Motown Records was sold to MCA Records/Boston Ventures for $61 million today (June 28, 1988).
MCA paid 20% of the sale price, while the other 70% was paid by Boston Ventures, an investment company based in Boston.
At the time of the sale, Motown was one of the nation’s largest black owned businesses.
The sale included contracts for artists like Stevie Wonder, Lionel Richie, Diana Ross and others, although Berry Gordy retained ownership of Motown’s Jobete publishing division and Motown’s own and TV/film production companies.
In March 1993, Boston Ventures bought MCA’s ownership in the label and by August 1993, PolyGram bought Motown from Boston Ventures for $325 million.
At the time of its sale in 1988, Motown Records was a shell of its former success.
In fact, the company was operating in the red and was losing millions, as Gordy contemplated the sale with MCA.
There was intense pressure for Gordy not to sell the label in the months prior to the sale. Motown had become an institution to many at this point.
In his autobiography “To Be Loved,” Berry Gordy discussed the sale of Motown.
When an employee named say Fay Hale entered Gordy’s office and told him that many people thought he shouldn’t sell the label, the CEO exploded.
“They say! Who in the fuck is they? Do they know I’m losing millions? How in the hell can anyone tell me I can’t sell something I created, nurtured, and built from nothing?”
Jesse Jackson urged him not to sell the label, as did legendary executive Dick Griffey of Solar Records, who also mentored a young Dr. Dre and Marion “Suge” Knight, as they were building Death Row Records in the 1990′s.
“To see Motown sucked up by corporate America is a sad day for most blacks in this country,” Dick Griffey said. “The Motown tradition lies in the black experience – their music, their ownership, their history – and I think that’s where it should remain.”
When Jesse Jackson pressured Gordy, the CEO stood his ground regarding the sale.
“I have three choices: sell out, bail out, or fall out. Which do you suggest?”
Jesse Jackson urged him to “do whatever he had to do.”
Boston Ventures took 70% of the label, MCA Records held 20% and 10% of equity was set aside for future black ownership, at Berry Gordy’s insistence.
After the sale, executive Jheryl Busby was brought in to run Motown, but troubles soon emerged.
Despite having hits courtesy of singing group The Boys, MCA and Busby were at odds.
Busby claimed that MCA treated Motown “like a Third World country” and attempted to get PolyGram to distribute the records, setting in motion a chain of events, which would lead to the sale of Motown to PolyGram in 1993 for $325 million.
Waxfact: The Jackson 5′s single “The Love You Save” was #1 on the charts on June 28, 1970.