So Johnny had a brief, charged conversation with Mr. Tyrell. “Johnny Baylor made a threat to Jim Tyrrell,” says Logan Westbrooks. “‘Follow Al’s dictates or else.’ And Jim Tyrrell was not intimidated. He came from the streets. He stared it right in the face. So that was the beginning of that little dispute.”
That little dispute quickly attained great size. In April, while Stax was down, Columbia hit ’em again: In light of this backlog of stock that Stax refused to acknowledge, Columbia was going to keep the $1.3 million it owed Stax. Stax’s quarterly payroll in March 1974 was $567,000—well over $2 million per year. Al attacked the problem. He hired his brother Paul away from General Electric (where he was a vice president) to head a new department of new hires at Stax, Retail Relations. “My brother staffed up a division doing nothing but calling retailers so we were able to document for CBS, ‘This store number, this person, this is the product they ordered, you didn’t ship it.’”
Al assigned Stax’s comptroller, Ed Pollack, to sort out the delayed payments with Columbia, and though he made many trips to New York City, he was unable to loosen any cash flow. That same month, behind the scenes in the IRS’s Stax investigation, chief bean counter Pollack was given immunity from prosecution, promptly revealing names of disc jockeys and amounts of cash paid. The IRS contacted them all; one admitted that Stax paid his son’s college tuition. At the same time, Washington Post columnist Jack Anderson was reviving his recording-industry investigations, revealing misdeeds. An ill wind was whipping up to a gale.
During the storm ahead, Stax discovered among subpoenaed Columbia papers a document entitled, “A Study of the Soul Music Environment Prepared for Columbia Records Group.” The thirty-page industry assessment, commonly known as the Harvard Report, had been submitted on May 11, 1972, prior to the Stax deal, by Harvard Business School master’s degree candidates at the instigation of a Columbia Records executive (and Harvard alumnus). There has been much speculation about Columbia’s actual intent with Stax, with some Stax officials citing the report as proof that Columbia was trying to cripple and then overtake Stax. The report, however, does not support the notion of Columbia buying or taking over a soul music label. It encourages Columbia to add soul music to its offerings, recommending the establishment of a black music division, staffing it with black personnel, and also suggesting Columbia make better black music than it had been making (a business school perspective on art). It suggests great profits can be made, but it warns Columbia against purchasing or taking over, by name, Stax, Motown, or Atlantic. Clive Davis claims never to have read it, and his dealings with Stax support that, as he ignored the various recommendations as much as followed them. Some parties wanted to make the report into the smoking gun that confirmed Columbia’s malicious intentions, but the report’s influence seems not as great as the conspiracy theories surrounding it.
There were other dictates that Columbia did follow. “The corporate philosophy of capitalism is, ‘If there’s a share of the market that you want, either you buy it, steal it, or destroy it,’” says Al with the knowledge of hindsight. “That’s the American way. I was talking to Kemmons Wilson [founder of Holiday Inn] and he explained how they took over rug companies to put rugs in all the Holiday Inns. The big fish eats the little fish.” The expansion deal that Al thought he was getting into was becoming a suffocation experience; Stax’s product was not getting into stores, and money was not flowing in. This was a threat not only to Stax as a corporation, but also to its artists and employees. Isaac’s massive payroll, for example, relied on timely payments from Stax.
CBS, to this day, denies any bad intent. “It was never a conspiracy on the part of CBS Records to put Al Bell out of business,” says Columbia executive Logan Westbrooks. “CBS was in the business to sell records, to make money. And they did it very, very well. I sat in on every last one of the meetings, and I never got the impression that CBS wanted to bury Stax or take it over. If the retailers are calling for product, then with a very, very short turnaround, we can ship it in there and meet the need.” Westbrooks says there was no demand for Stax product.
One of the battles between Columbia and Stax had been a bidding war earlier that year for a hot new United Kingdom act. It wasn’t a black London soul singer preaching Black Power to an international audience, it was not a rock band carrying blues to a new crowd. Al’s desire to sell more units brought him to outbid CBS for the contract on a prepubescent white Scottish girl named Lena Zavaroni. She was ten years old, the youngest artist ever in the UK album chart’s top ten. She sang standards and classics, leaping from a TV talent show into adoring hearts. Her fans included Frank Sinatra and Lucille Ball. “Lena Zavaroni was very good,” says Stax publishing executive Tim Whitsett. “She sounded every bit as adult as Rosemary Clooney, and that’s the type of music she sang. We were getting away from our core.” Though Stax had never had a big hit on a white artist, Al wanted her album, Ma! He’s Making Eyes at Me, to spearhead his next Stax tidal wave into white America’s living rooms. Big money was paid for this coup. And they sold well over one hundred thousand copies, a quantity that once had been a hit at Stax. But in this case, they’d pressed and shipped more than six hundred thousand copies.
Through Zavaroni’s manager, Al licensed the soundtrack to a South African stage play. He expanded his foray into that distant market by sponsoring a weekly radio program there, an hour in which only Stax records were played. Al had the legal department establish copyright and imprint trademarks there and in numerous foreign markets. “I know they opened an office in Paris,” says Don Nix. “I went down there and I just said, ‘My God, I wonder how many copies of ‘Who’s Making Love to Your Old Lady’ did they have to sell to pay for this?’ It was waste, just rampant waste.” Tim Whitsett was equally disquieted about the home front: “It got bloated, especially in some of the projects we took on, some of the artists we tried to put out that just didn’t seem to fit, expansive ideas that seemed to stray, like movie production. Our eye was not on the ball anymore. We were looking up in the stands.”
Stax won the bidding war for Lena Zavaroni in 1974.
Inattentiveness to the bottom line seemed epidemic in Memphis. The situation at Union Planters got so bad that the president of both the bank and the bank’s holding corporation resigned. For its rescue, the bank hired a young man who had shot through the ranks of First National Bank of Atlanta by writing an organizational and marketing manual. Organization was exactly what Union Planters needed, and on May 13, 1974, William “Bill” Matthews was named president of the bank’s holding company—at forty-two, the youngest person to ever hold such a position in America. On his first day at work, he learned that the Securities and Exchange Commission was investigating the bank and threatening to sue them. He was also confronted by operational and organizational chaos; when scrutinizing the bank’s loan portfolio, he found it so badly managed that it actually cost the bank money to make the loans—the more money it loaned, the more it was losing. Stax was among its largest loan customers.
“The Comptroller of Currency and the bank examiners came in to close the bank,” recalls Al. “It was about to go under when they brought in William Matthews. I was called by some of the old officers to come meet this new person. We were high up in their building looking out at the Mississippi River and having this casual social conversation and all of a sudden this gentleman that was sitting over in the corner said, ‘Al?’ And I looked and said, ‘Yes?’ He said, ‘Al, I don’t want you to think that I’m a redneck from Georgia.’ They’d introduced me to him by name but I didn’t know who he was. So I said, ‘Well, I don’t and I won’t as long as you don’t think I’m a nigger from Arkansas.’ And that’s the way the relationship started between the chairman of the board of the holding company of the bank and myself. And our interaction from that day to the very last day was like unto that. I knew at that very moment that that was a one-on-one fight.”
William Matthews, chairman of the board, Union Planters Na
tional Bank. (University of Memphis Libraries/Special Collections)
Matthews had his hands—and fists—full. He held the federal investigation at bay by conducting his own. In July, less than two months after coming on board, he discovered both a kickback scheme and a quarter-million-dollar embezzlement scheme involving loans to fictitious people. One of the participants in the latter was Joe Harwell, a bank employee for nearly fifteen years, and Stax’s loan officer.
In 1974, “Stax’s total indebtedness to Union Planters amounted to the principal sum of $10,493,220.06 plus interest,” trial documents reveal. Pursuing his loans’ security, Matthews found no collateral that justified so many dollars and he sent a team of auditors to Stax. “We tried to reconstruct the books,” he told a newspaper, “but they didn’t really have any books in the normal sense of the term. They appeared to be able to generate $13 to $14 million a year in revenues. The problem was expenses. It was hard to tell what was happening with the expenditures.”
On the one hand, Stax’s books were no different from any other record company’s—or, for that matter, any appliance manufacturer’s or any doctor’s office’s: All would have slush funds that would be hard for an outside accountant to decipher. Some larger, some smaller. Then again, there’s Baylor’s $2.7 million in nine months; the bank’s audit also discovered a $250,000-a-year apartment Stax was paying for in New York—occupied by Johnny Baylor. “Why,” Matthews asks, “was Stax paying this man all this money?”
By the summer of 1974, when President Nixon resigned, the music industry was a pop culture pariah. Payola scandals were wide open and CBS-TV broadcast a prime-time documentary, The Trouble with Rock, laden with implications of malfeasance throughout the music industry including at Columbia Records, the network’s own corporate relation. Stax’s relationship with Columbia had, by then, become outright adversarial. The lack of Stax records in stores seemed purposeful: Columbia could prevent sales by withholding shipments, send Stax to its knees, then cherry-pick the talent it wanted. “After Clive Davis left,” says Al, “there was really nobody for me to call, because the only person I knew inside of Columbia was Clive Davis.”
In July 1974, Stax bought its own pressing plant, a facility in nearby Arkansas. In addition to boosting its brick-and-mortar assets, owning the plant would, after the initial monetary outlay, reduce the cost of pressing, and allow the label to make profits pressing for others. The facility was a converted chicken coop, and its equipment was none too precise, with some records coming out a bit too wide to spin on a turntable.
Jim Stewart, motivated by many factors including the protection of his personal guaranty, stepped up to create additional revenue streams. After a two-year absence from the recording studio, he returned to sign and produce Shirley Brown. She’d been touring with Albert King, who brought her to the label’s attention. Her voice had an Aretha Franklin–like quality—she even cut Aretha’s standards “Rock Steady” and “Respect” at Stax—but Jim focused more on the intimacy she conveyed, the way she courted the listener’s ear. The song “Woman to Woman” had been floating around Stax, rejected by several female vocalists. It has a long spoken introduction—she finds another woman’s phone number in her man’s pocket, and calls to introduce herself and stake her claim. Shirley’s delivery is compelling, like it would be rude to ignore her. Jim proved that his antenna was still tuned, his production skills exquisite.
There was a sense of reunion to the session, with Al Jackson and Duck as the rhythm section (Al also coproduced), Marvell Thomas on piano, Bobby Manuel on guitar, and Isaac’s arranger Lester Snell on organ. The resulting song was too good, in fact, to waste on Columbia, who would only warehouse it. Stretching the legal limits of their contract, Stax created the Truth label, a subsidiary outside the Columbia agreement, and put to work its arterial relationships with the distribution outlets where the connections were still strong. Released in August, “Woman to Woman” went to number-one R&B in November and high up on the pop charts; before year’s end it became a gold record. “‘Woman to Woman,’ the last record I did, was, ironically enough, a million seller,” Jim says. He pauses, then adds, “Too little, too late.”
Stax had been missing payments—to vendors, to employees, to artists. Like weeds, the lawsuits quickly flourished. The initial grievance tore to the company’s soul. On September 10, 1974, Isaac Hayes sued Stax for $5.3 million in a federal civil suit. The company’s July 26 check for $270,000 had been returned for insufficient funds; Isaac’s tax payment to the government bounced with it. (He’d negotiated a $1.89 million contract for the period February 13, 1974, to January 20, 1977, payable in seven equal installments of $270,000; this was the second installment.) Like Stax, Isaac was finding himself in desperate straits. His lawsuit attacked with a vengeance, claiming Stax had cheated his royalty statement since 1968, that the label had not properly promoted his records, and that he’d been billed $100,000 for promotion in violation of his contract. Much of the suit’s language expressed dissatisfaction with and anger at Al Bell. Isaac said Al had promised him equity in the company, had declared a “feeling of brotherhood” for Isaac, had told him in 1968, “We are going to be together and share all benefits all down the line.” Isaac asked that his relationship with Stax be terminated and he be allowed to negotiate a new contract with ABC Records, the proceeds of which could help satisfy his personal debt to Union Planters National Bank. “Isaac didn’t do anything more than the average artist does when he reaches a certain level,” says Deanie, “and that is to become a little bit more difficult to work with.” The suit was settled a week later, out of court, with a promise for an undisclosed sum and the return to him of all his masters and copyrights, and the release from his contract. Al Bell’s organization had been built on Isaac Hayes’s back. On what now would it stand?
At that same time, to avoid another court debacle, the master tapes belonging to Richard Pryor were returned, and his contract terminated; he’d sold well, but the income he generated was absorbed before Stax could pay him royalties. Stax had made him a star but couldn’t keep him a star; he’d go to Warner Bros., where That Nigger’s Crazy would be re-released, to enjoy his days in the sun.
Before the month was out, a federal grand jury subpoenaed records of all Stax’s financial transactions from 1973. The investigation was part of Project Sound, the ongoing nationwide inquiry into recording-industry kickbacks. Documents covering the two prior years, and all testimony before the jury, were released on October 15 to the IRS “for the purpose,” stated US District Judge Robert M. McRae Jr., “of determining whether there are additional tax liabilities due.”
On October 9, 1974, in the wake of the success of “Woman to Woman,” Columbia sued Stax, accusing it of breaking its distribution agreement. Lawsuits being the day’s preferred mode of communication, Stax answered with one against Columbia, suing for $67 million, claiming that Columbia breached the distribution agreement to gain control of the company, citing the Sherman-Patton antitrust laws. Attorneys claimed that during the two-year relationship, Columbia had overordered Stax product, then left the records “unsold in the warehouse of CBS.” They stated that Columbia had withheld more than $2.32 million in sales proceeds due to Stax under the agreement and had “willfully, wantonly, and maliciously” attempted to force Stax out of business. Because of the withholding, Stax claimed, it was unable to meet its payroll, causing it to lose Isaac, among other damages.
“I had the international accounting firm of Price-Waterhouse come in and value our masters,” says Al. “They put it at sixty-seven million dollars. And we started out fighting with a major law firm—Heiskell, Donelson, Adams, Bearman, Williams & Kirsch—which became Senator Howard Baker’s firm. That was one of the most prestigious firms in this state and they wouldn’t have taken on an antitrust suit against CBS unless they believed in the validity of that suit.” The attorneys claimed Columbia “calculated to destroy Stax as a full service record company and to reduce it to a mere label or prod
uction company, completely under the domination and control” of Columbia.
Matthews, the bank chairman, recognized the potential of the antitrust suit, and he wanted to put his team of lawyers on it; helping Stax win it could help his bank. “He called me in,” says Al, “and said, ‘I want you to give this antitrust lawsuit over to the bank. We can win this, you can’t. We’ll give you two or three million dollars out of it.’ I wasn’t going to give him a sixty-seven-million-dollar lawsuit and he’ll give me two or three million dollars. If he’d said, We’ll split it down the middle, maybe I could have heard him.”
During the Stax troubles, Westbrooks remembers Columbia’s worry about its reputation in the African-American community. “CBS was concerned about their image on a national basis, especially with black radio stations and black disc jockeys,” he says. “Al Bell was a very, very popular figure in the national black community.” In fact, Columbia tried to bring Al under its umbrella, offering him a corporate vice president’s position overseeing its distribution network. But moving from Stax to Columbia would have, Al felt, been shirking his responsibility and moral obligations. “I said, ‘I can’t do that. You want me to be a Judas and sell out my people.’”
Al was called to a meeting by Arthur Taylor, the young, starched, and suave president of CBS, Inc., not just the record division, but the man to whom all the media heads—records, television, radio, the whole empire—answered. “I went up to the thirty-something floor in the New York CBS office to see Mr. Arthur Taylor,” Al says. “Elevator opened—and it was intimidating. Like going to the Justice Department with all these CBS lawyers running around up there. Here I am arriving with this one little old black lawyer. This huge boardroom runs the length of the floor, could’ve put forty or fifty people into it. Arthur Taylor was sitting at one end, tapping a pencil on the table, and said, ‘Have a seat.’ He had a couple of people beside him, and through the door came a guy with a stack of clippings from newspapers that they were getting from all over the country. There was concern building in the streets, and in black media, and in other media, regarding what was going on between CBS and Stax.”
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