Recession may be the buzzword of the year, but not in U2’s world. The band’s ability to command top dollar seems to be as strong as it always was.
And this week, while students and pensioners took to the streets to protest over a divisive Budget, details of U2’s most recent deal were coming to light.
It was revealed that Bono, The Edge, Adam Clayton and Larry Mullen Jr had received shares totalling €19m as part of their deal with US entertainment giant Live Nation, which was signed amid much industry gossip in March.
The up-front payment — made public after being reported to US regulator Security and Exchange Commission — is effectively a sweetener for signing up to Live Nation’s new model order, and a telling illustration of how crucial the Dublin four-piece is for the US corporation.
It also showcases the unstinting appeal of the U2 brand. After all, the 12-year deal signed with Live Nation is dependent on them being a going concern right up to their late 50s and being able to stay relevant in shifting music climates.
U2, all in their mid-40s now, are expected to play three hugely lucrative tours during the duration of the dozen-year deal. Based on their live outings to date, the band should comfortably pull in over $1bn from touring alone, as well as hundreds of million dollars more on merchandising. Both the band and Live Nation will share a sizeable chunk of all the money earned.
Unlike Madonna and Jay-Z — who both signed big-money deals with Live Nation this summer — U2 will retain control over their studio recordings. They enjoy an existing deal with Universal — the biggest of the four record company ‘majors’ — and their forthcoming 12th album, tentatively titled No Line On The Horizon, will yield the band a rumoured 28pc royalty for each copy sold.
It’s a royalty rate that’s one of the best in the business and one that the band has enjoyed since the mid-Eighties. When one considers that each studio album shifts in the region of 10 million copies — maintaining their position of, in Bono’s words, “the biggest band in the world” — those 28pcs really add up.
U2’s decision to move part of its financial empire to Holland to minimise the tax they pay on the publishing side of their business continues to be criticised. In 2006, the group began moving some of their business affairs to a Dutch finance house in order to avail of a virtually tax-free status on their handsome royalties.
They are believed to have saved around €15m by transferring the music publishing side of their business empire to Amsterdam — a relatively paltry sum given their estimated joint wealth of €690m.
“The reality is that U2’s business is 90pc conducted around the world,” manager Paul McGuinness said at the time. “Ninety per cent of our tickets and 98pc of our records are sold outside of Ireland. It [Ireland] is where we live and where we work and where we employ a lot of people. But we pay taxes all over the world. And like any other business, we’re perfectly entitled to minimise the tax we pay.”
McGuinness — the band’s manager of over 30 years — is seen as the the primary architect of U2’s enormous wealth. Famously, the band divides all earnings in five equal portions, with McGuinness bagging as much as Bono.
Although he holds no business qualifications, McGuinness has been instrumental in managing their finances from day one.
His first role in rock management was looking after the long-forgotten trad-rock band Spud, but when he happened upon U2 he found something he liked in the then rough-and-ready band.
When he first started managing the group, they were still at school and legend has it that he kept the coins for their bus fares in a glass jar, only doling out the amount they required.
While debut album Boy helped put the band on the map, it was McGuinness who pushed them to tour the US — an often crippling expense for fledgling Irish bands, but one which helped foster a mutual love affair between the group and America.
And it was McGuinness who helped restore confidence in a band racked with insecurity after second album October was generally badly received. They re-grouped and hit the big time with its anthemic follow-up, War.
While the temptation must have existed early on to cash in there and then and sell the rights of the band’s songs to the record company, he held firm. Others, such as Paul McCartney, sold the rights to their entire catalogue only to rue the decision shortly afterwards.
It was this intransigence and unshakable belief in U2’s worth that helped McGuinness to negotiate their high royalty rate with Island Records — one of the most lucrative in music history.
McGuinness also conducted the groundbreaking deal with Apple four years ago, which resulted in the U2 iPod, emblazoned with the key colours of their last album, How To Dismantle An Atomic Bomb, as well as helping to make Apple’s iTunes the big success it is today by making 400 of their songs available — a resounding endorsement to the legal download site.
When U2 signed with Live Nation, McGuinness explained the band’s rationale: “There’s a certain convergence taking place in the industry, and it’s obvious that the biggest part of U2’s business now is their live business, even though they’re a major, major record-selling act.”
The band’s relationship with Live Nation has been mutually beneficial. McGuinness says: “For some time now, they’ve been executing, promoting and producing our tours as partners pretty well perfectly. Since they want to consolidate rights and they have an online vision that I believe in, their Ticketmaster deal is expiring, which is going to change their margin, I’m very happy to go into a partnership with them.
And, apart from all the financial stuff, there is a real friendship, a real bond.”
That bond is wholly understandable when one considers that U2’s 18-month Vertigo tour between 2005 and 2007 took in close to €400m, making it the second-highest grossing tour of all time (behind the Rolling Stones).
The length of the deal, which exceeds even Madonna’s 10-year pact, “indeed is a mark of the faith and trust we have in them”, according to McGuinness. “In 12 years’ time, U2 will not even be the age the Rolling Stones are now.”
Unlike Mick Jagger and friends, U2 will be hoping to continue to generate excitement about each new album released rather than rest on a greatest hits routine.
Few bands of their vintage continue to arouse such fascination on the music front and there is building anticipation for No Line On The Horizon, which will be released earlier next year rather than in November as had been originally thought.
After flirting with dance music and electronica in the Nineties, U2 this decade have returned, to some extent, to their roots with a harder, rock-oriented sound. Various members of the ‘U2 family’ have been making encouraging noises of late — including long-term producer Daniel Lanois, who recently described it as “one of the great, innovative records from U2″.
Universal — and Interscope, its subsidiary that U2 now call home — will be hoping that it can follow the successes of the two other albums that the band have released this decade, 2000’s All That You Can’t Leave Behind and 2004’s How To Dismantle An Atomic Bomb.
Meanwhile, Bono was in the news this week for reasons closer to home. He and his wife Ali have applied to Dun Laoghaire/ Rathdown Co Council to add an extension to their Killiney mansion to provide them with a massive master bedroom, two ensuite bathrooms, walk-in dressing rooms and a study.
Although none of the members lives the sort of ostentatious lifestyle enjoyed by Elton John, for instance, they are not exactly scrimping it either.
With homes in Killiney (valued at about €10m) and a villa in the south of France, Bono also spends time in his enormous triplex penthouse apartment in Manhattan.
The Edge divides his time between Dalkey, Co Dublin, a waterside mansion in Malibu, California, and a French villa.
Adam Clayton owns a 20-room pile in Rathfarnham, south Dublin, while Larry Mullen Jr has a pair of large houses in Howth on Dublin’s northside.
- Independent.ie
