The Beatles' name was supposedly first noticed by Epstein in issues of
Mersey Beat, and on numerous posters around Liverpool, before he asked Bill Harry who they were, as Harry had previously convinced Epstein to sell the magazine at NEMS. (The Beatles were featured on the front page of its second issue). The Beatles had recorded the "My Bonnie" single with Tony Sheridan in Germany, and some months after its release Epstein asked Alistair Taylor about it in NEMS.Epstein's version of the story was that a customer, Raymond Jones, walked into the NEMS shop and asked him for the "My Bonnie" single, which made Epstein curious about the group. Taylor later claimed that he used the name of Jones (a regular customer) to order the single and paid the deposit himself, knowing that Epstein would notice it, and order further copies. Harry and McCartney later repudiated Epstein's story, as Harry had been talking to Epstein about The Beatles for a long time (being the group he promoted the most in the Mersey Beat magazine) and by McCartney saying, "Brian [Epstein] knew perfectly well who The Beatles were...they were on the front page of the second issue of 'Mersey Beat'."
The Beatles were due to perform a lunchtime concert in the Cavern Club on 9 November 1961. Epstein asked Bill Harry to arrange for Epstein and his assistant Taylor to watch The Beatles perform, and Epstein and Taylor were allowed into the club without queuing, with a welcome message being announced over the club's public-address system by Bob Wooler, who was the resident DJ. Epstein later talked about the performance:
I was immediately struck by their music, their beat, and their sense of humour on stage — and, even afterwards, when I met them, I was struck again by their personal charm. And it was there that, really, it all started.
After the performance, Epstein and Taylor went into the dressing room...which he later called "as big as a broom cupboard"...to talk to them. The Beatles, all regular NEMS customers, immediately recognised Epstein, but before Epstein could congratulate them on their performance, George Harrison said, "And what brings
Mr. Epstein here?" Epstein replied with, "We just popped in to say hello. I enjoyed your performance." He introduced Taylor, who merely nodded a greeting, and then said, "Well done, then. Goodbye," and left. Epstein and Taylor went to Peacock's restaurant in Hackins Hey for lunch, and during the meal Epstein asked Taylor what he thought about the group. Taylor replied that he honestly thought they were "absolutely awful", but there was something "remarkable" about them. Epstein waited a long time before saying anything further, just sitting there smiling slightly, but eventually saying, "I think they're tremendous!" Later, when Epstein was paying the bill, he grabbed Taylor's arm and said, "Do you think I should manage them?"
The Beatles played at The Cavern over the next three weeks, and Epstein was always there to watch them. Epstein contacted Allan Williams (their previous promoter/manager) to confirm that Williams no longer had any ties to them, but Williams advised Epstein "not to touch them with a barge pole", because of a Hamburg concert percentage the group had refused to pay him.
Management contract
In a meeting with the group at NEMS on 3 December 1961, Epstein would propose the idea of managing them. Lennon, Harrison and Best arrived late for the meeting...they had been drinking at the Grapes pub in Mathew Street...and Epstein was irritated to see that McCartney was not with them, because, as Harrison explained, he was "taking a bath". Lennon had invited Wooler to be at the meeting so he could later give his opinion of Epstein, but introduced him by saying, "This is me dad". Epstein was reticent throughout the short meeting, only asking if they had a manager (to which they replied in the negative) and culminating with, "It seems to me that with everything going on, someone ought to be looking after you." Epstein had further meetings with the group on 6 December and 10 December 1961. On 13 December 1961, after Epstein's invitation, Mike Smith of Decca records travelled from London to Liverpool to watch The Beatles at the Cavern Club, which led to an audition in London on 1 January 1962 (see The Decca Audition).
Being under the age of 21, McCartney, Harrison and Best had to ask for consent. Best and his mother (Mona Best, owner of The Casbah Coffee Club) were impressed with Epstein because of his office, expensive watch, suits and large car, as were the other Beatles, and Best’s mother thought Epstein "could be good for them [The Beatles]". McCartney's father was sceptical about a Jewish manager, and warned his son to be careful about finances. Lennon's guardian, Mimi Smith, refused, believing that Epstein had enough money to drop the group after a few months when something else came along that interested him, but as Lennon had just turned twenty-one, his Aunt's advice could be ignored. The Beatles finally signed a five-year contract with Epstein on 24 January 1962, which gave Epstein 25% of their gross income. The Beatles would then share any income after various expenses had been deducted. Epstein then formed the management company NEMS Enterprises, telling his mother and father that managing The Beatles was only a part-time occupation, and would never interfere with the family business.
The Beatles signed Epstein's first management contract, but Epstein did not sign it himself, thereby giving himself the option of withdrawing at any time (however, English law still would have enforced the contract through the doctrine of part performance), although he told his assistant Taylor the opposite by saying, "Well, if they ever want to tear it up, they can hold me but I can't hold them". The contract was not legally binding on McCartney and Harrison in any case, as they were both still minors (the age of majority at that time was 21) and lacked the legal capacity to sign a binding contract. The contract stated that Epstein would receive a management commission of 25% of their gross income after a certain threshold had been reached. The Beatles argued for a smaller percentage, but Epstein pointed out that he had been paying their expenses for months, without receiving anything in return. After the release of "Love Me Do" in 1962, Epstein signed a second (and legally binding) contract.
Appearance on stage
Although Epstein had had no prior experience of artist management, he had a strong influence on their early dress-code and attitude on stage. When Epstein discovered the band, they wore blue jeans and leather jackets, performing at rowdy rock 'n' roll shows where they would stop and start songs when they felt like it, or when an audience member requested a certain song. Epstein encouraged them to wear suits and ties; insisted that they stop swearing, smoking, drinking or eating onstage; and also suggested the famous synchronised bow at the end of their performances. McCartney was the first to agree with Epstein's ideas, believing it was, in part, due to Epstein's RADA training. John Lennon was against the idea of wearing suits and ties, but later said, "Yeah, man, all right, I'll wear a suit. I'll wear a bloody balloon if somebody's going to pay me". Epstein began seeking publicity by "charming and smarming... the newspaper people", as John Lennon said in 1972. According to McCartney, "The gigs went up in stature and though the pay went up only a little bit, it did go up", and that the band was "now playing better places." Another improvement Epstein made was that the group was now far more organised, having a single concert diary in which to record bookings, rather than using whoever's diary was to hand.
Record contract
Epstein made numerous trips to London to visit record companies with the hope of securing a record contract, but was rejected by many, including Columbia, Pye, Philips, Oriole, and most famously, Decca [see The Decca audition]. The Beatles later found out that Epstein had paid Decca producer Tony Meehan (ex-drummer of the Shadows) to produce the studio recordings. While Epstein was negotiating with Decca, he also approached EMI marketing executive Ron White, who later contacted EMI producers Norrie Paramor, Walter Ridley, and Norman Newell, but they all declined to record the group. White could not contact EMI's fourth staff producer, Martin, as he was on holiday.
On 8 May 1962, Epstein visited the HMV (EMI) store at 363 Oxford Street, London, to have the Decca audition tape transferred to 78rpm acetates. An HMV disc-cutter named Jim Foy liked the recordings, and suggested that Epstein should contact Sid Coleman, the head of EMI's record publishing company, Ardmore & Beechwood, who had offices on the top floor. Coleman liked the recordings, and sent Epstein to George Martin, the A&R manager of Parlophone. On 9 May 1962, Epstein met George Martin at Abbey Road Studios, and immediately sent a telegram to The Beatles in Hamburg confirming that they had been accepted. The Beatles were signed by EMI's small Parlophone label after the group had been rejected by almost every other British record company, and without Martin ever having seen them play live. Martin later explained that Epstein's enthusiasm, and his conviction that The Beatles would one day become internationally famous, convinced him to sign them.
The Beatles' recording contract that EMI offered Epstein gave them one penny for each record sold, which was split among the four members, meaning one farthing per group member. The royalty rate was further reduced for singles sold outside the UK, on which the group received half of one penny (again split between the whole band) per single. Martin said later that EMI had "nothing to lose" by signing a contract with them.
Martin scheduled an audition at Abbey Road Studios which convinced Martin that they were good enough, but with one exception: He felt the recording would be better served by an experienced session drummer in place of Pete Best. When the news came that Martin wanted to replace Best on their recordings with a session drummer, Lennon, McCartney and Harrison asked Epstein to fire Best from the band. Epstein agonised about the decision, and asked Bob Wooler if it was a good idea, to which Wooler replied that Best was very popular with the fans and they wouldn't like it at all. Ringo Starr took his place, as Starr had previously played with Rory Storm and the Hurricanes, and had previously stepped in to drum with them when Best was ill or unable to play.
Epstein renegotiated EMI's royalty rate, and on 27 January 1966, The Beatles signed a new nine-year contract with EMI, but with a clause stating that 25% would be paid to NEMS for the full nine years, even if The Beatles decided not to renew their management contract with Epstein, which was up for renewal the following year.
After Candlestick Park
The Beatles' hectic schedule of touring, television, and film work between 1963—65 kept Epstein very busy. The Beatles' last live concert was at Candlestick Park in San Francisco on 29 August 1966, and Epstein's management duties changed to reflect the changing nature of their career. He wanted them to continue touring, but they adamantly refused. The Beatles started to pay less attention to Epstein's advice on many issues after they stopped touring, such as the legally risky cover art of
Sgt. Pepper's Lonely Hearts Club Band.