Emma Channing, Draft: 02/07/2016

LL.M. Stanford Law School, 2010

emma.l.channing@gmail.com Cell: 650 283 6241

Bowie: Rock God or Tax Genius?1

1.

INTRODUCTION

Even now, nearly 20 years on from issue, the Bowie Bonds remain a remarkable creation
that spawned over 100 similar transactions in the music industry, and some claim, triggered the
creation of more dubious derivatives that played such an enormous part in triggering the Great
Recession2. Following David Bowies tragic death in January 2016, there has been a great deal
of coverage of the Bowie Bonds and their origination, but one aspect has always been
overlooked, and that is the tax structuring. The Bowie Bonds arguably were a tax free structure
paying 15 years income totaling $55m in one bullet payment by the first securitization of
intellectual property rights, namely Bowies pre 1990s royalties 3, which can be concluded from
a facts and circumstances analysis as laid out in this essay. In this day and age of punishing
regimes for both income and capital gains, such an enormous tax free structure is an incredible
achievement. However this is unsurprising given the beneficiary was a creative genius with a
very smart business sense: David Bowie and hence the answer to the title Rock God or Tax
Genius arguably should be both.
The Bowie Bonds came to the end of their life early in 2007 when they were liquidated
and the assets returned to Bowie4, but the Bowie Bonds' role in the history of securitization is
also worth note. The Bowie Bonds were successful arguably for the same reason that certain
Credit Derivative Obligations (CDO), particularly CDO2 and their ilk were not. The Bowie
Bonds were transparently structured, with clear sight of the underlying income generating assets,
proven income track-record, most likely modeled for that income to decrease as well as increase
and clear title ownership. The Bowie Bonds remain an interesting example of what was and was
not wrong with where the securitization market went, and an argument for the merits of wellstructured securitization products.
2.

BACKGROUND TO THE BOWIE BONDS

2.1

Introduction to Securitization

Broadly speaking, most securitizations of assets involve an Originator, who makes a true
sale of income generating assets (ie mortgages) to a Special Purpose Vehicle, which then issues
bonds which have a specific maturity date and interest rate, which are then rated by a rating
agency and purchased by a Purchaser, usually an instututional investor. There is often a separate
Servicer who collects and transfers to the SPV any income stream from the assets.
1

Acknowledgments: I would like to thank Professor Joseph A. Grundfest for inspiring and encouraging this essay.
Considerable thanks are also due to Susan Champion, Christine Kirk and Douglas Nordlinger, without whose
support, guidance and encouragement, this paper would never have been conceived of or written.
2
John Harris, Is the recession David Bowie's fault?, The Guardian (January 13, 2009 19.01 EST)
http://www.theguardian.com/music/2009/jan/14/david-bowie-music-industry
3
Dominic Bencivenga, Bowie Bonds Pioneer Deal Uses Copyrights to Raise Capital, N.Y. L. J., May 15, 1997, at 5.
4
Vincent
Ryan,
Securitization:
The
Sequel,
CFO
Magazine
(May
22,
2014)
http://ww2.cfo.com/credit/2014/05/securitization-sequel/;
http://www.ey.com/Publication/vwLUAssets/EY__US_securitization_market_re-emerging/$FILE/ey-us-securitization-market-re-emerging.pdf

1
Electronic copy available at: http://ssrn.com/abstract=2729014

Emma Channing, Draft: 02/07/2016

LL.M. Stanford Law School, 2010
emma.l.channing@gmail.com Cell: 650 283 6241

Agency rates

Assets
Originator

SPV

Bonds

$$$
$$$
Purchaser
Servicer

2.2

Bowie Bonds Structure

No details of the Bowie Bonds were ever made public; Bowie did not give any interviews
discussing them, and in fact rarely gave interviews regarding any of his business enterprises.
However, certain elements can be gleaned from interviews given by David Pullman, the banker
who orchestrated the issue of the Bowie Bonds, and details of David Bowies personal life
revealed in interviews and biographies.
The Bowie Bonds structure was relatively standard (see below), but the critical differences were
the type of asset involved and EMIs role as Servicer and Guarantor.
Moodys rates A3

Originator
David Bowie conveys the
copyright, music recording
and publishing rights
(including the right to
receive royalties) to 25
catalog albums and
associated recordings

SPV

Bowie Bonds

$55m

$55m
Servicer and
Guarantor
EMI

Issued by SPV with a

7.9% interest rate

Purchaser
The Prudential
Insurance Co

2
Electronic copy available at: http://ssrn.com/abstract=2729014

Emma Channing, Draft: 02/07/2016

LL.M. Stanford Law School, 2010
emma.l.channing@gmail.com Cell: 650 283 6241

2.3

EMIs role

EMIs role in the structure as a guarantor has not been repeated and it was not clear what
the benefit was. The role created a structural weakness, which became evident when in March
2004, Moody's Investors Service lowered the Bowie Bonds from an A3 rating (the seventh
highest rating) to Baa3, one notch above junk status5. This downgrade was prompted by lowerthan-expected revenue generated by the IP assets underlying the Bowe Bonds "due to weakness
in sales for recorded music.6 A downgrade to an unnamed company that guarantees the issue
was also cited as a reason for the downgrade, that company namely being EMI. However,
although the Bowie Bonds retained their investment grade status, they were ultimately liquidated
in 2007 for undisclosed reason7, only 10 years into their 15 year life.
Bowies own press release at the time of issue of the Bowie Bonds suggested that EMIs
reward for acting as a guarantor of the Bowie Bonds was a licensing deal 8. The deal gave EMI
rights to release for the lifespan of the Bowie Bonds the 25 Bowie albums to which the Bowie
Bond royalties related. Bowie however was guaranteed more than twenty-five percent of the
royalties from wholesale sales in the U.S.
2.4

Bowies motivations

A Fortune article9 written at the time of issue of the Bowie Bonds briefly mentioned
Bowies motivations for entering into the Bowie Bond transaction, suggesting that Bowie wanted
lots of money up front to buy out a former manager and make other investments. Additional
detail can be found in biographies of Bowie and in 2011 copyright case. Buckley comments that
the investment that Bowie made was a greater-than-10-percent deal and that a large part of
the proceeds went towards it10. Furthermore, the manager in question was Tony Defries11, who
ran management company MainMan, and Bowie has claimed left him broke by 1976, fleeced
mercilessly by the MainMan operation12. However, Marc Spitz's interview of David Pullman
presents a slightly different picture, suggesting that Tony Defries was in some respects a very
savvy manager, albeit not one with Bowie's interests always ahead of his, hence Defries
acquisition in the 1970's of a share of Bowies royalty rights having negotiated the 1970s RCA
deals so the two would own the recording copyrights, a provision almost unheard of at the
time13. Furthermore, Bowie had learnt from Defries the importance of owning royalty rights:
Peter Campbell, Bowie Bonds blazed a trail through capital markets, Financial Times (January 11, 2016 12:07
pm) http://on.ft.com/1RhPQqT
6
Bowie: man whose bonds fell to earth, The Telegraph (March 25, 2004 12:01 AM GMT)
http://www.telegraph.co.uk/news/uknews/1457666/Bowie-man-whose-bonds-fell-to-earth.html
7
Dan McCrum, A Short History of the Bowie Bond, FTAlphaville (January 11, 2016 10:51 AM)
http://ftalphaville.ft.com/2016/01/11/2149761/a-short-history-of-the-bowie-bond/
8
Ed Christman, The Whole Story Behind David Bowie's $55 Million Wall Street Trailblaze, Billboard (January 13,
2016)
http://www.billboard.com/articles/business/6843009/david-bowies-bowie-bonds-55-million-wall-streetprudential
9
Kim Clark, On the Frontier of Creative Finance: How Wall Street Can Securitize Anything, Fortune; (April 28,
1997).
10
David. Buckley, Strange Fascination: David Bowie, the Definitive Story 538 (2001).
11
Marc Spitz. Bowie: a Biography. New York 365 (2009).
12
Buckley, supra, at 537.
13
Christman, supra.
5

Emma Channing, Draft: 02/07/2016

LL.M. Stanford Law School, 2010
emma.l.channing@gmail.com Cell: 650 283 6241

Tony taught him some of the things he learned along the way about owning things. People
dont pick it up right away. Didnt do things the right way to begin with; as he learned he
corrected everything.14 Indeed, Bowies otherwise complete ownership of his back catalog
was the key reason why the securitization could work, and is relatively unusual in the industry.
Defries however did not come out of things so well because he continued to sell rights to
Bowies back catalog that he had sold to Bowie at the time of the Bowie Bond issue. MainMan
and Defries were named in a 2011 copyright case complaint Capitol Records, LLC et al v.
Defries et al15, wherein Capital Records, various EMI entities and Jones/Tintoretto
Entertainment Company, LLC (Bowies commercial vehicle) sued MainMan and Defries and
associated entities for selling rights to David Bowie, John Mellencamp and Iggy Pops back
catalogs to online distributors such as iTunes and Amazon. In the complaint it was revealed that
Bowie entered into an agreement entitled, Record Masters Rights Purchase and Sale
Agreement, dated December 20, 1996 pursuant to which MainMan sold to Bowie all the
interests it held in Bowies pre 1974 back catalog16. This was less than two months prior to the
Bowie Bonds and the complaint only mentioned that millions were paid, but not when. It is
conceivable that Bowie either took out a loan to bridge the period until the Bonds were issued or
agreed to pay MainMan out of the proceeds from the Bonds. The complaint also revealed that
MainMan and Defries had sold the MainMan music publishing business to EMI in 1992. Default
judgement was awarded against MainMan and Defries to the tune of $9,350,000 and
$126,916.34 for Plaintiffs' attorneys' fees and expenses17. Defries represented himself Pro Se
and continued to fight restraining orders designed to prevent him from accessing money that
Sony held until 2014. The court filings present an interesting picture of Defries as having a long
association with Switzerland as well as a creative flair for the dramatic. In one motion he
quoting the United Nations Universal Declaration (Article 12 and 13) and Inter-American
Commission on Human Rights (E)16918 and apparently maintained a belief that such things
would hold water with the court not dampened by several years of denials by the court.
Ironically enough Defries also fell afoul of a questionable off-shore Swiss tax shelter through
which he lost $22 million in 2001, and attempted to sue the entities in question including Swiss
Partners Investment Network Ltd., Swiss Partners Insurance Company SPC Ltd.,
Liechtensteinische Landesbank Ltd., and Bank Julius Baer & Company Ltd. in federal court in
Virginia but failed to show jurisdiction19 although managing to come to the attention of
Wikileaks in the process20.
Drawing conclusions from the information available, a picture emerges of David Bowie
distinct from the dazzling Rock God along with details such EMIs role and rewards and
14

Spitz, supra, at 366.

No. 11 Civ. 6808(PKC), at *1-2 (S.D.N.Y. September 28, 2011)
16
Complaint, supranote 15 at 10-11.
17
Judgement at *1, Capitol Records, LLC et al v. Defries et al No. 11 Civ. 6808(PKC) (S.D.N.Y. December 26,
2012)
18
Declaration In Response And Opposition To Plaintiffs Cross Motion For Permission To Serve A Restraining
Notice On Sony Music Entertainment at *2-3, Capitol Records, LLC et al v. Defries et al No. 11 Civ. 6808(PKC)
(S.D.N.Y. December 26, 2012)
19
Notice of Voluntary Dismissal, Defries v. Landesbanc, 1:04-cv-01364-CMH-TCB (V.E.D.C March 23, 2005).
20
Rudolf Elmer, Bank Julius Baer: Grand Larceny via Grand Cayman, Wikileaks (February 2008)
https://wikileaks.org/wiki/Bank_Julius_Baer:_Grand_Larceny_via_Grand_Cayman
15

Emma Channing, Draft: 02/07/2016

LL.M. Stanford Law School, 2010
emma.l.channing@gmail.com Cell: 650 283 6241

Bowies motivation for the transaction. Bowie appears to have a talent for hiring smart advisers
and following that advice. Along with his judicious choice of jurisdiction, made over thirty
years ago, these skills have ensured sustained great wealth and privacy, making Bowie almost
unique amongst his profession and deserving of both titles: Tax Genius and Rock God. In the
words of Pullman: They went to David with the idea [of the Bowie Bonds] and Davids
reaction was Well, why havent you started already? . . . He picks things up very quickly.
Very creative, innovative. 21 . . . Nobody thought of this. Then they said it would never work.
Never pay off. David is someone who grasped it instantly.22
3.

ON THE TRAIL OF THE TAX STRUCTURE

3.1

Known issues

Little of the tax structuring was discussed in the legal press around the time of issue,
other than Bencivengas 1997 article23 which gave away that Bowie was not U.S. resident24
and that the deal was closed at an accelerated pace25. While it is possible to guess at a group
of jurisdictions that Bowie might have been resident in, establishing that is a little more complex.
Broadly speaking, for individuals other than US citizens or residents26, tax residency is usually
established by presence in the jurisdiction and physical ties such as real estate. This is
particularly true of the offshore jurisdictions, which usually require an acquisition of real
estate, whereas the UK, for example will now look at far less substantial ties to find residency27.
However, based on his property ownership, divorce from Angie Bowie, marriage to Iman and
recording locations, Bowies tax residency appears to have been Switzerland from 1976 until
1997, when his residency appears to have reverted to the US shortly after the Bowie Bond issue,
where he had been living with his wife Iman for at least part of the time since 1992 summarized
in this graphic.

21

Spitz, supra, at 365.

Spitz, supra, at 366.
23
Bencivenga, supra, at 5.
24
Bencivenga, supra, at 6.
25
Bencivenga, supra, at 7.
26
US citizens and residents are taxed in the US on worldwide income. However, if a US citizen is resident outside
the US then they are also likely to be taxed in their country of residency, subject to dual-taxation treaty application.
See IRS, Income from Abroad is Taxable, https://www.irs.gov/Businesses/Income-from-Abroad-is-Taxable and IRS,
Tax Treaties, https://www.irs.gov/Individuals/International-Taxpayers/Tax-Treaties.
27
HM Revenue & Customs, Guidance Note: Statutory Residency Test (SRT), December 2013
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/458559/RDR3_govuk_hyperlink__up
dated_078500.pdf
22

Bowie
purchases
Clos de
Msanges

Station to
Station
rec. 1975
Cherokee
Studios,
CA

1975

Low rec.
1976
Hansa
Studio by
the Wall,
Berlin

Heroes
rec. 1977
Mountain
Studios
and Hansa
Studio by
the Wall

Bowie
divorces
Angie
Bowie

Lodger
rec. 1978-9
Mountain
Studios

1980

Scary
Monsters
rec. 1980
The Power
Station,
NY

Under
Pressure
rec. 1981,
Mountain
Studios

Bowie
purchases
Chteau du
Signal,

Tonight
Tonight
rec. 1984
Le Studio,
Quebec

1985

Lets
Dance
rec. 1982
The Power
Station,
NY

Tin
Machine
rec. 1988-9
Mountain
Studios

Black Tie, White

Noise rec. 1992,
Mountain Studios,
LA and The Hit
Factory, NY

1990

Never Let Me
Down rec. 1986-7,
Mountain Studios
and The Power
Station, NY

Tin Machine II
rec. 1989 and 1991,
Sydney and LA

Bowies
daughter is
born in
New York

Bonds issued,
Chteau du
Signal up for
sale in 1997,
sold in 2000

Bowie
marries
Iman
Abdulmajid

1995

Outside rec.
1994-5, Mountain
Studios and The
Hit Factory, NY

Earthling rec.
1996, Mountain
Studios and
Looking Glass
Studios, NY

Bowie buys
penthouses
at 285
Lafayette
Street, NY

Bowie dies
in New
York

2000

Hours
rec. 1998-9
Looking
Glass
Studios,
NY

The Next Day

rec. 2010-12, The
Magic Shop and
Human Worldwide
Studios, NY

Heathen
rec. 20002, Looking
Glass
Studios,
NY

2005

Reality
rec. 2003,
Looking
Glass
Studios,
NY

2010

2016

Blackstar
rec. 2014-5
The Magic
Shop, NY

Emma Channing, Draft: 01/25/2016

LL.M. Stanford Law School, 2010
emma.l.channing@gmail.com Cell: 650 283 6241

3.2

Bowies tax residency in Switzerland

The original motivation to move to Switzerland appears to have been tax itself. In her
autobiography Backstage Passes, Angie Bowie, David Bowies first wife claimed:
Stan came up with the idea of Swiss residency for David as a solution to a pressing tax
problem. If David were to remain a resident of California, he would have to pay a hefty tax bill $300,000 was the figure I was told-with money he did have.28
For a high net worth individual, generally speaking Swiss tax residency is established by
owning a property and Angie Bowie, who was Swiss educated, claims to have negotiated
residency herself and selected the first property that David Bowie owned in Switzerland, Clos de
Msanges, Blonay, near Montreaux29. It is certainly true that obtaining Swiss Fiscal Deal B
residency was very tricky up until reforms in 200230. But perhaps the most illuminating
explanation is to be found in Buckleys biography of Bowie31:
[Bowie had] sound financial reasons for taking up Swiss residence: after five years of
being fleeced, Bowie determined to domicile in a country with advantageous tax laws.
His main motivations for the move, though, were both personal and professional he knew
that he had to rid himself of the circle of dealers, pushers and hangers-on that had
attached themselves to him in the States.
Bowie then moved to Chteau du Signal, Upper Lausanne in 1982, perhaps to be closer
to his son, Duncan Bowies school, the then Commonwealth American School (now the
International School of Lausanne)32, the move would have reduced the car drive from 25 minutes
to under five minutes. Interestingly enough, although there are conflicting reports, it appears,
although there are conflicting reports, it appears Chteau du Signal was put up for sale in 1997,
and eventually sold in 200033.
There are a couple of other clues that suggested that Bowie liked the privacy of
Switzerland and was resident there for some 20 years. Firstly, while Bowies marriage to his
first wife Angie Bowie (then Mary Angela Barnett) took place in the UK at the Bromley Registry
Office in Beckenham Lane, Kent, the divorce was filed in Switzerland on February 8, 1980.
Filing for divorce in Switzerland instead of the UK would ensure privacy in a way not possible
in the UK, and also reportedly worked in Bowies favor, resulting in a relatively small settlement
to Angela Bowie of $750,000 over ten years and Bowie having full custody of their son, again an

28

Angie Bowie, Backstage Passes 390 (1st ed., 2000).

Angie Bowie, supra, at 392.
30
Micheloud & Cie, Swiss residency for Businessmen and Professionals
http://live-inswitzerland.com/e/residency/self-employment.html (last visited January 24, 2016)
31
Buckley, supra, at 298.
32
Swissinfo.ch and agencies, David Bowie: The Swiss Years, January 11, 2016 16:14
http://www.swissinfo.ch/eng/turn-and-face-the-strange_david-bowie--the-swiss-years/41886858
33
Swissinfo.ch, supra. The Local, Bowie's discreet time in Switzerland recalled, January 11, 2016 12:13
GMT+01:00 http://www.thelocal.ch/20160111/bowies-discreet-time-in-switzerland-remembered
29

Emma Channing, Draft: 01/25/2016

LL.M. Stanford Law School, 2010
emma.l.channing@gmail.com Cell: 650 283 6241

unlikely result in the UK34. Furthermore, the civil ceremony for Bowies marriage to his second
wife Iman Abdulmajid also took place in Switzerland on April 24, 1992 at the Lausanne
Registrars Office, even though a much larger wedding ceremony took place at Saint James
Episcopal Church in Florence, Italy on June 6, 199235. Bowie is reported to have then moved to
New York with Iman3637, and to have owned properties at 285 Lafayette Street, New York, NY,
10012, bought in 199 and in Woodstock in New Yorks Catskills, but his recording studios
reveal a longer attachment to Switzerland.
Bowies choice of being near to Montreaux, Switzerland is apparently common amongst
tax exile musicians, due to the nearby location of the state-of the-art recording studios Mountain
Studios38, which was owned by Queen 1978-1985 and in fact Under Pressure, was written and
recorded by Queen and Bowie at Mountain Studios. Indeed, while he did do some writing and
recording in Berlin in 1976, The final mixes [of Heroes, released in October 1977] took place at
Mountain Studios39. Thereafter, until Hours, all of Bowies albums were at least in part
recorded at Mountain Studios in Switzerland including Earthling, which was released in
February 1997 just after the Bowie Bond issue, suggesting he was still spending significant
amounts of time in Switzerland40. Only in 1998 did Bowie begin preferring New York for a
recording location: Hours (recorded 1998-1999), Heathen (recorded 2000-2002) and Reality
(recorded 2003) are all credited as having been substantially recorded at Looking Glass Studios.
The last two albums, The Next Day (recorded 2010-2012) and Blackstar (recorded 2014-2015),
were recorded at The Magic Shop in New York, just a four minute walk from 285 Lafayette
Street.
3.3

Effect of Swiss tax residency

Switzerland allows retired or independently wealthy residents to pay only a lump sum
tax, based on their rental income of the house they own or rent. Such Swiss Fiscal Deal B
resident tax payers usually pay no other taxes and also do not have to declare or report any
income or capital gain41. However, if you are still an active professional generating income, the
Swiss tax regime is not as flexible as one might think. Switzerland not only is one of the small
group of countries including the US that taxes active professionals on worldwide income,
Switzerland also has dual tax treaties with many countries, including much of North America,
Europe and Asia, albeit still no capital gains42. David Bowie continued performing and writing
throughout his life, well beyond the 1997 issue of the Bowie Bonds, so this troublesome impact
of income tax would have been an issue for him. Thus, by structuring what was an income
34

Spitz, supra, at 293.

BowieWonderworld.com http://www.bowiewonderworld.com/faq.htm#p10 (last visited January 20, 2016).
36
Steven Kurutzjan, David Bowie: Invisible New Yorker, The New York Times (January 16, 2016)
http://www.nytimes.com/2016/01/17/fashion/david-bowie-invisible-new-yorker.html?_r=0
37
Tom Leonard, The daughter who made David Bowie yearn to live, Daily Mail (January 11, 2016 19:14 EST)
http://www.dailymail.co.uk/news/article-3394835/The-daughter-David-Bowie-yearn-live.html
38
Spitz, supra, at 292.
39
Nicholas Pegg,. The Complete David Bowie 307 (2000).
40
Pegg, supra, at 345.
41
Micheloud & Cie, supra.; Federation of International Trade Associations, Country Profiles - Switzerland - Taxes
and Accounting http://www.globalpropertyguide.com/Europe/Switzerland/Taxes-and-Costs (last visited 1/25/2016)
42
KPMG, Switzerland's double tax treaties, (November 2015) http://www.kpmg.com/ch/en/topics/savingtax/pages/dba.aspx
35

Emma Channing, Draft: 01/25/2016

LL.M. Stanford Law School, 2010
emma.l.channing@gmail.com Cell: 650 283 6241

producing asset as a capital gain, Bowie would have received the $55m proceeds from the Bowie
Bond issue tax free.
3.4

Unlikelihood of Irish tax residency for Bowie

It is worth briefly mentioning that Bowie appears to have considered moving his tax
residency to Ireland. Ireland would most certainly have made sense due to Irelands unique and
very favorable treatment of artists royalties, informally known as the U2 tax, which came into
force in 1997, the year the Bowie Bonds were issued. Artists who are Irish resident for tax
purposes were originally not taxed on income or gains from original and creative work, and are
now not taxed on the first 50,00043. The effect of receiving the Bowie Bond proceeds while he
was tax resident in Switzerland and the moving his tax residency to Ireland would have meant
that both this past royalty proceeds and future would effectively be tax free.
However, despite the elegance of a past-and-future-proof tax free structure and much
speculation at the time, later newspaper articles suggested that although Bowie attended the
auction of Humewood Castle he did not acquire it44 and there is also no reference in any of the
Bowie biographies or interviews.
4.

FUTURE OF BOWIE BONDS AND SECURITIZATION

Bowie never repeated the issue of the Bowie Bonds and only a small proportion of the
industry ever duplicated the transaction, because few artists own their entire back catalogue. As
to why Bowie never did a second bond issue, one can only speculate, but it is possible his views
on copyright and his tax residency played a part. In 2002 in an interview in the New York
Times, Bowie stated that he believed that copyright was coming to an end and that there would
be no future in digital music sales: I see absolutely no point in pretending that it's not going to
happen. I'm fully confident that copyright, for instance, will no longer exist in 10 years, and
authorship and intellectual property is in for such a bashing. . . You'd better be prepared for
doing a lot of touring because that's really the only unique situation that's going to be left.'45
Bowie was of course not quite right about, that but what is also mentioned in that article was the
major change in his life With his wife, Iman, he has a 22-month-old daughter, Alexandria, for
whom he's keeping to a minimum his time away from home in Manhattan. While his
citizenship and tax residency were never made public, his wife Iman is a US Citizen46 and his
well-documented love affair with New York and extensive time spent in the city following 1997,
and particularly following the birth of his daughter in 2000, strongly suggest that he acquired US
permanent residency and/or citizenship, which of course he would have been entitled to as the
spouse of a US Citizen. The US, along with Switzerland, taxes its residents on their worldwide
assets and income, charging both income tax and capital gains tax. Thus the tax advantage of
swapping income for capital gains would no longer exist if Bowie was taxed in the U.S..
43

Irish Tax and Customs, Artists' Exemption Information and Guidelines (February 2015)
http://www.revenue.ie/en/tax/it/reliefs/artists-exemption.html
44
James Dunne, Be king of the castle for 10m; stately home that cost just 840,000 up for sale; The Mirror; May
14, 1999, Friday;:
45
Jon Pareles, David Bowie, 21st-Century Entrepreneur, The New York Times (June 9, 2002)
http://www.nytimes.com/2002/06/09/arts/david-bowie-21st-century-entrepreneur.html?src=pm&pagewanted=1
46
http://www.imanbeauty.com/about_us/

Emma Channing, Draft: 01/25/2016

LL.M. Stanford Law School, 2010
emma.l.channing@gmail.com Cell: 650 283 6241

But perhaps it is more simple than that, as a man who was always financially successful
in his chosen career, who now owned his entire back catalogue, perhaps there just wasnt the
need any more for such financial high jinks. He famously told Nina Simone: Whats wrong
with you is you were giftedyou have to play. Your genius overshadows the money, and you
dont know what to do to get your money, whereas I wasnt a genius, but I planned, I wanted to
be a rock-and-roll singer and I just got the right formula. 47 While this author would strongly
argue that he was both a financial and musical genius, he certainly seems to have reached a point
by the 2000s where financial success was no longer a significant concern.
Finally, the last possibility brings us back around to the strengths and weaknesses of the
securitization market. The Bowie Bonds succeeded because they held a clearly identifiable asset
that was generating income throughout the life of the bonds, even if at times not as much as
expected. They struggled however because of a connection to a less credit worthy entity, the
strange role of EMI as guarantor. Likewise the securitization industry suffered because as
products became more complex, seeing through to the underlying assets became all but
impossible unless you were particularly interested in the way that the likes of Michael Burry did,
as so dramatically outlined in Michael Lewis The Big Short48, and better known individuals
such as John Paulson49. Furthermore, the credit worthiness of entities entirely unrelated to the
underlying assets of those securitization products became intrinsically tied up with the value of
the products. The securitization market remains a logical approach to relatively illiquid assets
but played a significant role in the Great Recession, which began the same year the Bowie Bonds
were liquidated in 2007, and the securitization market did not return in any significant form until
2014.50 Thus perhaps Bowie did not repeat the Bowie Bonds for the simplest of all reasons, the
securitization market was there anymore.
Sadly, the answer is now in the stars, but what remains true is that Bowie was an
extraordinary artist and business man, with a rare gift for not only hiring the best in terms of
legal and financial talent, but also listening to that talent and following their advice.

47

Alan Light, How David Bowie Helped Nina Simone Out of a Slump, Time (January 11, 2016)
http://time.com/4176079/david-bowie-nina-simone/
48
Michael Lewis, The big short : inside the doomsday machine (1st ed. 2011)
49
Gregory Zuckerman, Trader Made Billions on Subprime, The Wall Street Journal (January 15, 2008 12:01 a.m.
ET) http://www.wsj.com/articles/SB120036645057290423
50
Vincent
Ryan,
Securitization:
The
Sequel,
CFO
Magazine
(May
22,
2014)
http://ww2.cfo.com/credit/2014/05/securitization-sequel/;
http://www.ey.com/Publication/vwLUAssets/EY__US_securitization_market_re-emerging/$FILE/ey-us-securitization-market-re-emerging.pdf

10