Prince Rupert zu Loewenstein: Banker whose invention of the business model for modern rock made rich men of the Rolling Stones
Thursday 22 May 2014
Prince Rupert zu Loewenstein described the various roles he performed for the Rolling Stones between 1970 and 2007 as "a combination of bank manager, psychiatrist and nanny, a little bit of agent, business manager, accountant." He was correct in emphasising the financial aspect of what he did for the group, who were nearly broke when Mick Jagger asked for help to extricate them from the clutches of the infamous New Jerseyite Allen Klein in 1968.
With Loewenstein as adviser, the Stones invented a business model designed to maximise income from touring, recording and music publishing, and minimise their exposure to UK tax by living abroad and domiciling their companies in more advantageous territories such as the Netherlands. This business model became the template for many of the biggest acts in the world, including Cat Stevens and Pink Floyd, both Loewenstein clients in the 1970s.
Born at Palma, Majorca, in 1933, he could trace his Bavarian ancestors back to the 15th century. A pupil at Beaumont College, the Catholic public school in Windsor, he read Medieval History at Magdalen College, Oxford, where he formed lifelong friendships with Jonathan Guinness, now Lord Moyne, and Richard Cox-Johnson. In 1962, after training with stockbrokers Bache & Co, he joined forces with Guinness and Cox-Johnson to acquire the merchant bank Leopold Joseph for £600,000. "We decided that young people plus a small traditional City bank was a combination that made sense," Loewenstein recalled. "In those days, many wealthy families had their own financial organisations to manage their money."
They refocused the Leopold Joseph business away from its old-fashioned clientele towards corporate finance and new money. "It's much more interesting than old money," he said. "People with old money are nearly always having to be adjusted downwards; those with new money are much more realistic."
Loewenstein first met Jagger in 1968, at a party held at the Chelsea home of the banker Peter Denman. "We walked into the room and found everybody stoned," he recalled in his 2013 memoir A Prince Amongst Stones. "One of the people whom I tripped over was Mick."
Loewenstein was not a rock fan but took their second meeting, arranged by the art dealer Christopher Gibbs at Jagger's Chelsea Embankment house, more seriously. "At the end of our conversation, it was clear to me that Mick and I had clicked on a personal level," he wrote. "Essentially, the band were handcuffed on the one side by their contract with Allen Klein, and on the other to Decca Records. My job was going to be to allow them to escape, Houdini-like, from both. I also realised that if a way could be found to get past the dodgy business practices that surrounded touring, there was a lot of money to be made."
Looking at British stars who had moved abroad like Noel Coward and Richard Burton, he suggested the Stones "would have to abandon their UK residence. If they did not do this, they could be paying between 83 and 98 per cent of their profits in British income tax and surtax. I selected the South of France as a suitable location" Richards might have talked up the romance of a group driven out by the establishment and recording Exile On Main St on the French Riviera, but as Loewenstein wrote, it was "the only rock album to contain a reference to tax planning in the title." Save for the occasional studio track and live concert, the Stones would not record in the UK again, and rehearsed in Canada before US jaunts. Their tax exile status has been much imitated.
Securing freedom from Decca and the litigious Klein proved costly. Litigation continued for another 18 years after a first agreement in 1972 gave the Stones $1m and Klein's ABKCO the copyrights to the band's '60s recordings, another album, and two tracks from 1971's Sticky Fingers recorded under his watch.
A former LSE student, Jagger found a savvy ally in Loewenstein who orchestrated an undercover auction, helped the Stones start their own label and sign a distribution deal with Atlantic in 1971. The agreement enabled the band to retain the rights to subsequent albums and negotiate new contracts with EMI, Columbia, Virgin and Universal over the next three decades. Given the fact that the Stones have never released a blockbuster album but have been steady catalogue and compilation sellers, this proved a shrewd move from Loewenstein – "very pukka, trustworthy, the mastermind of our set-up," as Richards described him in his memoir Life. He was also behind their decision to license the Jagger-Richards composition "Start Me Up'' to Microsoft for their Windows 95 campaign for a reported $4m. Along with guitarist Ronnie Wood, he also succeeded in putting an end to "World War III" and reconciled Richards and Jagger after the singer's attempt at a solo career.
In 1989, the Canadian impresario Michael Cohl guaranteed Loewenstein and the band $40m for 40 shows. This paved the way for the Steel Wheels tour and the Urban Jungle dates the following year to become the most financially successful tour in rock history, grossing over $260m. Subsequent tours proved even more lucrative, culminating with A Bigger Bang grossing close to $560m by its close in 2007.
The previous year, Loewenstein had suffered a major haemorrhage and decided to bow out. "I could not see the Rolling Stones being able to manage more than one or two more tours of the magnitude of their previous global circumnavigations," he said.
He was never tempted by the rock'n'roll lifestyle, a valuable asset within the Stones inner sanctum. He handled the financial fall-out from Jagger's divorce from his first wife Bianca in 1978 and his separation from his long-time partner Jerry Hall in 1999 and remained on friendly terms with the singer until A Prince Amongst Stones. This prompted Jagger to say, "Call me old fashioned, but I don't think your ex-bank manager should be discussing your financial dealings and personal information in public."
His daughter Dora collaborated with Jools Holland on the 1998 coffee table book The Rolling Stones: A Life On The Road. Both his sons became priests.
Rupert Louis Ferdinand Frederick Constantine Lofredo Leopold Herbert Maximilian Hubert John Henry zu Loewenstein-Wertheim-Freudenberg, banker and business manager: born Palma, Majorca 24 August 1933; married 1957 Josephine Lowry-Corry (two sons, one daughter); died Richmond 20 May 2014.
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