How to Handel Money - What is it with Musicians and Money?

Sometimes you come across the most bizarre and, therefore, the most intriguing pieces of research. Like in the case of George Frideric Handel, composer and all round master musician. But did you know he was also a canny investor?

Ellen T. Harris is Professor Emeritus in Musicology at the Massachusetts Institute of Technology, and has written about Handel and the Bank of England.

George Frideric Handel was born on 23 February 1685 in Halle, then part of Brandenburg-Prussia. Although German by birth he is now famous for his musical career in London where he lived from 1712 until his death in 1759. A Baroque composer, he wrote operas, oratorios, anthems, and organ concertos.

In addition, Handel was also something of a musical entrepreneur. An internationally renowned composer, virtuoso performer, and music director of London’s Royal Academy of Music, he started three commercial opera companies to supply the English nobility with Italian opera. By the time of his death he had been well and truly embraced by the British Establishment and when buried in Westminster Abbey – the ultimate accolade from that Establishment – he was famous – and rich.

Harris’ researches were not so much interested in the musical legacy of Handel as in how he handled his vast wealth. So some twenty years ago she began to explore Handel’s personal accounts at the Bank of England. For her, these financial records provided a unique window on Handel’s career, musical environments, income, and even his health.

It is said that his business savvy came from his father – a courtier, barber surgeon, and wine dealer. By the time Handel arrived in London he had already made a name for himself in Germany and Italy aged just twenty-five.

The young Handel dabbled in buying stocks and became involved in what would become of the earliest and worst stock crashes, now known as the South Sea Bubble. In 1715, Handel purchased £500 of South Sea Company shares. The shares climbed sharply in value, before crashing in 1720. But after that there was some rescue offered to the many investors caught up in this and on the whole Handel timed his market moves and so, eventually, did not lose money from his holdings of South Sea stock. Especially as he had been trading some of his shares before the crash.

For the rest of his life, Handel would trade in stocks and shares, and profitably it seems. He did this alongside a glittering musical career that paid him handsomely in any event. When he died Handel was a millionaire many times over.

Handel is not the norm in the world of music, however. There are many stories of gifted musicians who end their days – often tragically early and broke! Why is this?

Well it is one thing to be gifted musically quite another to be gifted with the management or investment of money. The more successful musicians realized this early on and so employed good, trustworthy managers.

It is one of the saddest bits of many music legends of how some were exploited, however. Take The Beatles. One would think that such a successful band must have made a lot of money quickly. They did. But take a look at their first contract.

On 24 January 1962, John Lennon, Paul McCartney, George Harrison and original Beatles drummer Pete Best signed a management contract with Brian Epstein. At the time, McCartney, Harrison and Best were all under 21 years old so had to have parental consent to sign! Obviously this made little difference to the deal that they signed up to. For that contract promised their manager Epstein a fee of 10%, rising to 15% if their income exceeded £120 a week – a sum that McCartney had negotiated down from 20%.  So of all the money that The Beatles would earn Epstein would take 15% essentially. Now the other 85% was split four ways – just over 21% each for the band members. Not a bad deal for Epstein, but there was yet another contract when Best was booted out to make way for Ringo Starr on drums.

In October 1962, the band signed a second contract with Epstein, giving him an even higher percentage of their earnings around 25%. So again, the split for the actual band members decreased to around 19% each.

Of course, neither Epstein nor anyone else knew just how successful The Beatles would become. As John Lennon later said: “He wanted to manage us and we had nobody better so we said, all right, you can do it.”

At first, for both Epstein and The Beatles it looked like a good deal. Quickly Epstein secured a record deal with EMI. The band and their music then set about conquering the world and as they say the rest really is history in their case.

But that original EMI contract was terrible too. It gave The Beatles just one penny for every record sold, split between them, meaning they each earned a single farthing in the then UK currency from each piece of vinyl they shifted. Now as a single sold for about six shillings and three pence in those days this meant The Beatles’ royalty worked out at 0.35 per cent each. This royalty rate was further reduced for sales outside the UK: just half a penny per single, again split four ways.

And so on, now, what saved the band financially was the simple fact they were phenomenally successful, like very few other ever before or since. The fact is they needed to be with a contract like that.

Following the success of The Beatle’s second single, Please Please Me, Epstein set up a publishing company, Northern Songs. This was to control the copyright of all Lennon/McCartney compositions between 1963 and 1973. That deal was another disaster: 51% of the company was owned by other investor with Epstein owning 9% and Lennon and McCartney – the songwriters – sharing the remaining 40%. When the other investors sold their shares to Associated Television in 1969 Lennon and McCartney lost the rights to their own songs.

But there were other financial disasters early on for The Beatles. When the hottest property on the planet Hollywood wanted a Beatle film. A Hard Days Night was planned to be the band’s first move into cinema. The studios were keen that the band took no more than 25% of the film’s profits, which were going to be immense. Epstein walked into the negotiations and made the following statement: “I think you should know that the boys and I will not settle for anything less than 7.5%.”

His merchandising deal was even worse. When Beatlemania was at its height with the band’s image on everything from pens to clocks to wigs Epstein signed away 90% of his merchandising to just one company. It is estimated that that deal alone cost the band $100 million.

The Beatles still made a lot of money, many, many millions but it is no thanks to their manger. Epstein later admitted: “I have no musical knowledge, nor do I know very much about show business or the record business. The Beatles are famous because they are good. It was not my managerial cunning.”

The Fab Four would have done better to have looked to the earlier musical genius of Handel and how he handled money and made himself rich by means of his talents – both musical and financial.