[Postcard2] Clip:Clark Brothers Bankruptcy

[Jim Caligiuri]

http://www.tennessean.com/business/archives/02/12/26527572.shtml?Element_ID=
26527572

Clark brothers: An experience to forget

By RICHARD LAWSON

ROCKY MOUNT, Va. - Five years ago, six talented brothers from this tobacco
town thought they were on their way to stardom with a major record deal.
Alan, Aaron,

Adam, Andrew, Ashley and Austin were told they could be themselves and make
the music they wanted.

But the young Clarks had quite an opposite experience. They had done what
many hopeful artists do. They shrugged off advice and signed whatever deal
was presented to

them, fearing that another opportunity might not come if they passed up the
first offer.

Transformed by their management into the Clark Family Experience, the band
learned how tough the music industry can be for unknown artists who have
little power to

control their own destinies. Management says it did a ''miraculous'' job on
the Clarks' behalf, securing a bus for them to tour radio stations, getting
them a record deal and

trying to shape their image. The label attempted to shape their music into a
commercially appealing product that radio would play and consumers would
buy.

The Clarks learned how slowly the music machine can grind, and that you
might go broke along the way.

They did go broke, blaming the recording contract and their management for
helping them get there.

But nothing's ever that simple in the music business.

Burdened by debt

The Clarks went from touring with their traveling preacher parents to
opening for country music superstar Tim McGraw.

Instead of becoming stars, however, the Clarks, ages 29 to 19, joined a
legion of artists across genres who've filed for bankruptcy. In the
bankruptcy, filed in May, they

sought Chapter 7, a complete liquidation of assets.

Last month, a Roanoke, Va., federal judge removed the final hurdles to allow
the liquidation to proceed and relieved them of their contractual
obligations. The lingering

question is whether they can sign with another record label.

Their chief concern was getting out of debt. But they also wanted out of
their contracts, which isn't easy for what are usually ironclad deals.

In court, the Clarks said they plunged into more than $800,000 of debt
partly because of an onerous recording deal with Los Angeles video producer
Sherman Halsey that

bound them to Nashville-based Curb Records. The deal left them with little
opportunity to make money, according to their statements in court.

Through the bankruptcy, the Clarks became part of a smaller group of artists
whose displeasure with a career-launching record deal led to a court battle.

The Clark Family Experience is the second Curb artist in the past two years
for which the recording contract was central to litigation. Last year, star
LeAnn Rimes sued

Curb in an effort to get out of her contract, claiming the deal would keep
the now-20-year-old tied to the label until she was 35. She subsequently
dropped the lawsuit,

renegotiated with Curb and stayed on the label to pursue a pop career.

The difference for the Clarks, however, is that they sought to end their
deal before their first album was even released.

Mike Curb, owner of Curb Records, didn't return repeated phone calls to his
office. But the label fought the bankruptcy in court, failing in an attempt
to move the case to

Tennessee and have it dismissed.

The Clarks had grown frustrated with the delays in putting the album out.
Their work had been done more than two years ago, but The Clark Family
Experience wasn't

released until this August.

''I don't know if they would have put out the record until we filed,'' Alan
Clark said last week in Nashville, where he and three of his brothers had
stopped on their way to a

performance at a casino in Biloxi, Miss.

The band's Beverly Hills, Calif., attorney, Larry Larson, who has deferred
his fee to represent the Clarks, said their management contributed to the
band's financial straits.

Larson cited many apparent conflicts of interest and said the Clarks'
finances were poorly handled.

The Clarks had signed with Sherman Halsey's father, famed manager Jim
Halsey, who helped build careers for such country stars such as Roy Clark
and still represents the

Oak Ridge Boys. Halsey Management was earning a 20% commission on income the
Clarks earned, and Sherman shared in the earnings.

Sherman Halsey essentially acted as the personal manager, video producer,
publishing company, merchandising company and record production company -
all functions

that are normally separate, according to other managers in the music
industry.

''I don't think there is any conflict of interest at all,'' Jim Halsey said,
noting that there were two separate companies.

In a telephone interview last week, Halsey was reluctant to discuss the
Clarks' situation.

''I don't think I should comment,'' he said. ''There will be legal action
against them. . I feel we probably did a miraculous job with them. We took a
completely unknown group

and got them a deal with one of the largest labels.''

The Clarks concede they made mistakes when they signed their deals with
Halsey and then Curb. Despite suggestions from their father and an uncle,
who is an attorney,

they didn't have a music attorney to look over the contracts.

''We were pressuring them,'' said Alan Clark, the assertive eldest brother.
''This was our first taste of the music business.''

Aaron Clark, wide-eyed and exuberant, added: ''We're part of this 'don't let
this happen to you' crowd.''

Halsey said he had told them to get a music attorney.

''We always tell everybody to get an entertainment attorney,'' he said.

As the guardian for the brothers who weren't yet adults, their father,
Freddy Clark, put his signature on contracts obligating them to the
agreements.

The Clarks eventually hired Nashville attorney Robin Gordon to represent
them legally, but it was long after the contracts had been signed.

Instant hits

Margaret Brown recalled first seeing the Clarks about 10 years ago when the
young twin boys in the family were singing Jesus Loves Me.

Abraham and Alexander performed with their six brothers and traveling
preacher parents at a monthly banjo and fiddle club that met in the Roanoke
Civic Center. Brown

appeared on some of the same nights with the Clarks, doing flat-foot dancing
routines with her family.

Wearing short pants and bow ties, the twins would move the microphones
toward and away from their mouths in sync, so that each would project only
every other word, a

smiling Brown recalls.

''The crowd just went crazy over them,'' she said recently, sitting in a
refurbished train station in the Clarks' home town of Rocky Mount about 30
miles south of Roanoke.

The Clarks grew up in a gray house along a dirt and gravel road that carries
the family name. It's not far down the highway past the turnoff to downtown
Rocky Mount, a

217-year-old town that thrived on tobacco farming for much of its history.

A panel truck parked next to the house shows that the brothers actually grew
up touring. The truck advertises their father Freddy's traveling ministry:
''Old Fashion Revivals

- Salvation, Healing, Miracles - Evangelist Freddy Clark, 7:30 Nightly.''

The traveling road show included its own video equipment. They taped shows
and sent them to community-access, low-power television stations around the
country,

including cable Channel 19 in Nashville.

''We thought if we were on TV, if we came to town, more people would come to
our shows,'' Alan Clark said.

They weren't looking for a record deal, Aaron Clark said. They hoped the
exposure would mean more ticket sales for their concerts.

In 1997, Sherman Halsey had seen them on television and spent months seeking
them out. The band met Jim Halsey first, at a show in Georgia. They met
Sherman for the

first time at a Nashville motel.

Sherman Halsey won them over with the promise of getting country superstar
Tim McGraw and veteran record producer Byron Gallimore to work on their
album.

''That was his ace in the hole,'' Alan Clark said.

The pace moved rapidly for the brothers.

Two weeks after meeting Sherman, the band went on tour as an opening act for
McGraw, playing 20 dates. In November 1997, the band signed a recording
agreement with

Halsey for up to eight albums. The deal also included their twin brothers,
who as it turned out never performed with the band.

In early January 1998, the Halsey deal was assigned to Curb Records through
the formation of a joint venture.

Halsey hadn't shopped the deal around.

''He said Curb is the one to go to,'' said Andrew Clark, soft-spoken and
demure.

The Clarks signed the deal backstage just before going on Prime Time
Country, the nightly talk and variety show on TNN back when the cable
channel was called The

Nashville Network.

The contracts launched their odyssey into the Byzantine world of the country
music business. The contract also included deals for merchandising and
publishing, or

controlling the copyright to a song's lyrics.

''Normally, there would be a separate publishing agreement,'' said Charles
Sussman, a Music Row business manager, whose client list includes Clint
Black, Bette Midler

and Rodney Dangerfield.

The same is true of merchandising.

Scott Haynes, a Nashville attorney who represents artists, said such
encompassing deals aren't uncommon for unknown artists.

''They try and tie them up,'' he said.

Greg Hill, a manager who represents country artist Phil Vassar, noted:
''Usually when artists sign record deals, they have no leverage and are
willing to sign things that aren't

necessarily in their best interests.''

New artists can ask to make changes, but the labels rarely cede anything,
Haynes said.

Successful artists usually have the leverage to renegotiate. Sometimes an
artist sues the label to exit the deal.

One contention of Larson, the Clarks' attorney, is that the band should have
received advance money on the publishing.

But, for an unknown artist with no songwriting track record, Haynes didn't
think the lack of a publishing advance was unusual.

''They were actually fair in some of this,'' he said of the Clarks'
contract.

For instance, the Clarks would receive a percentage of the publisher's share
in the earnings from songs they wrote - unusual for a new artist, Haynes
said.

Halsey noted that a Davidson County court upheld the contract. Since three
of the Clarks were minors, Curb had to go to court to have them deemed
adults where the

contract was concerned.

The more than $800,000 the Clarks claim they owed Curb was recoupable
expenses for recording, videos, advances and promotion. These are standard
expenses in the

music business that labels deem as advances and get back through album
sales.

But recoupable expenses are more like venture capital funding - an
investment in the artist - rather than a loan. As long as the artist is part
of the label's roster, the

expenses are on the books and count against royalties till they're paid. If
the artist is dropped, any unpaid recoupable expenses are written off.

Curb argued in court that the band members purposely inflated their debt to
get out the record deal. The brothers admitted that about 98% of the listed
debt was what they

said they owed Curb.

Other debt listed was to Halsey Management, money they lent each other,
credits cards and the like.

In Curb's accounting filed with the bankruptcy court, the label invested
nearly $2.2 million in the band. About $954,000 is recoupable, according to
the court documents.

Curb's expenses included a touring bus and radio tours for the band. The
label spent $500,000 on recording, a high figure for a new artist, said
Sussman, the Music Row

business manager. Curb's budget was $200,000.

Sussman said the band would have to sell a million records to break even.
With any artist, if the expenses aren't recouped on the first album, they
roll on to the next and the

next, potentially digging a deeper hole.

''The record company and the artist typically reach the break-even point on
the second or third album,'' Haynes said.

Over five years, the Clarks were paid $50,000 in advances. They received the
first $25,000 advance shortly after signing with Curb.

The second advance was supposed to come after they delivered final
recordings to the label and Curb accepted them. Though the recordings had
been delivered more than

two years ago, Curb didn't approve them until April. That's when the Clarks
got the other $25,000.

''In retrospect, (the Clarks) could have made more money working at 7-Eleven
for the four years immediately proceeding the bankruptcy than they realized
from the

contracts,'' attorneys said in one court filing.

Part of the delay had to do with the recording process, with several songs
having to be recut.

And the brothers had some misconceptions about their roles in the studio.

''We thought we were going to play on our own record'' with no studio
musicians, said Andrew Clark, who two weeks ago signed on with the Ford
Models Inc. in Los Angeles.

While the brothers play the instruments on stage, common country music
practice has studio musicians playing on records.

One song, Meanwhile Back At The Ranch, had been released as a single in 2000
and had modest success. Usually, the album follows not long after the
single. The original

album release date was February 2001, and delays came without much
explanation, the Clarks said.

Essentially, they felt they had little input with the process.

''We were just so disconnected from everything,'' Aaron Clark said.

Meanwhile, they were trying to get by on a tight cash flow. While they
waited for the album to come out, they toured to make money. At one point,
they did a pilot TV show

for Warner Bros. and were paid $250,000. The show was never picked up.

The Halseys were paid $100,000 of that, apparently to cover commission fees
and expenses, the Clarks said.

The Clarks hadn't hired a separate business manager to handle their
expenses.

Having a separate personal manager and a business manager ''can save you a
lot of money over the long run,'' said Sussman, the Music Row business
manager. ''You need

someone who is going to take the necessary checks and balances.''

Larson said that Halsey Management cut the checks to the band, and the
management's accountant prepared the tax returns.

Jim Halsey maintained that his company didn't serve as the Clarks' business
manager.

He said one of the challenges of managing the band was its size.

''You got one question and six answers,'' he said.

At one point, Sherman Halsey took the Clarks to the bank to get a loan to
pay him $65,000 he said they owed, according to the bankruptcy court
documents.

Larson discovered after starting to represent the Clarks a year ago that
their tax returns had been done incorrectly. Now the band owes the Internal
Revenue Service

$150,000, a sum that doesn't get discharged through bankruptcy.

''Our financial books were a mess,'' Alan Clark said.

A new start

The brothers said they are older and wiser now and hope the bankruptcy gives
them a fresh start. Their new start includes a new band name. They didn't
like Clark Family

Experience because few people understood what it meant.

Now it's simply Clark.

''It feels like a new start,'' said Alan Clark. ''Hopefully, people will
take us a little more seriously.''