More from year 1968
The Beatles’s business difficulties
Aug 06, 1971
Mar 21, 1969
Aug 11, 1968
June 20-25, 1968
Apr 19, 1968
Mar 29, 1968
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In the fall of 1968, it became obvious to Apple’s management team and therefore to The Beatles that the company was bleeding money and the situation was becoming unsustainable.
In October 1968, Stephen Maltz, The Beatles’ accountant and financial adviser for almost four years, had resigned and had sent a long letter to the four Beatles:
Dear John, Paul, George and Ringo, As you are aware, I am leaving Apple today and since I have been connected with you for approximately 3 years, I feel that this is a good occasion to express some of my views and make certain observations. […]
After six years work, for the most part of which you have been at the very top of the musical world, in which you have given pleasure to countless millions throughout every country where records are played, what have you got left to show for it? I am sure you have derived great satisfaction from your work and that materially you have had every comfort you desired. You have had the opportunity of doing whatever you wished to do and to search for whatever you are searching for, but my concern only for you is purely so that you can have enough money to go on doing all these things. Two of you have money in the bank and a vast holding in a public company, but are these shares, in fact, worth to you what they are quoted at? You have shown no inclination so far of diversifying your assets. They are all locked away in a Company solely dependent on you. You therefore have no freedom of action as far as that is concerned. All four of you have houses, cars etc., but you also have tax bills to be paid and tax cases to be won. Meanwhile, the spending goes on. You have already spent the second GBP 400,000 due under the goodwill scheme that has not been approved as yet by the tax authorities. You all have assets in the form of your shares in the Apple companies, but this is only paper until Apple can be built into a position where that paper can be sold, but at the rate Apple is progressing, it seems likely to me that this paper will eventually be valueless. Your personal finances are in a mess. Apple is in mess and I believe honestly that the only way you can get out of it is by trusting Neil and talking to him not as a road manager but as a managing director.
Please believe me when I say that my only wish for you is that you have the millions you so richly deserve, and I hope that I will still have the opportunity of being able to speak to you as frankly and honestly as I have always tried to do.
With all best wishes to you,
It’s not sure The Beatles had read this letter or had taken it seriously. Alistair Taylor, Apple’s general manager, was the one who had to explain the situation to the Beatles:
The meeting Alistair had with the Beatles and Neil Aspinall was extremely difficult. Just for once they listened to the man with the shiny shoes and his advice. He showed them that Apple was losing in the region of £50,000 week in and week out. Projected over a full calendar year the losses would amount to £2.6 million. (Allowing for inflation that equates to around £30 million today.) Yet executives were buying expensive pieces of art for their offices. Equipment of all kinds was ordered and disappearing within hours including major items of furniture and hand made carpets. Staff were given ridiculous salaries. Apple was a magnet for every freeloader and petty thief in London and, indeed, the world.
“If you allow things to carry on the way they are you will lose all of your money within twelve months,” he told the Beatles.
“Don’t be a drag Al,” was Lennon’s immediate response.
“Apple is far too big and complicated a business to be run by Neil and me,” Alistair replied. “We are not up to the job and I include myself in that statement. This company needs a figurehead, a proven businessman. You need someone like Lors Beeching. Otherwise, we’ll all be on the scrap head.” With that, he closed his briefcase and walked towards the door. Everyone was very quiet.
“It’s your decision,” he told them as he left the office.From “Hello Goodbye, the story of Mr. Fixit” by George Bunby
I was getting very worried by now, and I called the boys in, sat them down, and said, ‘Look, this can’t go on!’ Neil [Aspinall] was with us and he was more on their side than mine. I said, ‘Something has got to be done. We cannot go on like this. Look at us. We’re a multi-million-pound company, and you’ve just got us five guys running this company. I can’t speak for everyone, but, for me, it’s beyond me to do it like it should be done. I think we need a top businessman in here to run it. Somebody to control the company.’ John then began to realise that money was flying out.Alistair Taylor – Apple general manager – From “The Beatles: Off the Record” by Keith Badman
For the people who were there, it was too much to run. I’m not an administrator, I’m a terrible administrator, you know. Certain things I’m good at, and some things I’m not, of course. The Beatles weren’t skilled in administrations, why should they be? So, no one was really running the place. It was running itself, but places can’t run themselves. They have to be run, so someone had to come in and do it. This someone turned out to be Allen Klein [early 1969].Derek Taylor – Apple press officer – From “The Beatles: Off the Record” by Keith Badman
We would just spend money, but we didn’t know where we were spending it from or if we had paid taxes on it. We were really in a bad shape as far as that was concerned. Really, none of us could be bothered. We just felt as though we were rich because, really, we were rich, by how many records we had sold and what we did. But it wasn’t really the case. It was just so untogether, you know, the business side of it.George Harrison – From “The Beatles: Off the Record” by Keith Badman
People were robbing us and living on us … Eighteen- or twenty-thousand pounds a week was rolling out of Apple and nobody was doing anything about it. All our buddies that had worked for us for fifty years, were all just living and drinking and eating like fuckin’ Rome! And I suddenly realised it … We’re losing money at such a rate that we would have been broke, really broke. We didn’t have anything in the bank really, none of us did. Paul and I could have probably floated, but we were sinking fast. It was just hell, and it had to stop!John Lennon – From “The Beatles: Off the Record” by Keith Badman
There were huge expenses bills, catering, drinks, free cars and houses for people. Every Beatle had his own personal assistant, all of them overpaid.Tony Bramwell – Quoted in Classic Rock, May 2020
Everybody connected with us is millionaires except for The Beatles. They used to tell Paul and I we were millionaires, and we never have been… George and Ringo are practically penniless.John Lennon – Quoted in Classic Rock, May 2020
We’re extremely vulnerable and we know it. We have made a lot of mistakes because we were too ambitious at first. We tried to do too much at once and the result was chaos. We should never have tried to beat Marks & Spencer with the boutique idea and the other divisions like feature films and electronics were too premature. Now, we have put these companies on ice and are concentrating our activities on records and music publishing. We are all four heavily involved in Apple, although John and I have more money in it because we’re richer … We used to be too generous, but now, if a group comes along and asks us to buy them amplifiers, we’ll tell them to get themselves together as a group first and then come and see us, otherwise it becomes charity, and people resent charity.Paul McCartney – May 1969 – From Badman, Keith. The Beatles: Off the Record .
At the initiative of Paul McCartney, The Beatles then started to look for a new manager for Apple.
John Lennon met with Richard Beeching, ex-chairman of British Railways, who became famous in Britain in the early 1960s for his report, which led to far-reaching changes in the railway network, popularly known as “the Beeching Axe”. The meeting didn’t go well, Richard Beeching telling John to “stick to making records“.
Other ideas were explored. They met with Lord Arnold Goodman, a British lawyer and political advisor, and Cecile King, who was chairman of the International Publishing Corporation (then the biggest publishing empire in the world) till 1968. But both men refused.
I met a lot of people including Lord Beeching, who’s one of the top people in Britain and all that. And though he didn’t want to take the job, Paul had told me, “Go and see Lord Beeching.” So I went. I mean I’m a good boy, man. And I saw Lord Beeching and he was no help at all and he didn’t look nice. I mean, he was alright. He was alright, and everybody I interviewed for the… while Paul was in America getting Eastman, I was interviewing all these top so-called “people.”John Lennon – From “Lennon Remembers” by Jann S. Wenner
Paul McCartney also met with Lord Poole, chairman of the London merchant bank, Lazard Brothers & Co., who offered to look at Apple’s finances at no charge and without becoming officially involved. But Paul didn’t call him back, likely because he now had another idea in mind.
In October 1968, Paul met with Lee Eastman, the father of Linda Eastman and his future father-in-law. He soon became convinced that Lee Eastman, a New York-based attorney with experience with music copyrights, should be put in control of The Beatles’ financial affairs. Lee Eastman indeed had the relevant experience.
The other Beatles were not comfortable with the idea that Paul’s future father-in-law would run Apple, but they agreed to have Lee Eastman and his son John as business advisors for a short while.
There was a point when Paul, with the support of the others, went looking for a major figure to run Apple, on the basis of they were so big and powerful that Neil and I were not qualified to do it. Paul felt that the Beatles needed the biggest and the best to run their corporation. They interviewed English tycoons like Cecil King and Dr. Beeching, but these people were not interested. Not only that, they knew nothing about the music business.Peter Brown – From Granados, Stefan. Those Were The Days 2.0 (pp. 134-135). Cherry Red Books. Kindle Edition.
Paul had been agitating for some time for a new manager for Apple. He was fed up with the way that the company was being run and he asked his future father-in-law, Lee, to recommend someone to put the house in order. Lee, of course, recommended his son, John.Nat Weiss – Beatles attorney – From “The Beatles: Off the Record” by Keith Badman
I put the Eastmans up. I thought they would be fair. For one thing, they are lawyers. They don’t take percentages, they take a fee. So, they manage you, and, at the end of the year, they put in a bill. And, if you don’t like them, you don’t pay the bill. Well, you pay the bill, but you sack them for the next year.Paul McCartney – From “The Beatles: Off the Record” by Keith Badman
[Lee Eastman] would have been good business-wise, but of course he would have too much of a vested interest. He would have looked after me more than the others, so I can understand their reluctance to get involved with that.Paul McCartney – From “And In The End” by Ken McNab
John Eastman gave me the impression of being an inexperienced, somewhat excitable and easily confused young man. We all knew of Paul’s friendship with the family … I was against the idea of having, as manager, anyone in such a close relationship with any particular Beatle, but, apart from that, they did not strike us as having the right experience or knowledge for the job which had to be done.John Lennon – From “The Beatles: Off the Record” by Keith Badman
Despite the other Beatles’ reluctance, they all signed a document early January 1969 (maybe during their January 12 meeting) giving the Eastman & Eastman law firm rights to negotiate contracts on the Beatles’ behalf.
Last updated on February 26, 2022
"With greatly expanded text, this is the most revealing and frank personal 30-year chronicle of the group ever written. Insider Barry Miles covers the Beatles story from childhood to the break-up of the group."
We owe a lot to Barry Miles for the creation of those pages, but you really have to buy this book to get all the details - a day to day chronology of what happened to the four Beatles during the Beatles years!