Sly Stone’s Former Production Company Goes Bankrupt
After the former front man for late-60s and 70s supergroup Sly and the Family Stone sued his former manager for tricking him into signing away his royalty rights, the manager is now putting Stone’s production companies into bankruptcy.
It’s been a parade of legal woes for Stone, whose real name is Sylvester Stewart. The IRS came after him in the 80s and put a lien on his income, taking most of the royalties from his hits for the next 15 years, according to Billboard. He made a series of bad decisions with business associates and friends, signing over his rights in exchange for quick loans and drugs.
The production companies he once owned, Even St. Productions Ltd. and Majoken, as well as the trademark to the band name “Sly and the Family Stone” are now in the hands of Jerry Goldstein, the manager whom Stone accused in a 2010 lawsuit of cheating him out of millions of dollars in royalty rights.
Stone’s $50-million suit for breach of contract and fraud, among other things, is still pending in state court in Los Angeles. Stone says Goldstein tricked him into signing a document he thought was a basic management contract but really gave Goldstein the royalty rights to Stone’s music, which includes hits such as “Everyday People” and “Thank You (Falettinme Be Mice Elf Agin).”
Goldstein created companies and diverted the royalties into them, Stone alleges, amassing $80 million in assets while the singer scraped by with nothing. In a related lawsuit in which Stone blamed several big music publishing companies for allowing Goldstein and others to siphon off his royalties, a California appellate court ruled on May 30 against him.
Bankruptcy to Boot
And then as if to add insult to injury, on June 4, Goldstein reportedly applied for Chapter 11 bankruptcy protection for Even St. and Majoken in federal bankruptcy court in California, citing both assets and debts in the range of $1 million to $10 million. Sony Music is listed as the company’s largest creditor, which it owes almost $2 million balance for an unrecouped advance.
A lawyer for the companies told the Wall Street Journal that Goldstein was forced to file for bankruptcy because creditors were trying to foreclose on property the companies owned.
Stone’s financial woes with his music all come down to a lack of bargaining power, says Tamera H. Bennett, a music lawyer in Dallas, Texas. “In a perfect world Stone would have had a lawyer to assist him,” she adds.
“Often times I see artists/songwriters sign deals just because they need the money now,” Bennett explains. “They are not looking into the future to see the potential downside of their actions.” And that’s unfortunate because “the music business is a ‘futures’ business and tied to extreme risk,” she says.
Stone also took a wrong turn when he made assumptions about what he was signing. “There are few ‘standard’ agreements anymore,” Bennett notes. “And those ‘standard’ agreements from years ago were often very one-sided to the manager.”
“I hate to compare the music business to the car business,” she says. “But the simple truth is sometimes to get a better deal, you have to walk away and have the sales manager come running after you.”
Stone’s story isn’t unique, because, sadly, “if the artist doesn’t have the bargaining power or doesn’t believe he has the power, the artist will continue to sign one-sided deals,” Bennett says.