How bad deals and government grabs left the Rolling Stones nearly broke
The first time Prince Rupert Loewenstein met Mick Jagger, at the singer’s house in 1968, the Bavarian royal, who was a partner in an investment bank, was surprised by the home’s minimalist quality.
“Despite the upwardly mobile address, the decor of the house was extremely sparse, the rooms quite bare. He had not yet bought much furniture . . .”
In the meeting that followed, the prince learned that while the Stones were already international superstars, they were also broke. The rock ’n’ roll megastar couldn’t even afford a couch.
The band’s financial situation was so dire that they missed a chance to own 49% of Rolling Stone magazine for an investment of just 5,000 British pounds. When Jann Wenner, the magazine’s founder, offered them the opportunity, not only did they not have the money, but Loewenstein’s partners refused to grant a loan, feeling that “there was no security to back it with.”
Loewenstein discovered that one of the reasons the Stones were broke was an incredibly bad deal they had signed with Allen Klein, the notorious band manager who had also managed, and ended on bad terms with, the Beatles.
Jagger was so angry at Klein — who’d wind up in litigation with the band for decades — that during one negotiation, “Mick started screaming at Klein, who darted out of the room and ran down the corridor with Mick in hot pursuit.”
The other reason the band was poor was that at the time, high earners in the UK were subject to an astounding 83% to 98% tax rate. Loewenstein told them they would need to leave England and become, like many of their rock-star peers, tax exiles. The Stones moved to France, and Loewenstein notes that “‘Exile on Main St.’ . . . may be one of the few top-selling albums to contain a reference to tax planning in the title.”
Loewenstein brought a care to this planning that was rare not just for the Stones, but for the music business at large. It was not uncommon for bands on tour to be paid with large bags of cash, while failing to realize that “they were participating in a huge tax fraud.” (He recalls how on the band’s 1978 tour, a staffer approached him and asked, “What do we do with the $50,000 in this paper bag?”) He had to teach the band that outside of drug arrests, tax-fraud charges were the greatest potential danger to their career, and that all payments had to be declared.
Throughout the book, Loewenstein also notes how the Stones notoriety affected their business. When Keith Richards was arrested on heroin charges in 1977 just as the band was negotiating with record labels, every label but Atlantic dropped out. Since the possibility remained that Richards could face prison time, the eventual contract had to define the Rolling Stones as “Mick Jagger and two of the Rolling Stones.”
Some of the band’s bizarre business situations emerged from sheer foolishness, like when Jagger tried to make the case that he should receive more money than his bandmates, since “he was the quasi-manager.” This never came to pass, especially after Richards phoned Loewenstein to ask whether Jagger’s “interventions” had lost them more money than they earned.
Eventually, thanks to Loewenstein’s advice and some shrewd marketing, the Rolling Stones became the highest-grossing live band in rock history. The top 10 tours of all time include three from the Stones, including their Bigger Bang tour, which brought in $558 million from 2005-2007, making it, at the time, the highest-grossing concert tour ever. (It’s currently second, behind U2’s 2009-2011 360° tour.)
While Loewenstein’s relationship with them was largely professional, he did witness their wild side. After inviting a friend and his group to accompany him to a party for the band at the Hotel George V in Paris, Loewenstein saw Jagger “slip upstairs accompanied by my friend’s attractive 18-year-old daughter. When her father approached us, we rather timorously commiserated, but all he said was, ‘Well done, daughter!’ ”
Given his status as financial advisor, Loewenstein also got an inside look at some of the band’s fractured personal relationships. When Jagger and his wife Bianca were headed for divorce, Loewenstein sat with Bianca to try to keep the settlement peaceful. But peace was the last thing she wanted, as she told him, “You don’t understand . . . I want to kick him where it hurts — in the money!”
