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 Music & Records Incorporated. Klein increased profits for his musician clients by negotiating new record company contracts. He first achieved monetary and contractual gains for Buddy Knox and Jimmy Bowen, one-hit rockabillies of the late 1950s. He then managed Sam Cooke before becoming the manager of the Rolling Stones and later the Beatles, along with many other artists. This made him 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". Through these agreements, a company that Klein owned became an intermediary between his client and the record label, owning the rights to the music, financing the recording and production of the music, selling them to record labels to manufacture and distribute the music, and subsequently 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. The Rolling Stones in particular accused Klein of withholding royalty payments, stealing the publishing rights to their songs, and neglecting to pay their taxes for five years, thereby 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.
Klein was born in Newark, New Jersey, the fourth child and only son of Jewish immigrants. His mother died of cancer soon afterward, and Klein lived for a time with his grandparents, then in a Jewish orphanage, until his father remarried shortly before Klein's 10th birthday. An indifferent student, he graduated from Weequahic High School in 1950; fellow graduate Philip Roth was the only classmate to sign his yearbook.
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.
In 1963, Klein began a business partnership with Jocko Henderson, an urbane black disc jockey who had daily radio shows in both Philadelphia and New York City. Henderson hosted lavish, profitable live rhythm-and-blues shows at the Apollo Theater in Harlem, and formed a partnership with Klein to begin doing the same in Philadelphia. As Henderson's partner, Klein was introduced to Sam Cooke, a preeminent talent equally adept at writing, producing, and performing his numerous hit records. Cooke had four top-ten hits between 1957 and 1963, including his number one hit, "You Send Me," among 33 records in the top 100 in that period. Although Cooke was clearly making his label, RCA Records, a great deal of money, label executives nonetheless repeatedly refused to honor his many requests for a review of his accounts. Klein forced the label to open its books for a thorough audit. Shortly afterward, RCA agreed to renegotiate Cooke's contract.
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.
Mickie Most and the British Invasion
In 1964, Klein became the American business manager of Mickie Most, a former singer who was the producer of hits for the Animals and Herman's Hermits. Klein extended to Most a million-dollar promise, adding that if he failed to deliver in only one month, Most owed him nothing. Klein did deliver, through strategic renegotiations of existing contracts and new producing opportunities for RCA, including offers for Most to produce for both Cooke and Elvis Presley. Though the latter two prospects did not materialize, Most was suddenly one of the most talked-about and financially gratified figures in the English recording industry, and Klein was a step closer to eventual agreements with both the Beatles and the Rolling Stones.