Apple – Part Three: De-Klein and Fall

Desperate to put Apple in some kind of order The Beatles considered hiring several British business executives but none seems suitable, or even felt they could help. John even showed the accounts to Lord Beeching, who was famous for the Beeching ‘axe’ of most of the British Railway network in the 1960’s. However, all he could say was that the Beatles should stick to music.

Allen Klein had the reputation of being the toughest manager in the music business. He already handled the Rolling Stones and made it no secret that he wanted the Beatles as well. Therefore when Klein saw an article in Rolling Stone magazine in which John Lennon said that Apple was losing money fast he saw his chance. He packed his bags and headed for England and awaited The Beatles call.

The call finally came from John who was advised by Derek Taylor that Klein could be the man they were looking for.

At their first meeting at the Dorchester Hotel John was surprised to find that Klein was warm and likeable and as nervous about the meeting as he was. Klein also seemed to know more of John’s lyrics than John himself! They got on so well together that John immediately sent a letter to Sir Joseph Lockwood – head of EMI – telling him of Klein’s appointment to look after his affairs.

John’s next task was to convince the other three Beatles of Klein’s ability. George and Ringo were won over easily but Paul was another matter. This was because Paul was at the time dating Linda Eastman whose father and brother, Lee and John, were top show business lawyers and Paul wanted them to manage his affairs.

Paul was less worried about the state of Apple than John. He wrote the Apple artists and employees a memo saying – “In case you’re worried about anything at Apple, please feel free to write a letter telling me about the problem. There’s no need to be formal, just say it. Incidentally things are going well, so thanks – Love Paul”.

Following John Eastman’s visit to London all four Beatles signed a letter of authority for him to act on their behalf in contractual matters. This was despite him failing to make a good impression on certain members of the band.

John Eastman’s first priority was to buy up NEMS Enterprises. Brian Epstein’s old company. The company was now run by Brian’s brother, Clive, and he was looking to sell. In late 1967 he received an offer from Triumph Investment Trust, a city merchant bank. Triumph offered £1 million and John Eastman persuaded The Beatles to match the offer. Sir Joseph Lockwood had agreed to advance The Beatles the entire sum against future royalty earnings. Clive Epstein thought the Beatles had a moral right to NEMS and therefore notified Triumph that the deal was off.

It was at this point that Klein came on the scene. The initial plan by John, George and Ringo was that both Eastman and Klein should manage Apple. However the Eastmans did not trust Klein and rows started immediately. They convinced Paul that Klein wasn’t to be trusted.

The inability of Klein and Eastman to come to terms with each other created two totally opposed hostile camps. Klein was in as far as John, George and Ringo were concerned. Klein was convincing because he said that he would only take 20% of increased Beatles business. If things stayed as they were he would not get a penny.

However with the rows at Apple the deal with NEMS was delayed and Clive Epstein became impatient and reopened negotiations with Triumph. The Beatles advisors were so bogged down they couldn’t respond and Clive Epstein sold NEMS to Triumph in February 1969. Klein, however, went to EMI and made sure The Beatles cut themselves off from NEMS and Triumph – and claimed half a victory.

Klein then turned his attention to the staff at Apple. Before he arrived on the scene it was just like a continuous party at 3 Savile Row. Later John Lennon said “People were robbing us and living off us. 18-20 thousand pounds a week was rolling out of Apple and nobody was doing anything about it. All our buddies that worked for us for fifty years were all just living, drinking and eating like f***ing Rome, and I suddenly realised it …. we were losing money at such a rate that we would have been broke – really broke.”

Two dozen people were either sacked or resigned in despair. There were no more hired cars, no more liquor for guests, and workers had to sign in and out. The party was over. Apple finally became a profitable organisation but all the original ambitions were lost in its pursuit.

By Richard Porter.

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