Touring the key to Rolling Stones' business success

The Rolling Stones, undoubtedly one of the world's wealthiest and most successful bands, is returning to the road later this year to play a small number of shows in London and New Jersey.

It is not yet known if the Greatest Rock n Roll Band in the World, together in various incarnations about 50 years, will make it to New Zealand this time.

But the Stones – who have an average age of 68.8, higher than the current US Supreme Court Justices at 66.1 – are among the smartest in the business when it comes to touring.

Front man, or business man, Sir Michael "Mick" Jagger (69) has been the key to the band's financial success, realising from early on that touring was its ticket to making money.

Since dropping out of the London School of Economics in 1963 to pursue what he knew would be a promising musical career with the Stones, he has been at the helm of one of music's most prolific money-making machines.

Touring a big money maker

The band's most recent tour, The Bigger Bang, brought in $US558 million from 2005-07, making it the highest-grossing tour in history.

Their upcoming shows probably can't be called a tour as only four dates have been announced so far, but guitarist Keith Richards (68) still expects it to bring in a fair bit of cash.

According to NME, he expects the band will pocket about £16 million from the shows.

But Richards doubts that'll be the end of it, telling CNN: "My experience with the Rolling Stones is that once the juggernaut starts rolling, it ain't gonna stop. So without sort of saying definitely yes – yeah. We ain't doing all this for four gigs!"

After all, the Rolling Stones - dubbed the 'Strolling Bones' by some, due to their ages and refusal to stop touring - are astute businessmen, and astute businessmen go where the money is.

In this age of internet piracy and music sharing, recording a new album isn't going to bring in nearly as much money as a few live shows will.

Jagger, who Bloomberg estimates is worth $US295 million, believes touring is more lucrative.

"There was a window in the 120 years of the record business where performers made loads and loads of money out of records," he told the New York Times.

"But it was a very small window – say, 15 years between 1975 and 1990."

In a comprehensive 2002 Fortune article about the Rolling Stones' business model, Andy Serwer says: "the Stones carry no Woodstock-esque, anti-business baggage.

"The group has tendrils deep in American business, cutting sponsorship and rights deals with stalwarts like Anheuser-Busch, Microsoft and Sprint.

"If the Stones were a traditional company, they would be the cash cow."

Freakonomics' Stephen Dubner calls Jagger the 'profit maximiser.'

"The smartest thing about the Rolling Stones under Jagger's leadership is the band's workmanlike, corporate approach to touring."

He points out while record sales are fickle, income from touring is more controllable because the band can just add another date to the schedule.

Tax exile in France

Part of Jagger's success can be attributed to linking up with the right people, such as "Prince Rupert", full name Prince Rupert Ferdinand zu Loewenstein-Wertheim-Freudenberg.

Prince Rupert, a London-based banker and descendent of the Bavarian royal family, was behind the Stones' well-documented tax exile to the south of France in 1971.

To escape the astronomical top tax rate of 83% in the UK at that time, the band moved to Cote d'Azur, where under the French tax regime they could pay no French taxes on what they earned, as long as they stayed longer than 12 months and spent at least $US500,000 a year.

That year resulted in one of the group's most successful albums, Exile On Main Street – recently re-released.

Most accounts of that year describe a continuous series of debauched, drug-hazed parties and orgies, but really it symbolises that Jagger would do what was best for the business.

The tax avoiding didn't stop there either.

In 2006 it was revealed the band had paid just £3.9 million in taxes on revenue of £242 million since 1986. That is 1.6%. 

They achieved that through a series of offshore trusts and companies established in Holland.

Not afraid to license songs

Not shying away from allowing their music to be used in film and television has also helped the band amass a huge sum in royalties.

"We do a lot of film licensing. We get lots of requests, and I usually say yes. It's a great business," Jagger says.

The cost to a filmmaker of using a Stones tune is in the low six-figures, according to Fortune.

The band's financial success is certainly down to it being run like a business.

Foundation drummer and Arabian horse breeder Charlie Watts (71), for example, is essentially an employee of Jagger, as is ex-Faces guitarist Ronnie Woods (65).

It's all very corporate, but in a fun, loose, New York ad-agency sort of way.

The financial success of the band is no accident. Jagger and Richards did not just make up a few tunes and sit back to watch the money roll in.

Like any successful business, it is the result of astute planning and strategy, thoughtful fund management and old-fashioned hard work.