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"As a performer, I understand it takes a picture of me with the Pope or a president to get debt cancellation onto the front pages. Otherwise it's just too obscure a melody line." — Bono

U2 Lose Millions in Investments

The Sunday Times
U2, the world-famous Irish rock band, have had to restructure their business after losing Pounds 10m in German bowling alleys and other unsuccessful ventures.

The band, worth an estimated Pounds 367m, are reorganising their business affairs because of poor investment results. Ossie Kilkenny, also accountant to the Verve and Oasis, is being replaced as U2's main adviser by an American lawyer.

U2's management says that in spite of the success of Bono, the singer, and his fellow band members for the past decade they have not been making much money. "They are certainly not broke but they are not as rich as they might be," one rock management source said. "If you look back at their earnings over the past 20 years and ask what they have to show for being the world's leading band, you have to conclude that they have nice houses and that is about it."

The worst investment was a loss of at least Pounds 10m in a company that planned to build leisure centres for 10-pin bowling and Quasar, a laser shooting game. U2 also invested in a deal to buy six sites in Germany for Pounds 8m but were refused planning permission for Quasar because war games with replica guns are banned by the German government. U2 finally baled out in 1993 after selling several of the prime sites at a loss.

The loss-making deals have created a rift between Kilkenny and Paul McGuinness, the band's manager. McGuinness has introduced a new financial team, led by Alan Grubman, the leading American entertainment lawyer. Kilkenny still audits the band's accounts and is in volved in investments with members of the band.

Most commentators valued the group at several hundred million pounds -- higher earners than the Rolling Stones or Michael Jackson. The Sunday Times Rich List gave their net worth as Pounds 367m, based partly on Pounds 3 for each of their 76m album sales.

However, the profits were not always invested well. "If they had invested the money in shares 10 years ago, they would have had a much better return," a source said.

Management sources say U2's difficulties are as much their own fault as Kilkenny's. "An element of disappointment has crept into their relationship with Ossie. They are putting a shape on the next seven years and want to introduce more accountability and discipline," said one.

In a rare comment about the band, McGuinness said: "They are now in the best position of any band ever, in that they own all their own copyright and master recordings."

A friend of Kilkenny said: "Ossie and McGuinness made a lot of the U2 investments together. They are like a couple splitting up after 20 years and fighting over the kids."

© 1998 Times Newspapers Limited. All rights reserved.