Interview With Eli Ball (From Lyric Financial)

Hi everybody, Wendy Day here. I'm so excited to do this interview. You know, one of the questions that a lot of artists ask me is how they can fund projects that they're working on. And I met this amazing gentleman at A3C. His name is Eli Ball, and, um, I'm gonna have him introduce himself to you. Eli, how are you today?

Hi, doll. So I'm good.

I'm good.

I'm good.

So Eli's with Lyric Financial. Eli, let's cut to the chase. Like, what is Lyric Financial? What do you guys do?

We've been financing musicians and music companies around the world since, uh, 2007. Oh wow. So we're— I guess we're officially 10 years old now. We started with BMI as our first partner, and we started processing advances for them in 2007. And now, $40 million later, and wow, you know, many thousands of advances and loans, etc., we have— we're where we are right now.

Okay, so how does, how does an artist get an advance from Lyric Financial? What makes them qualify?

They already have some earnings in their catalog. It may be their performance royalties, it may be their mechanical royalties, it may be their artist royalties. You know, effectively what we do when we do an advance is we give the artist a forecast of what they're going to earn for the next 6 months to a year. Based on pulling all the data in, us analyzing it. And we grew up in the music business, so it's pretty familiar territory for us. We take that and then we come back to the client and basically say, here's what your earnings are for the next year, um, how much would you like? And it really starts out first with much more holistically other than how much do you want which is my goal is to get my client from point A to point B and hopefully all the way home. We pride ourselves on our long-term relationship with our clients, most of which we started with 2007, 2008, and we still— they're still clients. It's really what's the problem and let me help you fix that. So when you go to a doctor, You don't walk in and tell a doctor how to do his job, right?

You're smart, you don't.

Yeah, you go in, you tell them what the problems are, and you let him ask questions. You answer him candidly, and then you depend on him or her to come up with a solution that's going to get you well and fix your problems, right?

Right.

But people don't approach banking and finance that way. They just go, well, I've already made up my mind what I need. And so the first thing that we do is kind of break it down. So, for instance, I'll have a producer-writer who's been a friend for a long time and his manager's a friend for a long time. And he just hit a lick and got a big track, right? He's a— and so the manager calls me and says, Eli, you know, can we get $120 grand? Yeah, no problem. Here's what's going on. Well, tell me, why do you need $120,000 all at once? Well, we just figured that's what we have in the pipeline. Wouldn't it be better for your client, who I know well, to basically get $10,000 a month so that money really lasts? And, uh, you know, the manager goes, yeah. And I said, not to mention the fact that if I give him $120,000 now and it's not recouped for a year, it costs him a year's worth of finance charges. Why not take $10,000 a month and you're only paying for a month's finance charges?

Exactly.

And, you know, for those of you that are a little more challenged in math, think of it like this. You know, for a month, it might cost him, you know, or 2 months, you know, he might pay $500 for that finance charge. So let's just say it's $500 for 2 months. And so that means over 6 months He's going to pay what, $3,000, right?

Grand. Yeah.

Okay. Over the year.

Right.

But if he takes that advance out because it's only outstanding for a short period of time and then it's repaid and then he can take out another advance. The problem is you take all the money up front, whether it's a loan or an advance, and it doesn't get paid back for a year. Now you're paying 20% because you're paying for the whole year at one time, right? And now instead of paying $5,000 on that same money, you're paying $6,000, right? Right.

Plus, as humans, it's just our nature—

back, you're paying $24,000.

It's also human nature that if you've got $120,000, you're gonna find a way to spend $120,000. $20,000. Whereas if you have $10,000 a month, you're not as likely to just spend that money and lose the money. Just human nature.

You know, it is human nature, Wendy Day. But, you know, and the other issue is that most people, songwriters and creatives and artists included, their job is not doing the mental math. Of managing that money, right? So the first thing that happens is if you're taking out— let's just use round numbers— $10,000 advance, okay? And let's say that gets recouped in one year. You have to pay taxes on that advance in the, in the year that you took it. Okay, so let's just say you're in a 30% tax bracket. That means $3,000 of that off the top is money you're gonna owe the federal government, okay, whether you like it or not, right? If you take a $20,000 advance and let's say $10,000 of it's recouping one year, and $20,000— I mean, $10,000 of it's going to recoup the next year, and then you're actually having to pay Taxes on all $20,000 in the year that you get it, even though it takes 2 years to recoup. So like right off the top, when you're thinking about how to manage your money and just stay straight, it's really hard to just kind of keep all those in your head. And for all intents and purposes, that's what we pride ourselves on at Lyric is helping artists stay straight.

Beautiful, beautiful. There have been some, um, stories that I've heard in the past of artists that have had to declare bankruptcy and have lost their homes and their studios. And it seems to me that Lyric would be a great solution for that. Not, not, you know, not that you only want to call somebody like you in a, in a, an extreme circumstance, but it seems to me that you could have saved a lot of homes and a lot of studios if artists just knew that this existed?

Yeah, so the difference— one of the issues is just the more successful you get as an artist or as a creative, and I say that because, you know, while the producer or the songwriter or the manager, you know, aren't the artist out front, they're still in the creative process, right? Or the label, like independent label head. So the issue really is taking care of your business without putting yourself or your assets at risk. And it's, again, it's not as straightforward as it may seem. Just in the sense of, gee, you know, I've got $10,000 coming in, so I got $10,000 I can spend. Well, you really don't have $10,000 you can spend. You have $7,000 that you can spend. And oh, by the way, in addition to the IRS and state taxes, you know, is a manager taking a piece? Your whole team up to get it. And so Sometimes we just have to, you know, speaking of people that have, you know, some friends of mine got, had really big success, their names you would know, and they got off the tracks and they spent a whole bunch more. And when the industry or their catalog kind of went a different way, like down a little bit, and And it happens to everybody. I don't care who you are. If you're Taylor Swift, you're going to have cash flow issues. It's just because it's not just you. It's not your music. It's the economics going on in the world that affect what happens in your royalties and the sales of your music. So when you think about that, and banks are real conservative and they kind of go with the wind, so to speak. So right now, money is really easy. Well, money was really easy in 2006. And so several— not several, several dozen artists got upside down when the recession hit in 2008. And because they did and they didn't know they had options, they ended up— the banks foreclosed on their catalogs and forced them to sell them. The ironic part of it— and these are multimillion-dollar catalogs— the ironic part is in almost every case, the buyer was the major that already controlled it, that was buying it at 20 cents on a dollar. They recoup their money in a year. And, you know, the artist lost ownership of their music. Yeah. Which was totally unnecessary and heartbreaking. Yeah, well, in some cases, you know, they have to put on their big boy pants. They got themselves into it. But at the same time, when you have a problem, the first thing you do is you admit that you have a problem and you figure out how not to repeat that behavior.

Right.

Or get yourself making those decisions. And then you figure out how to get yourself out of it one step at a time. And very, very rarely do I believe that. It's not even I believe, it's just simple math. They didn't have to sell those catalogs. There were other options, right? They just got pinched up. People got pressured. The politics came in. I'm damn sure the people buying those catalogs weren't buying them to be charitable. They're buying them on the auction block because they're going to make money because it's a good deal. Yeah, so if it's a good deal for them, why isn't it a good deal for somebody else that wants to be— allow that artist to hold on to their assets, right?

Right. So with Lyric, is there a minimum amount that somebody has to have in royalty income in order for you to be able to help them?

Well, it's royalty and/or sales income.

Okay.

So in today's world, a lot of artists own their own masters. And so, which is a great thing. And so for us, it's really consistent cash flow that's coming in and being able to forecast it. That really is the key trigger for us to say, hey, this is something we can help work on. We don't work on things where we're betting that something's going to be a hit. That's not our business. Our business is helping those that are already professional manage their money and their affairs, their business affairs, financial affairs. So, um, as far as a minimum goes, generally we like to see artists make, or our clients make, at least $10,000 a year from their music. Sometimes we'll do it a little bit less, but $10,000 is probably a pretty good number to start with. And we do deals all the way up to $25 million. Okay.

And they can use the money for whatever they want to, whatever they need to.

Yeah. You know, it's their money. For all intents and purposes, my job is— and the people that work at Lyric is— to help them figure out like when you come to the doctor, figure out how to solve the problem. Or it may just be an opportunity. They have a chance to buy a catalog, or they have a chance to go into business at this other place, and they need some money to fund that growth. Need money to go on tour, right? So, uh, their own music. Yeah. So there are a number of things that, you know, we help with. It's not just people that are pinched up or backed into a corner. It's actually— we do just as much in helping them grow.

Nice.

It beats the— beats the heck out of the deals that are offered by the big record companies and publishers.

Absolutely. All day, every day. Absolutely. So Eli, how did you get into this? I know that, um, you and I share a little bit of a common background with Memphis. I lived in Memphis for 3 years. I know you spent some time in Memphis when the rap scene was burgeoning. Would you talk a little bit about that?

Sure. I started out like most folks in the music business as a gofer. 1980, I started with the Oak Ridge Boys as a gofer working directly with William Lee Golden, who's the singer with the long hair and long beard. And it was interesting. You know, I was still in college and My job was to fetch, and, you know, I was given a couch to sleep on and a couple hundred dollars a week, and, you know, from there, it turned out that I gravitated towards A&R. And so I started signing bands. People asked me, and I started producing records, and people will ask me if I played anything. I said, nah, I'm just a white boy with an opinion. Uh, but it was a fairly commercial one. Um, so I think I was always a better A&R guy than I was a producer because I wasn't a player, so I was a little bit limited technically. But, um, you know, I knew what people would buy. And so I started out with a band called Jason and the Scorchers in Nashville, um, who were playing the punk clubs, and they became on top of the New York Times best albums of the year. And then that led to working for CBS as an A&R director and then a producer. CBS is the forerunner of Sony Records, what is Sony Music that it became. And I got to work with people like Rosanne Cash and her father and, um, you know, a lot of really cool artists. And then, you know, while I was at CBS, I heard some music from Memphis that I just thought was really cool. And I had started, you know, writing some songs, and, you know, not as good as the really great writers, but good enough that the record labels were wanting to sign the artists that we demoed, used that demoed on those songs, and the songs, they thought they were radio hits.

So, um, gotta love a radio hit.

Uh, yeah, um, it's bought and paid for.

Exactly.

Um, anyway, in regards to Memphis, I started getting these tapes, and a friend of mine, Steve Hrabowski, up in New York, got some tapes. He did the initial deal with Russell Simmons for Def Jam at CBS. For distribution. And we both were really, you know, I look, I was kind of like Rubin. I looked at initial hip-hop as basically Black punk rock. You know, not necessarily musically, but the attitude and, you know, what it was coming, you know, the statements that were being made about society and what was going around it and government and etc. There's a lot of similarities between early punk and early hip-hop in, in the subject matter that they were talking about. And so I started getting some of these tapes from Memphis, and so I went to Memphis, and Polygram Records, which is now Universal, gave me a really nice deal where they basically paid for a recording studio on the river. Um, that we basically took an old cotton warehouse set up on the river bluff This was '87, and let me build a studio in it, and they funded it for several years. And the goal— it was really an A&R magnet, so they thought I was going to bring them, uh, the next Al Green or the next Leonard Skinner. And, um, we brought them Al Capone, Skinny Pimp, 8 Ball, MJG, and Three-6. That's what they got exposed to.

I love it, I love it.

It's interesting, it was like at that time it was so elementary, the sound was, um, 836 didn't exist. I mean, Paul and Jay were in separate camps, really. Oh wow. Um, Paul I met first because he came to the studio and he's wanting to produce 8-Ball, MJG, they would hang out at the studio. I didn't work with them directly. Al Capone and Skinny Pimp I worked on directly. And it was just, it was interesting. You know, we were supposed to find, you know, really focus on soul music and rock because that's what they, Polygram, thought. Was going to be there. But I would go to the stereo shop to like get some subs put in my truck. You got to remember, this is the late '80s, so, you know, subs were kind of— a lot of people didn't have subs in their places, right? And in the cars. So I went there and these kids kept coming in and out of the stereo shop while I was waiting for my— get my truck back. And they'd go up to the counter and walk away with a white cassette. They'd be buying it. Oh wow. I walked up to the counter, this is probably '89 maybe, and I said to Mr. Z, who owned the shop, you know, what are they buying? He goes, uh, those mixtapes. What's a mixtape? I don't know, but they buy them. Oh, okay. Never seen them before. They're not in there. They're not in the record stores. The radio stations won't go anywhere near rap or hip-hop. And make a long story short, I asked, well, how many of those do you sell a week? I was just curious because we're recording, you know, rock bands with, you know, literally quarter of a million, half a million dollar album budgets, right? And most of them didn't recoup the cost of what the record company paid out, right? So, you know, they might have a half-million-dollar record deal, but they're still sleeping 5 guys in a room, right? That's the rock life. Yep. And, uh, we sell about 100 a week. Really? That's pretty dang good for one little stereo shop in, you know, in Midtown Memphis. And then he goes at this location. He has 3 other locations, so he's sending 300 to 500 tapes a week. And then I start— really, seriously? Then I start asking around. We show up at Westwood— I mean, at Crystal Palace in Westwood, which was down in South Memphis. It was an old grocery store that was turned into a skating rink. Oh wow. On the weekends, the parking lot was packed, and, you know, artists were out there bumping their tapes and selling them out of trunk. And I just thought, this is just— this is where it's at. This is what's happening in Memphis. And there was a good rock scene, but You know, there's a difference between artists that were dependent on the system and this whole new type of music. Yes. And culture that didn't depend on the system.

Didn't depend, worked outside the system.

I went back to Polygram and I said, I know you just built this million-dollar recording studio for us in Memphis, but I need another $25,000. And the head of Polygram goes, what do you need it for? I said, don't ask. So because he'd known me for a while, he just— I just said, trust me, we're going to invest in, um, some of the street scene. I didn't want to tell him what kind of music was because if I told him, he would say no, right? And that's where the name of the studio was called The Warehouse. And that's where a lot of, you know, the Memphis scene got started, because the recording, they didn't have to pay, right? So the deal I had with Polygram was you pay for the studio and the operations of it, and I'll just let whoever we think has some talent come in here and record. And then you'll get first look at it. But if you don't want it, then I'm going to let them have the tape and go off and do what they need to do. And so that worked out really well at first. We did a few, you know, it started out there were just a couple people didn't trust us. You know, I wasn't from Memphis. And so I But after 6 or 7 months, that little studio that we built with the $25 grand, which was basically a TX-16 track with a reel-to-reel and a couple of turntables, Technics turntables, literally ran 24/7 for like 4 years straight until we closed the studio. And a lot of the, you know, a lot of the kids— and I say that just because of my age— that went through there That was the first place they got to be in a studio for real, right? Because Ardent and Kiva or House of Blues and the rest of them, it just— one, it was a street scene. Nobody had that kind of money. Nobody had $150 an hour to pay for an engineer in a studio. And also, it was very, very counterculture. To what Memphis thought of itself as a music town, right? Which— blues, rock and roll, and R&B, right? And so, um, yeah, anyway, that was— that's the beginning of it. I, uh, we had that run, and then I decided to go to LA, and I spent some time out there producing for some of the rock labels and metal labels. And, um, and then I had I had two boys along the way. They needed a father and not somebody off in LA blowing up speakers. And I decided to come home and learn how to be a dad.

Wow, good for you. That's the hardest job yet, actually.

Oh my gosh. Yeah, it was ridiculous. You know, you learn real fast. You got to walk the walk, not talk the talk.

Exactly. You got lives depending on you. So Eli, what is your website and how do people get in touch with Lyric Financial if they feel you can help them?

Our website is lyricfinancial.com, L-Y-R-I-C-financial.com, like song lyric. You can either shoot us an email. Some of the, you know, there's an online process if you just want to request an advance. Everybody here is basically from the music industry, so you have people that understand what your needs are. They not only understand the pun— I mean, the jokes— but the punchlines, right? So, um, and they're all people that give it— you know, I'm not supposed to cuss, but they're people that give a damn.

Good.

And they want to help. You know, that's our job, is to serve We make money as a side part of that, but our goal is not to make money. Our goal is to serve, and that's not lip service.

Gotcha. Is there anything that I haven't asked you that I should have asked you? Did I leave anything out?

What's the difference between one company and another? One financial—

yeah, great question. What is the difference? I mean, I guess there's other people out there doing this.

Yeah, there are quite a few. We look at things in a long-term relationship. It may not be what you want to hear. You may want to get as much money as you can as an artist, but being transparent and helping work through issues and helping create opportunities is what we're about. You know, bankers I got accused once by one of my board members of not being an AGB because I wasn't charging enough. And I said, what's an AGB? And he was the head of a big bank in Memphis. And he says, egregious greedy banker. Most people go into banking because they can make money at it. It's about making money.

Right.

It's a business. Yeah, for me it's always about creating solutions and oh, by the way, you do a good job at it, you're going to make money. Right. And there's a big difference in intent.

Huge.

I would say that's the difference and the knowledge of, you know, the industry.

Absolutely. Wow. Thank you so much for taking the time to do this today and I want to give you extra, extra love because we tried to do this yesterday and I hit a— I hit some sort of a weird snag. I couldn't, I couldn't get this to record. I couldn't get, um, lovely Skype to work. It turns out they had updated their program whilst I slept and it was no longer attached to my recording system. So I ran downtown, met with Jordan Tower from Jordan Tower Films He was kind enough to, to fix this for me temporarily. There's a little bit of a weird window that you're speaking in, but that's okay because the information is what matters. So a huge thank you to you for coming back today and doing it. A huge thank you to Jordan for helping me with the, the technical side of it that I suck at. Well, I appreciate you.

I resemble that remark. One thing I'd leave with all your community out there is in the old days there was— there weren't a lot of alternatives either to get your music out or in terms of, you know, funding your career. There are now. So when— if you hear an offer that's too good to be true, it probably is. Make sure that you have, uh, somebody that understands legal and/or finance, your business manager, your attorney. Look at what you're signing. And for Pete's sake, just look at your alternatives. You get one offer, great. You don't have to say yes to it right away. They're there to make money and put money out the door. So go get other offers. And then sit down and look at the true cost of what you're signing.

And make sure you're comparing apples to apples. Exactly. I've seen some other companies out there where they'll have a higher origination fee but a lower percentage, so it looks like it's a cheaper loan, but it's really not.

You always need to understand the math of what you're agreeing to, and a lot of times it's not only not disclosed Clearly, it's actually hidden on purpose. So have somebody that understands them, and if they don't understand it, best walk away, right? Okey-doke.

Great advice.

All right, thank you. Thank you so much. I love you.

Thank you. Take care.