The prize: When news of the Beatles' imminent financial danger spread, notorious manager Allen Klein knew his time had come

Klein pursued the Beatles for years, to the point of spooking Lennon. But meeting with John & Yoko sealed the deal

Published June 21, 2015 7:30PM (EDT)

The Beatles    (AP)
The Beatles (AP)

Excerpted from "Allen Klein"

To promote Beggars Banquet, Mick Jagger conceived a television special. Dubbed The Rolling Stones Rock and Roll Circus, the program was to feature the group atop a bill with numerous other artists including Jethro Tull, Taj Mahal, Marianne Faithfull, the Who, and the debut of John Lennon and Yoko Ono fronting a unique band boasting guitarist Eric Clapton and drummer Mitch Mitchell with Keith Richards on bass. Filmed near London in a twenty-four-hour marathon session in December 1968, the project never aired, reportedly because the Stones feared they’d been upstaged by the Who.

Klein didn’t care whether the program aired or not — that was Jagger’s business. He came to the all-night recording session for only one reason: to meet John Lennon. He achieved his goal, but just. The set was hot and cramped, no place for a conversation let alone a full-blown seduction. Allen had to settle for a handshake and hope that he’d finally registered with Lennon as more than just another outstretched palm.

Klein was growing frustrated. His obsession with getting the Beatles wasn’t new, but since Epstein’s death, he’d focused his strategy on finding a way to see Lennon. In that regard, Klein’s relationship with the Rolling Stones was clearly a positive; though Lennon had heard all kinds of dark rumors about Allen, he didn’t think it was coincidental that the Stones had become more and more successful throughout their association with him. Even Jagger endorsed Klein in his own tepid and smarmy fashion, telling the Beatles that he was “all right if you like that kind of thing.” The Beatles had apparently been ready to accept Klein into their world when they briefly talked about combining forces with the Stones in a joint venture to include a recording studio and other creative outlets. Those discussions ultimately came to nothing, and in January 1968, the Beatles instead opted to form their own company, Apple Corps, for the same purposes.

As with so much in the world of Allen Klein and his clients, Apple represented high hopes, lofty goals, and grand illusions but owed its genesis to the more prosaic challenges posed by Britain’s tax laws. Despite the substandard recording, publishing, merchandising, and management arrangements negotiated by Brian Epstein, the extraordinary success of the Beatles meant they were still taxed at the highest rates. In 1966, when Epstein arranged a ten-year recording extension with EMI, the Beatles’ royalties increased. Now fearful of losing two million pounds in taxes, they opted to create a corporation that could both receive the bulk of payment and, hopefully, someday produce additional revenue they could keep. “The amount of money owed by EMI was mountainous,” said Peter Brown, a former Epstein assistant who
became director of Apple. “Eighty-five percent or more would have gone to the Exchequer. The structure of Apple was to avoid that.”

Its basis was a new partnership, Beatles and Company, into which the group’s earnings, excluding songwriting income, would be placed. Each musician owned 5 percent of Beatles and Company, while the new unnamed corporation owned the remaining 80 percent of the partnership, thus shielding them from the lion’s share of taxes. Looking for a business to substantiate the company, Epstein, who’d grown up working in his family’s Liverpool furniture stores, envisioned a retail chain, perhaps something selling greeting cards. The Beatles had no interest in that. Instead, they proposed a creative company, one that might make real use of the band’s cultural cachet and become not just a profitable venture but a transformative one. The seed for Apple was planted.

Following Brian Epstein’s death, control of his management company, NEMS, passed to his family, most notably his brother, Clive, whose sole goal appeared to be not to blow whatever fortune his brother had made. He was not at all interested in having NEMS take part in Apple.

Left to their own devices, the Beatles announced the new venture with a May 1968 press conference by Lennon and McCartney at New York’s Americana Hotel. “It’s a business concerning records, films, and electronics,” Lennon announced, one aiming to get “artistic freedom within a business structure . . . . We want to set up a system whereby people who just want to make a film about anything don’t have to go on their knees in somebody’s office. Probably yours.” Apple was the prototypical hippie corporation: altruistic, optimistic, off the cuff , and clueless. When McCartney invited people to simply mail their work and proposals to the new company, he unwittingly and fatally cast Apple as a psychedelic sugar daddy. “We really want to help people, but without doing it like a charity or seeming like ordinary patrons of the arts,” he said. “We’re in the happy position of not really needing any more money. So for the first time, the bosses aren’t in it for profit. If you come and see me and say, ‘I’ve had such-and-such a dream,’ I’ll say, ‘Here’s so much money. Go away and do it.’ We’ve already bought all our dreams. So now we want to share that possibility with others.”

It was a lovely sentiment, and in that regard Apple certainly fit the conception of the Beatles that many fans had, that the group was much more than entertainment, their influence pervasive, wholly positive, and improving the world. What started as pop music now felt like social revolution. Everything was possible as the Beatles invited their fans to make a better world simply by dreaming it.

As a record company, Apple was born with every advantage. Though the Beatles were signed to EMI and its American subsidiary, Capitol Records, they were able to deliver their own recordings under the Apple logo, and their first release, the enormous worldwide hit single “Hey Jude,” couldn’t have given Apple Records more visibility. If Apple was intended to be a business that challenged the status quo, the record company certainly did that; the major labels had to be loath to see the biggest pop act in the world striking a blow for artist-owned imprints. If successful, the Beatles’ label would be difficult to compete with — what artist wouldn’t want to be associated with the Beatles? And Apple Records showed every sign of becoming a quick success with hits by Mary Hopkin and the Iveys (who later changed their name to Badfinger) and clearly could have become a powerhouse. Aside from the Beatles, Apple signed James Taylor and was in the hunt for Crosby, Stills, Nash, and Young.

Yet Apple’s description as the unbusinesslike business would prove far too accurate. A series of McCartney-designed ads inviting everyone to submit demos ran in Rolling Stone and New Musical Express and soon produced a mountain of tapes and queries from around the world that then sat unopened and unheard. Worse, the record company was just one of numerous Apple Corps Ltd. companies and about the only one that the Beatles and the friends they’d selected to run them knew anything about. There was a music publisher, a film company, a recording studio, a design firm, and an electronics lab run as a dream factory/playroom for their protégé “Magic” Alex Mardas, a former TV repairman turned self-styled inventor and visionary. Mardas’s gee-whiz projects were said to include a car that changed colors, wallpaper that acted as a stereo speaker, and invisible sound barriers. One of the most concrete projects, an attempt to build a seventy-two-track studio in the basement of Apple’s London offices, resulted in a sixteen-track console that was all but useless; the Beatles ripped it out after the first day.

The fatal flaws wired into Apple’s DNA were certainly on display at the Baker Street fashion shop known as the Apple Boutique. Magic Alex’s plan to unveil an artificial sun at the store’s debut came to naught, and the shop, lavishly designed by a Dutch art collective, was opened in December 1967 by Lennon and Harrison and out of business six months later, largely because employees and potential customers simply helped themselves to the merchandise.

The situation at Apple Corps’ Savile Row office was much the same: a free-for-all. The Beatles had announced that Apple would break the rules, but in practice, it had no rules. Publicly, the Beatles talked as if they would continue on that path. When announcing the closing of the Apple Boutique, McCartney, who was the most hands-on regarding Apple, had taken pains to continue casting the company in a soft Aquarian light, emphasizing that they were going to give away their remaining stock rather than consign it to a broker, find new jobs for and provide generous severance pay to the employees who’d helped drive the store into the ground, and otherwise continue to be groovy. Perhaps he was thinking primarily of the band’s reputation. Privately, the Beatles were coming to see Apple as a giant financial sinkhole, one that was costing them a fortune and taking all their attention. “I wanted Apple to run,” McCartney said. “I didn’t want to run Apple.”

Lennon, though less involved in Apple’s day-to-day business, was the first to publicly sound an alarm. “We haven’t got half the money people think we have,” he told journalist Ray Coleman in early January 1969. “It’s been pie-in-the-sky from the start. . . . We did it all wrong — you know, Paul and me running to New York saying we’ll do this and encourage this and that. It’s got to be business first, we realize that now. . . . It needs a new broom and a lot of people there will have
to go. . . . If it carries on like this, all of us will be broke in the next six months.”

Lennon’s assertions that the Beatles were in imminent financial danger came as a shock to many when they were published five days later in Disc and Music Echo. They also produced opposite emotions in two particular quarters. In London, McCartney called Coleman, who’d covered the Beatles since the earliest stirrings of Beatlemania, and chided him for publishing the remarks. In New York, Allen Klein knew his moment had arrived.


Very few people ever earned the unwavering trust of the Beatles. Derek Taylor did.

An established journalist when the Beatles were on the rise, Taylor was an early and unqualified admirer; he got and loved them right away. As a result, he was invited into the tent, collaborating on an early syndicated column by George Harrison and later ghosting Brian Epstein’s autobiography, A Cellarful of Noise. By the mid-1960s he was a press agent, first for the Beatles and then on his own in California, where he helped establish the Byrds and worked with the Beach Boys and Paul Revere and the Raiders. After promoting the Monterey Pop Festival, he settled in for a year at A&M Records as the “house hippie.”

Difficult to imagine now, the house hippie was an odd, amorphous, not always legal, and important record-industry role in the mid- to late sixties, a position that required its holder to be part go-between, part cultural ambassador, and 100 percent double agent. At the time, record-company executives were unsure how to deal with artists from the underground, and it was the house hippie’s job to show them what to do — and to show the artists that the record company “got” them. It was an unusual tightrope walk, and its most admired practitioners — Billy James at Columbia, Andy Wickham at Warner Brothers, and Derek Taylor at A&M — had the rare and valuable ability to keep their footing while astride two worlds. When the Beatles started Apple, Derek agreed to be its press liaison.

Two days after Lennon’s worries concerning the Beatles’ financial future were published, Andrew Oldham’s partner Tony Calder offered to drive Taylor to the office, primarily so he could deliver a message to him from Klein.

“Allen Klein says you are in his way,” he told Taylor. “Allen says you are blocking him from meeting the Beatles and doing business with them. He thinks you’re sore at him.” Taylor was flabbergasted. Nothing could be farther from the truth. A few years earlier, Oldham and Klein had spoken with Taylor about handling press for the Rolling Stones and then nothing had come of it, so while Taylor could certainly see why Klein might imagine he bore him a grudge, his only lasting feeling had been bemusement. He’d found Klein both grating and oddly ingratiating. Allen had offered him sound and thoughtful financial and business advice but only, Derek suspected, as a way to impress him.

“He is an asshole for thinking that,” Taylor told Calder, and he offered to do what he could to clear the way for Klein.

“Allen Klein wants to meet the Beatles,” Taylor told Apple director Peter Brown.

“Does he ever!” Brown quipped. A former assistant to Brian Epstein at NEMS, Brown remembered Klein’s earlier unsuccessful attempt to woo Epstein. He told Taylor that the only impediment to Klein’s speaking with the Beatles was the musicians themselves.

Taylor sent a message back to Klein telling him to call. But a few days later Taylor heard from another Klein emissary, Stones’ publicist Les Perrin, that Allen still couldn’t get Brown to put him through. When Lennon and Harrison came in for lunch that day, Taylor broached the subject directly and learned that Lennon had told Brown he didn’t want to take the calls. Derek allowed that Klein was a little strange and that his reputation and tactics engendered strong feelings;
he characterized him as “hated by many who have never met him and by some who have only heard of him,” to which Harrison deadpanned that Klein sounded really nice. Nonetheless, Taylor said, Klein might be just the person to sort through the Beatles’ money woes.


Shortly after nine o’clock on the evening of January 26, just eight days after Lennon’s interview appeared in Disc and Music Echo, Allen Klein opened the door of his penthouse suite at London’s Dorchester Hotel and invited in John and Yoko Ono.

Both men were on their guard, agitated, and anxious. For Allen, this was it — the crucial moment in years of planning and scheming. Could he harness his nerves and put it over?

Klein’s public pursuit of the Beatles — particularly the repeated boasts that he would get them, that it was just a matter of time — had spooked Lennon. “He called me once but I never accepted it,” Lennon said. “I was too nervous.” Still, he was impressed with how well the Rolling Stones had done since pairing with Klein and couldn’t square it with the dark rumors he’d heard. “I could never coordinate it with the fact that the Stones seemed to be going on and on with him . . . I started thinking he must be all right.” Yet Lennon began to relax only when he realized that Klein was at least as nervous as he was. “You could see it in his face,” he said. “When I saw that I felt better.” Lennon also liked that Klein had made sure the three of them were alone in the room to establish a rapport, although Allen’s assistant Iris was nearby in case they needed anything. Klein offered them a carefully researched and prepared vegetarian meal — exactly the macrobiotic dishes John and Yoko preferred — and his tone was unusually personal and unguarded: Let’s put business aside for a bit and see what we make of each other. It felt as if Klein had come to them naked with nothing to

It wasn’t what Lennon expected. Since Epstein’s death, the Beatles had sought out new management and advisers in fits and starts. They knew they were rudderless and courting real financial danger, yet they were skeptical and distrustful of outsiders and had no idea whom to turn to. Along the way, Lennon and McCartney had looked at a number of possibilities. At Paul’s suggestion John met with Lord Beeching, the chairman of British Railways. The meeting did nothing except confirm John’s suspicions that everyone in the business world was an animal, and he’d be fucked and damned before he’d have anything to do with any of them.

Allen’s music-business expertise and take-no-prisoners negotiating style at least fit the job. But more important to Lennon was the feeling he got that Klein was cut from a different cloth than the others he’d met — the same plain, coarse, ordinary cloth that Lennon flew for a flag. John, who had a world-class chip on his shoulder, listened to Allen’s stories about the orphanage and the painful indifference of his father and his childhood on the streets of Newark, and he saw himself: the underdog who had proven to be the leader of the pack, the everyman who’d had the temerity to become extraordinary only to be rewarded with the scorn of all the third-rate bastards he’d bettered and beaten.

Allen had spent years preparing for this moment. He didn’t make a direct pitch, since they all knew why they were there, and he won points with the couple for doing what few did: speaking to them as partners and equals. And while Klein was the first to admit that not everything the Rolling Stones recorded was for him, his appreciation for the Beatles’ genius was boundless. He didn’t talk about business; he talked about Lennon’s music, correctly picking out which songs were John’s and noting where Lennon’s contributions and personality could be found in compositions primarily written by McCartney. Lennon was floored. He would later compare Klein to a human jukebox for his awesome ability to recall what felt like every pop lyric written in the last fifty years.

Clearly, Klein’s obsessive research had paid off. In Lennon’s estimation: “Anybody who knew me that well — without having met me — had to be a guy I could let look after me.”

Lennon told Klein that he wanted him to handle his and Yoko’s business. He added that the Beatles had recently asked New York attorneys Lee Eastman and his son, John, to look into their affairs. The elder Eastman had a well-established practice that at one time had focused on music publishing but was best known for representing painters, particularly Willem de Kooning. Lee and John were also the father and brother, respectively, of Paul McCartney’s girlfriend, photographer Linda Eastman. Klein, continuing to play it cool, didn’t ask Lennon to formalize their arrangement. They continued chatting until 3:00 a.m., when John finally asked if Allen didn’t need something in writing.

A portable typewriter miraculously appeared from the bedroom. Yoko sat on the floor and typed out brief letters, similar in wording to the one Klein had given Sam Cooke to sign, informing the top executives at EMI, music publisher Northern Songs, the Beatles’ accountants at Bryce Hamner, and NEMS that John Lennon had retained Allen Klein to look into his business affairs and to please provide him with any help he required.

Holding a letter — he would later have one framed — Allen was overcome. “At last!” he said. “At last!”

Excerpted from "Allen Klein: The Man Who Bailed Out the Beatles, Made the Stones, and Transformed Rock & Roll" © 2015 by Fred Goodman. Reproduced by permission of Houghton Mifflin Harcourt. All rights reserved.

By Fred Goodman

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