was ordered to hold "He's So Fine" in trust for Harrison provided that Harrison reimburse him the $587,000 it had cost Klein to purchase the company.
Starting in 1967 Klein produced four films in the Spaghetti Western genre, a lean-and-mean style of cowboy movie with taciturn heroes and explosive violence. Klein used actor Tony Anthony, whom he'd met on Force of Impulse, in all four. Their films included a trilogy comprising A Stranger In Town, The Stranger Returns (1967), and The Silent Stranger (shot in 1968 but not released until 1975 by United Artists). Blindman (1970) featured Ringo Starr as a Mexican bandit, Anthony as its lead, and Klein as an extra. The first two "Stranger" films were released by MGM, the studio where Klein produced Mrs. Brown, You've Got a Lovely Daughter starring the popular Herman's Hermits. Klein, who had tried to purchase MGM in the mid '60s, became involved with a lawsuit against MGM, with each accusing the other of not fulfilling their contracts with each other.
In 1971, John Lennon directed Klein's attention to El Topo, a surrealist western by Chilean director Alejandro Jodorowsky. Inspired by Lennon's enthusiasm, Klein bought the film and put it in American release. He then produced and financed Jodorowsky's next film, The Holy Mountain, an allegorical journey with psychedelic overtones. Later the producer and the director's planned collaboration on a proposed film version of Story of O was halted when Jodorowsky refused to make the film or return substantial advance monies. Klein retaliated by withdrawing both El Topo and The Holy Mountain from distribution. In 2008 Jodorowsky released the films in Europe and was sued by Klein. After a face-to-face reconciliation between the two, Klein dropped his lawsuit and ABKCO released the films on video, paying Jodorowsky to remaster them.
Klein's legs appeared in Lennon and Yoko Ono's 1971 film Up Your Legs Forever. With George Harrison, Klein co-produced the 1972 concert film The Concert for Bangladesh. Klein also produced the 1978 film The Greek Tycoon, in which Anthony Quinn and Jacqueline Bisset played characters based on Aristotle Onassis and Jacqueline Kennedy. In the early 1980s Klein produced two Broadway plays. It Had to be You, a romantic comedy starring Renée Taylor and Joseph Bologna, ran for barely a month. Next Klein produced The Man Who Had Three Arms, written by Edward Albee. Although Albee had had big successes with The Zoo Story and Who's Afraid of Virginia Woolf?, the play Klein produced had an even shorter run than his previous attempt.
In June 2015, American journalist Fred Goodman published a biography of Klein, Allen Klein: The Man Who Bailed Out the Beatles, Made the Stones, and Transformed Rock & Roll.
In his book , Peter Doggett writes that Klein has come to be seen as one of the controversial "intruders" in the Beatles' story. Doggett writes:
Suspected for their motives, hated for their disruptive power, they all arrived from America and were all regarded as suspects for the crime of breaking up the Beatles, on the assumption that without them the group would have continued happily in each other's company until their dying days. The first of these intruders was Yoko Ono; the second was Linda McCartney; and the third was Allen Klein.With the possible exception of Magic Alex, who occupied a far less central role, nobody in the Beatles' milieu has received a more damning verdict from historians than Allen Klein. He was, one said, "a tough little scorpion"; for another, "fast-talking, dirty-mouthed … sloppily dressed and grossly overweight"; again, "short and fat, beady-eyed and greasily pompadoured". Beatles aide Alistair Taylor said, "He had all the charm of a broken lavatory seat" ... So consistent was the vilification that when biographer Philip Norman merely described Klein as "a tubby little man", it sounded like a compliment.
… No such rehabilitation as was available for Allen Klein, who entered the Beatles' story as a villain from central casting, and never escaped that role. Yet we are asked to believe that three of the four Beatles found this "beady-eyed" "grossly overweight" "scorpion" such an attractive figure that they were prepared to trust him with their futures. Clearly the Demon King didn't always exude the stench of sulphur.
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