He's still standing: Other megastars may succumb to drugs and booze, but Elton John's money machine keeps churning out millions. Chris Blackhurst reports

Click to follow
All the pay cuts and layoffs cripple me inside

I pay the price for living every day

So sings Elton John on his latest album, The One. Since its British launch three weeks ago, The One has sold almost 200,000 copies and is now at No 2 in the chart. PolyGram, its distributor, confidently forecasts it will sell over a million in Britain alone. Worldwide, the figure will be many millions.

Together with a 150-date world tour, The One could, according to industry estimates, make pounds 7m for the 45-year-old entertainer over the next year.

Last weekend, more than 200,000 people paid pounds 22.50 each to watch Elton John and Eric Clapton on stage at Wembley. Then Elton was off to sell-out performances in Birmingham and continental Europe. Last night he was in Basle; this week it is the turn of Bologna and Rome.

They will pay to see the public face of Elton John. They will watch the legendary Rocket Man, the wearer of zany costumes, weird spectacles and bizarre hats - or, as at present, a schoolboy-mop hair extension costing a reported pounds 14,000.

But a percentage of their money - for the tickets, T-shirts, records, posters, programmes and videos - will go to his very private business empire.

Administered by John Reid, his manager, Elton John's business nestles in three tightly held private companies, one of which, Watside Charities, is a registered charity.

All three have substantial turnovers but seem to make comparatively little in the way of taxable profits and therefore pay little corporation tax.

In the case of the two most successful companies, a large chunk of their income is consumed by the cost of their sole employee: Elton John.

In public, Elton is the typical pop star, who once declared he did not read contracts, the traditional bane of a recording star's life. In private, he is a money-making machine who, according to his biographer, Philip Norman, on the way back to the hotel after a concert would detail in a notebook the size of the audience and the estimated box-office takings.

While other rock stars have succumbed to drugs and booze - and he has had his share - Elton has kept churning out the music and adding to his fortune, now widely reported to be pounds 100m.

Over the years, no rock star has been able to match his prolific work-rate or worldwide appeal. Madonna and Michael Jackson may be bigger, but they have not been hitting the charts, as he has, since 1972. He has 24 platinum albums (sales of more than a million copies each) to his name. They include his last releases, Sleeping with the Past (3.5 million) and The Very Best of Elton John (7.5 million outside North America, where it is not available).

According to one recent music industry calculation, podgy, balding Reginald Kenneth Dwight (his real name) from Pinner, Middlesex, accounts for 3 per cent of annual record, tape and compact disc sales worldwide.

Whenever his popularity shows signs of waning in one country, says a spokesman for Reid, 'we discover somewhere else where he is growing'.

And unlike many other megastars, he has not suffered a serious financial setback through any dispute with management or the tax authorities.

For that the credit must go to Reid. Through more than two decades of Elton's frequently lavish spending and sometimes outrageous behaviour, Reid has kept his charge's business affairs ticking over. Few people have been more famous for spending money and living life to the full than Elton John. Like Liberace, once his hero, nothing was too ornate or fantastic.

He loved football, so he backed Watford, the nearest league club. He gave a gold Rolex watch to each member of an orchestra, an original Rembrandt to a favourite guitarist. He went to Australia and came back with a Melbourne municipal tram. He lost a pounds 6,000 limited-edition gold Cartier watch. He let his bath run over at the Savoy while he made a phone call and caused pounds 5,000 of damage. He once reportedly ran up a pounds 6,000 bill on wines at one meal for himself and a 14-strong party at a Dallas restaurant.

For his 42nd birthday, he spent a reported pounds 200,000 on a party in France. More than 200 guests were flown over and treated to a spectacular meal - the centrepiece of which was a nine-foot replica of the Eiffel Tower - served by uniformed footmen in wigs and tails.

He threw equally spectacular parties at his mansion in Windsor. He mixed with royalty, he went to dinner with the Reagans at the White House and described it as 'so boring I almost fell asleep'.

He went on crash diets and tried expensive baldness treatments. He confessed to being bisexual. In 1984, in a blaze of publicity, he married Renate Blauel, his German recording engineer. They spent much of the next four years apart before separating permanently. He sued Dick James, his former manager, and won. He won pounds 1m in libel damages from the Sun.

More recently he has been selling: shares in Watford and much of the contents of Woodside, his former matrimonial home. The reason for the sales, say his management, is that he is rich and rich people buy and sell things. Sceptics incorrectly put the sales down to desperation: he had frittered his millions away; he was hard up; he was bust. Others put the sales down to a purging of the recent unhappy past rather than a serious attempt to raise cash.

He still has his art and the world's largest private collection of records. He put his penthouse flat in Chelsea on the market for pounds 1.25m - he had never spent a night there - but still has the Windsor home and a house in Holland Park. And he can still make money at the drop of a hat. Earlier this year, he signed a pounds 9m deal with PolyGram to make just six records and received pounds 3m for making a series of Diet Coke commercials.

He also went public on drink and drugs. He attended sessions of Alcoholics Anonymous and was treated for cocaine addiction at a clinic in Chicago.

In a video costing pounds 11 to fans on the current tour he says: 'There are several things in life now that I never used to take notice of. It sounds terribly corny - beautiful days, trees, flowers. I never used to get up during the days. I used to hide behind the curtains. I used to hate the sunshine. I used to get up when the day was finished. I feel I have become a simpler person.'

But while he was hiding behind the curtains, Reid was keeping the money coming in. What began as a love affair in 1970 between Elton and Reid has become one of the most enduring and successful professional relationships in the music business.

They were like chalk and cheese. One was stocky and losing his hair, the other sleek and diminutive. Elton was the well- meaning boy from the Home Counties, Reid the hard-edged, ambitious wheeler- dealer from Paisley, near Glasgow.

When they met, Reid was managing the Tamla-Motown label for EMI. Elton and his mother encouraged him to leave EMI and join Dick James Music as Elton's personal manager. At that time, the maximum rate of income tax was over 80 per cent. To reduce the star's tax burden, his overseas earnings were separated from his domestic income. Henceforth, one company would look after his overseas earnings while another would receive his domestic income.

Gradually, says Simon Garfield, author of Expensive Habits - The Dark Side of the Music Industry, Reid steered Elton away from Dick James. 'They expressed unease at what might be happening to John's publishing income in America - they suspected that Dick James's US subsidiaries were siphoning off larger than normal amounts before returning his earnings to be split at home.' The final break came in 1975. By then, adds Garfield, 'Elton John had written 136 songs and recorded 169.'

Since then, under Reid's guidance, Elton and his manager have apparently prospered. According to Philip Norman, Reid is also a multi-millionaire, with a fortune estimated at pounds 12m.

With one or two refinements, the superstar's British business has evolved into three separate holding companies.

Watside Charities. A registered charity, Watside has two directors, one of whom is John Reid. In the year to the end of March 1990, it had income of just pounds 30,480, paid administration expenses of pounds 2,730 and retained profits of pounds 27,750. There is no indication at Companies House or the Charities Commission of Watside having made any substantial donations in this period.

In the past John has been generous with donations. He once presented a cheque for pounds 320,000 to four Aids organisations and announced that all future royalties from British singles would go to charity. But in its latest accounts Watside, described by Reid's spokesman as 'the company that collects the money and makes the charity donations on behalf of Elton John', seems threadbare.

Watside has two subsidiaries, Happenstance and J Bondi, both of which are 99 per cent owned by the charity.

Happenstance gives as its principal activity the 'exploitation of entertainers outside the UK and Ireland' - although, curiously, The One, on sale in UK record shops, is copyrighted to this company.

Happenstance has three directors, two of whom are Elton's mother and stepfather. It has one employee, their son.

In the 12 months to 31 March 1990, it had turnover of pounds 6.1m. But when costs, including the pounds 2.6m salary of the sole employee, were deducted, Happenstance made profits of just pounds 45,000. As for Watside, it received just pounds 18,000 in dividends.

Described by Reid's spokesman as 'Elton's touring company', J Bondi, like Happenstance, has only one employee. It had sales of pounds 12.2m in the year to 31 March 1990, but managed a gross profit of only pounds 48,000. Costs, including payments to Elton of pounds 1.4m, wiped out any substantial corporate tax gain.

William A Bong. Formed in 1971, it has one director, Sheila Farebrother, Elton John's mother. Now in her mid-sixties, Mrs Farebrother gives an address in Spain.

Owned 99 per cent by Elton and 1 per cent by Reid, its principal activity is 'exploiting and receiving the income of composers and entertainers'. In the year to March 1991, it had turnover of pounds 1.85m, divided 50-50 between records and music publishing royalties, but registered a pre- tax loss of pounds 102,000. William A Bong owed pounds 1.5m to other Elton-linked companies.

Its two main subsidiaries are Rocket Music and Rocket Records. Originally conceived as an independent record and music publishing label, Rocket had some hits, with the likes of Kiki Dee, Judie Tzuke and Fred Wedlock singing The Oldest Swinger in Town. More recently, though, the other acts have gone and today the label only promotes one artist: Elton John.

Big Pig Music. Owned 50-50 by Elton and Bernie Taupin, his long-time songwriter, Big Pig is a joint music publishing vehicle. In the year to 31 March 1991 it had turnover of pounds 1.5m. Yet again, though, serious profit appears to have slipped Big Pig by. After cost of sales were removed, it showed a net gain of only pounds 164,000.

Despite their separate legal identities, the companies are close. They can all be contacted through John Reid Enterprises, his management company. And they all trade with each other.

In the 1991 accounts, for instance, Happenstance owed pounds 407,000 to Big Pig, which itself owed pounds 305,000 to William A Bong.

What is strange is that apart from their turnovers, the companies give little indication of the apparent extent of the superstar's earning power or wealth. Instead, they reveal a web of intra-company dealings and costs with little in the way of taxable profits. Obviously, what they do not show is just how much he pays in personal income tax.

The companies were not something the normally gregarious Elton or his manager could find time to discuss.

Elton told Jonathan Ross recently: 'Whenever I had a hit record or met someone, I was never happy with just that. I always wanted more.'

A study of the accounts of his companies, though, suggests 'more' seems to mean more sales, more expenses and not much corporation tax. -

Additional reporting by Samir Shah

(Photograph omitted)