ABBA: Ready for the “Fortune 500”. To look at these four wholesome
entertainers, one would hardly peg them as owners of art galleries, leasing and
financing companies, and real estate and oil trading concerns. By Sam Graham
Backbeat
They have been called the largest-selling group in the history of recorded music
of the 1970s. They are established stars throughout the world, with only the U.S.
not yet completely conquered. And they’re one of the most profitable
corporations in the world, based on a simple comparison of net vs. gross
profits.
You’ve probably heard dramatic statements like these about ABBA, the Swedish pop
quartet that toured our country for the first time last fall. By their own
estimate, writers/producers/instrumentalists Björn Ulvaeus and Benny Andersson
and singers Agnetha Fältskog and Anni-Frid Lyngstad have sold between 100 and
150 million records and tapes since 1973, thanks to their highly commercial brew
of European melodies and harmonies and American rhythms (and enough hooks to
stock a sizable meat packing plant). But vinyl wasn’t the only cause of their
incredible $US15 million net out of $US25 million gross profit in the fiscal
year that ended on April
30th, 1979. (Their third bonanza year in a row.) ABBA and their
thirty-employee organization control an amazing number of other business
interests, some of which capitalize on the group’s image (T-shirts, posters,
etc.), some of which are completely unrelated.
To look at these four wholesome entertainers onstage, with their matching
jumpsuits, big smiles, and sleek good looks, one would hardly peg them as owners
of art galleries, leasing and financing companies, and real estate and oil
trading concerns. But theirs is a very canny business operation, designed to
minimize the tax bite and maximize security for the group and their families
long after Dancing Queen,
S.O.S., and the others are mere gold
records on a living room wall.
The story of ABBA, their music, and their money inevitably begins with Stig
Anderson, the group’s manager and principal architect of the financial empire.
He has long been a fixture on the Scandinavian music scene, not only as a
popular lyricist/translator, but also as owner of the Polar record label and
Sweden Music, his country’s biggest music publisher. Ulvaeus’ pre-ABBA band was
Stig Anderson’s first Polar artist, in 1964. Ulvaeus later joined with Benny
Andersson, and together they recorded for Polar as Björn and Benny, with Stig
writing the lyrics. The women came along later in the 1960s (Benny and Frida are
married; Björn and Agnetha were recently divorced), and, singing in English, the
four of them moved from big hits in Scandinavia
to a shot at the international scene. Agnetha and Frida were increasingly
featured, and with the two out front on
Waterloo they
won the 1974 Eurovision Song Contest. That started the snowball rolling and the
cash registers ringing.
Understandably,
Anderson has
just about given up his lyric writing. (He has written well over 2,000 songs.)
“Somebody has to push the buttons,” he says. “I have to be where it’s important
to be now, which is why I stopped writing. We control 100%: publishing, record
royalties, production money. It’s all split between the family, so you cover the
costs, and after that it’s all profit. We don’t want to mix up music with money,
but money always follows success and someone must take care of it.”
To take care of it, one must have it – and that’s not always easy under Sweden’s
stringent tax laws. “If you were not a corporation, but working as a private
person,” says Stig, “like a doctor, an author, or a musician, you once could
actually be taxed for more than you had earned in a given year.” That was
because of so-called “social costs,” which amounted to some 35 to 40% of one’s
gross income and were exacted in addition to standard income tax. “You could be
earning even less than $40,000,” he continues, “be in a regular bracket of 65 to
70%, and with the social costs, owe over 100% in tax. You were supposed to get
the social costs back the next year, but what do you live on in the meantime?
People were screaming when they understood how it worked.”
About five years ago, the law was relaxed a little: “You pay the social costs,”
he says, “but now you can deduct them immediately.” Still, one can be in a
bracket as high as 80%. “The only thing you can really do is build up your
company, let it grow, and sell the shares one day if you wish. That cuts the
taxes to about 40%.
And build they have, like developers on a newly discovered island paradise – but
never desultorily and always, they say, with an eye for quality over quantity.
They have established four major companies: Polar Music International, Sweden
music, Harlekin, and Sarimner, PMI, the biggest and most diversified, is owned
jointly by Anderson (50%) and the four performers (12.5% each). It controls most
of the outside, non-musical interests and collects record royalties, not only
for ABBA, but for Allan Petterson, a serious contemporary composer in Sweden,
and for Ted Gardestad, a popular singer
PMI also collects the money from sales of ABBA merchandise. Some of that is more
or less universal: T-shirts, posters, ABBA clogs (manufactured in Sweden by Tretorn), monthly magazines (50,000
copies per month in England
alone, at 40 pence each), belt buckles, pen and pencil sets, jigsaw puzzles, and
the like. But a great deal is manufactured for specific regional markets. In
England, for instance, you’ll find a variety of
ABBA mugs and an ABBA soap bar with a cassette tape depicted on one side. “That
one’s a bit lighthearted,” says London-based merchandising manager and
“financial genius” John Spalding, but no one’s laughing at sales of 200,000
during the last Christmas season (1979). Now they are introducing two new
colognes, one for each of the ladies. Frida’s scent, since she’s a redhead, will
be fiery and mysterious, while the blonde Agnetha’s will be lighter and sunnier
– or something like that.
In
Japan,
there are wastebaskets and a line of lightweight clothing for the kiddies. In
the U.S. and Canada, Burt Ward (Robin on the old
Batman TV series) is in charge of
merchandising and fan clubs, overseeing the sale of tour books, official ABBA
satin disco visors, and so forth. If that all sounds a bit exploitative,
Spalding explains that “we try to keep this kind of thing down, but if we don’t
do it ourselves, the pirates will.”
AH Graphic, the first extra musical investment ABBA made, also falls under the
aegis of Polar Music International. Intended “both for business and for
pleasure,” the Stockholm art gallery wholesaler
is “one of the biggest in Europe,” says Stig,
and is valued at $US1.5 million. He goes on to explain PMI’s founding of its
second nonmusical company, Invest-Finans: “We’re like a small bank with a lot of
cash. We wanted to increase our return from it, so we got into leasing and
financing.” Leasing includes “almost anything” from fishing boats to computers
to Xerox machines to alarm systems, with items bought one at a time and leased
out accordingly. Financing involves loans to “builders, various companies, and
even individuals,” with each deal worth “roughly $US60,000 and no less than
$US20,000.” PMI’s real estate company, Solax, owns several commercial buildings
– shops, offices, etc. – in
Sweden. Stockholm’s Sport Palace, where the
group’s new Polar Music Studios are located, is owned separately by PMI and does
not come under Solax’ aegis.
Sannes Trading is perhaps the most pointed illustration of Stig’s and ABBA’s aim
to “take out as little money as possible personally and put it back into the
corporation.” It is also the link among three of the four major companies –
Polar Music International owns 27.5% of it, Sweden Music 10%, and Harlekin
12.5%. The other half of Sannes is owned by a Sweden-based Far Eastern trading
concern called Beijer Invest, which – through Sannes – enables them to be paid
in industrial goods and oil from sales of their records in the East, rather than
money. (Perhaps coincidentally, Beijer also owns a fish-canning concern called
Abba, founded long before ABBA.) This year, Sannes will become simply Pol-Oil
and specialize in importing oil and gas from, among other places, the Arab
republics and then reselling it (some to the U.S.)
through the “spot market” in Rotterdam.
Sweden Music, the second major company, was founded in 1960 by Stig and is still
owned completely by him. “This is the biggest publisher in
Scandinavia
today,” he says. “We’ve bought up many old Scandinavian publishers, giving us
rights to songs from the 1920s and so on, and I purchase new catalogs all the
time.” One of his more recent acquisitions includes the unpublished works of the
deceased Evert Taube, one of Sweden’s most popular
singer/songwriters of all time. Sweden
music also administers Scandinavian rights for many U.S. publishers, including A&M’s
Rondor Music, Ivan Mogull Music, MCA/Leeds Music, and the publishing arm of
Decca Records. And part of its income comes of course from company that
publishes ABBA’s sheet music, Union Songs.
Owned jointly by Sweden Music and Harlekin is Polar Music, the newest company,
which essentially is Polar Music Recording Studios. “We treat ourselves as we
treat anyone else who wants to book time there,” says Anderson. “It’s hard for us to get time in our
own studio, which we think is one of the most modern facilities in the world.”
Albums recorded there include ABBA’s
Voulez-Vous, as well as Led Zeppelin’s
In Through The Out Door, and a
Genesis project.
The third major company is Harlekin, owned equally by the four members of ABBA.
Harlekin collects the composer’s shares of the record royalties from PMI and
also controls the touring activities of the group – the only aspect of the
entire operation that is not profitable. Tour organizer Thomas Johansson
estimated that “we may break even” over the course of the tour’s forty-one dates
(twenty-three of which were in Europe), at
venues with an average seating capacity of about 12,000. Apparently, the expense
of mounting a lush and “quality” stage show negates the possibility of turning a
profit, even from consistently sold-out houses. But, as with many acts, ABBA
tours primarily to promote record sales. “Someday,” Anderson
laughs, “I’d like to play Red Square in
Moscow
– that’s a four-million-seater. Of course, it would have to be festival
[unassigned] seating.”
Though dependent upon PMI for capital, the investment partnership between Stig
and ABBA is considered a separate entity within the ABBA financial complex.
Called Sarimner, its holdings include a trading company in
Sweden
(Commerce), a huge shopping center in
Skoevde,
Sweden, and the
Monarch bicycle factory. “Sarimner has enabled us to stay in Sweden by making some private
investments,” says Stig. Of the 150,000 shares, or 37.5%, of Monarch stock they
own, he comments, “With the energy crisis people are really buying bikes. This
is one of the biggest factories in Europe, so
we should do all right.”
Surprisingly, Stig still attributes their enormous wealth to luck: “This kind of
thing can happen in show business. Nobody planned ABBA, but you can hit a few
jackpots if you’re lucky.” Clearly, that isn’t all there is to it. Talent, a
little luck, and a lot of keen business sense have put ABBA in a league of
professionalism – and wealth – that few other popular music enterprises will
ever attain. Transcribed for ABBA World
High Fidelity (USA) · March 1980 (Pages
95-97)
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