Hollywood's top 25 financial gatekeepers on their clients' craziest purchases; how to keep cash flow under control; and when to say no to family members who have their hands out — again.
This story first appeared in the Oct. 11 issue of The Hollywood Reporter magazine.
The Hollywood Reporter’s third annual Power Business Managers package acknowledges the unsung professionals who keep the engine room of the industry's money machine humming. Business managers maximize cash flow from much-whittled paychecks and prevent overindulged stars from acting on their worst impulse purchases (lease the Gulfstream, don’t buy it).
"These business managers control how millions of dollars are spent -- that makes them incredibly powerful in Hollywood," says THR executive editor Matthew Belloni.
This year's package looks at everything from industry players who have cultivated lucrative second careers, to the hidden costs of keeping stars safe from paparazzi, to how to cut off freeloading family members.
"These business managers don't get much attention in Hollywood," says Belloni. "But they should."
Profiles by Alex Ben Block, Paul Bond, Eriq Gardner, Brandon Kirby and Rebecca Sun
A CPA and a 23-year veteran in Hollywood business management, Altman has charted an investment course for his A-list clients -- Naomi Watts, Jessica Alba, Dwayne Johnson -- that can be described as defensive, cautious and methodical, particularly since the WGA strike and recession.
Altman maintains that the risk is in the career choices, so his job is to provide the stability he knows his clients will need in the future. But Altman concedes that he is not infallible: His clients don't always take his advice -- and sometimes they're proved right.
In 1982, Bacon was working at an accounting firm specializing in real estate when he says he was told, "You are not an auditor, you are a business manager -- an accountant with personality." Bacon followed the tip into the entertainment industry and now represents a major TV network executive and two of the hottest Hollywood writers in town, among others.
Having grown up in a small town in Vermont, Bacon calls himself a "Yankee cheapskate" -- not pejorative for a man whose livelihood involves negotiating mortgage rates on major homes and deals on luxury cars. But Bacon isn't afraid to pass along financial wisdom to other business managers. "We're not like agents," he says. "We don't poach. We share ideas and enjoy saving clients money."
Since launching his firm in 1985, Bell has attracted to his roster a mix of older newscasters like Bill O'Reilly and younger performers. But the New York-based business manager notes that the economic climate has changed for reps like him. "The paydays of younger talent aren't what they used to be," he says, "because studios can get away with it. There are so many actresses out there who are interchangeable."
As such, Bell has been expanding his clientele. He recently turned his attention to below-the-line talent: Carmen Cuba, who won an Emmy for casting HBO's Behind the Candelabra, was a recent signing. He also has made moves on the athlete front, scoring the San Diego Chargers' D.J. Fluker, selected in the first round of 2013's draft.
For all his clients, Bell preaches the benefits of investing over spending and warns: "Never expect a hobby to be a moneymaker. If you are a polo player, your horses will never increase in value; a boat depreciates. One exception I've seen is art, but after commissions, it is rare that an armchair collector sees a profit."
Blakeman recently put the kibosh on a purchase by a client who wanted a convertible for weekend drives up the coast. "My reply was, 'That sounds romantic and fun, but the answer is no,' " he says. " 'You already have two cars. If you want to do this, rent a Mercedes this weekend, a BMW next weekend.' They liked the idea, so it was a successful 'no.' " Such are the perils of working with creatives, the established film and TV writers who make up his roster. "My clients push boundaries, and they're really smart," he says. "I'm the checks-and-balances guy."
With the same firm since 1965, Broder says his approach hasn't changed: Be consistent, have integrity and use knowledge of the business for his clients, said to be a huge list of actors, writers and producers. "We make sure they are well diversified and conservative [in their investments]," he says.
Recently a client wanted to buy an airplane. "He had the wherewithal," says Broder, "but I couldn't justify it: I did the analysis and showed him how much it would cost out-of-pocket even if he charters it out regularly." The client took his advice. "If they do something I don't think makes sense, I tell them I can't be part of it."
To thrive in show business, Crow says his clients have had to become multidimensional, like Chris Hardwick, a comic, producer and host of AMC's Talking Dead. (Crow also manages Shailene Woodley, Jared Leto and composer David Foster.) His practice similarly has evolved, expanding during the past 17 years to include movies, TV, music, content deals, and nonprofits and foundations.
He says no to too-expensive houses or nightclubs, but he never forgets it is his clients' money, not his. "I lay out a spreadsheet and say, 'Here are the consequences,' " says Crow, adding: "I want to be a partner with my client. If I'm just the 'no' guy, that would be polarizing and offensive."
She calls her approach "lifestyle management," meaning her clients, who include Hawaii Five-O producers Roberto Orci and Peter Lenkov, need to be as careful about money as they are about diet and exercise. "You've got to plan and budget," says Davis, who has been a business manager for nine years, "as opposed to just being super-restrictive or, on the other side, completely crazy."
A client who wanted to convert real estate into a marijuana farm received a firm no. Other than the obvious illegality (cultivation and sale are felonies if not for personal medical use or a nonprofit), "there are tax consequences," says Davis. "You can't deduct any of your expenses. It's not a great business model."
"I tell clients no every day," says Feinstein, who counts Mayim Bialik, Taylor Lautner, Mila Kunis and two-time Emmy winners Eric Stonestreet and Aaron Paul as clients. Feinstein recently put his foot down with a client who wanted to buy a multimillion-dollar property in the Bahamas. "We got into a heated argument," he says; the client ended up buying it anyway.
His younger clients, on Glee and ABC Family shows, tend to listen to him more. "Good clients listen to me 90 percent of the time, but that is certainly not the norm." Finally, Feinstein considers personal loans verboten. "That's a very common thing, lending friends money. I'm adamantly against that."
"I never tell a client no," says Feldstein, whose clients include Dr. Dre, Selena Gomez, Adam Levine, Lenny Kravitz and his own son, Jonah Hill. "I give them the facts and offer up my recommendation. Sometimes the client will appreciate that and say, 'Thank you, but I'm going to do it anyway.' "
Regardless, Feldstein's philosophy is not to pull punches. "We're getting paid for our advice," he says. "If I don't offer up my true feelings, I'm not doing my job." Another piece of strategy? Avoid litigation, he says. "In the halls of justice, the wheels grind very slowly."
While running a firm founded in 1967 with offices in New York and L.A., Gelfand also manages the finances of Bob Dylan, Neil Diamond and Will Smith, among others. In this digital age, he maintains that the process has changed: "There's faster communication with clients and more rapid responses to client needs. It's our responsibility to slow it down a bit. When it comes to financial matters, sometimes it's good to take a step back."
Managing the firm's 215 staffers is just as key as managing clients: "If you think you can do it all, you're not providing good, multiple eyeballs on everything, from a simple check to a complex investment."
Newcomer Glass, whose firm was formed in 2011, isn't afraid to go into the trenches for his clients (Lou Adler, AEG Live CEO Randy Phillips and Dancing With the Stars judge Bruno Tonioli are among them).
He fronted $2,000 of his money to sidestep a travel disaster for a touring band client and can intervene between clients and their demanding kids. "I don't mind being the bad guy," says Glass. His tactic on how to get through to a client? Make it seem like it was their idea.
An affinity for expensive autos has come in handy for Greenfield, who often is called upon to do car shopping. But it can backfire with unrealistic clients. "I told a client he shouldn't buy a Tesla," he says. "I wanted him to buy a Prius or a Chevy Volt, but he said he couldn't deal with driving a Chevy. See what we have to put up with?"
Greenfield, whose clients include Ashton Kutcher, Gwyneth Paltrow, Steve Martin and Annette Bening, adds that "clients have to earn more today because taxes are sky-high in California," he says. "When you factor in commissions, half the gross is gone. It's hard to convince someone making $60,000 an episode that they can only spend $30,000."
With Carrie Underwood and Lynyrd Skynyrd as clients, Haber is one of the few business managers who spends a third of his time in Nashville (he also has an office in Paris). More than 30 years in the business, Haber -- whose clients also include Julianne Hough, Peter Frampton, Joe Cocker and screenwriter Les Bohem -- has bailed stars out of jail and sent others to rehab.
"I had a client where, Monday mornings, hookers would show up looking for $250 checks -- every week for years," he says. "I've done things that are not in the Business Manager's Playbook" -- including intervening in divorce settlements. When a client told Haber, "I'm giving her everything," he recalls, "I told him I couldn't sit by and watch him do that. I called the wife, and eventually they split everything in half."
Herrmann spent nearly two decades at a boutique firm before trading up to a larger one with more resources. That's of benefit to his distinguished clients: Scott Rudin, Martin Scorsese, Liam Neeson, Matt Lauer and Barbara Walters.
Herrmann concedes high earners bring more complex financial scenarios; it's not as simple as handing off dollars to Merrill Lynch. "If we do the job well, we can liberate the clients so they can make choices in their careers," he says. "Planning means they can choose to do those independent films if they wish."
Starting out in the early '80s, Landesman was handed work for the stars of Saturday Night Live. When he set up shop on his own, he brought along Eddie Murphy. "Most people look to find that client that will take them to the mountaintop," says Landesman. "At age 26, I started on the mountaintop."
He soon signed other top comics including Arsenio Hall and Chris Rock and such SNL alums as Tina Fey and Tracy Morgan but also reps less funny actors (Vin Diesel). Describing himself as the CFO of 100 corporations, Landesman says a core part of his job is "staying close to clients and hoping they open their movie the right way" -- box office being among the things that elude his control.
Rooming with then-budding comic Paul Provenza a few decades ago, Lichtenberg met Larry David, an early client. "The audience didn't get him at all in 1984," he recalls. "One day after a show, Larry tells me, 'You don't have to keep me if you don't want to anymore.' I stuck with him." His stable of funny clients has grown and now includes Will Ferrell and Molly Shannon.
Lichtenberg adds that he has been in "gatekeeper" mode lately, factoring in "a strange economy that's in recovery but doesn't feel like it." Despite this, his wealthy clients won't forgo their luxuries. One reserved a $250,000 seat on the Virgin Galactic. "He's at the top of the list whenever that thing blasts into outer space," says Lichtenberg. "There was no talking him out of it."
"Those days of working your whole life, retiring and living off the interest are over," says McIlwee. "I want people to spend money in a way to be solvent until 100 years old." Based on some of McIlwee's clients, including Kurt Russell, Selma Blair, David Arquette, Twilight's Valorie Curry and "weirdly, this influx of 20-somethings on hit shows," he may be in business for the long haul.
"These kids have done the right thing by incorporating, but no one educated them on what to do next, so some have gotten into payroll and other messy situations. We swooped in and cleaned them up."
Given that one of his clients is Arrested Development's Portia de Rossi, it makes sense that Neuman is a fan of digital streamers like Netflix, which resurrected the series. "It's the beginning of the change in how people consume TV, and it's one more place for clients to sell content," he says. "That's a huge change in the business."
Another is Southern California's rebounding housing market. "At any given time, I'm working on five-plus real estate transactions. I've heard of situations where there are 20 offers on the first day a property comes on the market, which is insanity."
Even celebrities are flipping homes, which is fine by Neuman, whose other clients include Ellen DeGeneres, Mel Brooks, Scarlett Johansson and Lily Tomlin, as long as they don't spend their profits on an eatery. "Every business manager has said no to a restaurant," he says. "Those are the worst investments you can make."
Although the firm he co-founded handles 500 clients repped by more than 20 partners, these days the veteran business manager mostly focuses on David Letterman and his banner, Worldwide Pants. Consistent earners such as Letterman and fellow client Michael Strahan, who made a successful transition from sports to entertainment, make Nigro's job a lot easier.
For the rest, he says the key to discouraging splurges like a second house is to explain that "they're only high-income people for a moment in time, and we don't know how long that moment's gonna be." He also shares this saying: "The first year you make money, you pay off everything you've owed your whole life. The next year you make money, you go out and you buy everything you've always wanted in life. Third year, you've gotta pay off everything you just bought the year before. And if you make it the fourth year, you start to save some money."
After finishing college but before founding his firm in 1984, the former Marine decided there were only two respectable professions. "I didn't have a love of lawyers, so I became an accountant," he has said. Philpott's firm has about 60 employees representing about 130 clients, including Dick Wolf, Brian Grazer, Jerry Bruckheimer and Michael J. Fox.
"With really high-end clients," he has said, "there are a variety of things you do such that you never get bored." His work represents clients from "cradle to grave" and includes examining film-financing deals, negotiating office space, analyzing prenups and philanthropy.
The Atlanta-based business manager specializes in such R&B artists as Justin Bieber and Chris Brown.
Dealing in a genre that coined the word "bling" means that Smallwood has had to be unafraid of putting his foot down. His methods have included making his high-earning clients fill out fast-food job applications ("to remind them that they could end up needing one if they aren't careful," he told Forbes in 2005).
"To tell clients that, based on their investments and spending habits, they don't have to work anymore, that's my goal," says Reback. The relatively young boutique firm, which turned 9 in August, hasn't yet had the satisfaction of such a conversation, but Reback and partner Derrick Lee pride themselves on their reputation and ability to work in tandem with more than 30 celebrity and industry clients.
"We copy each other on everything," says Reback. "If one of us is unavailable, the other jumps in." Unlike most shingles, Reback Lee offers full production accounting, from developing the cash flow to the final audits, on TV specials like the Emmys and Super Bowl.
The business manager, whose firm spun off from Breslauer Jacobson Rutman & Chapman in the mid-'90s, has had his hands full shepherding the portfolio of Tom Cruise, whose net worth is estimated at $250 million and whose divorce in summer 2012 meant that finances had to be divvied up.
"Craig's an absolute 'A' -- good advice, smart and quick to get stuff done," says attorney Bruce Clemens, who has shared several industry clients with Tessler.
Since 1996, the Halifax native has been based in Los Angeles, where he manages A-list accounts, including longtime client Halle Berry, whom he recently supported in her successful campaign to pass anti-paparazzi legislation.
"He took it upon himself to help marshal that," a source tells THR. "He's one of the guys below the radar that really cares about the client. He's very honorable -- he's Canadian."