Thursday, October 8, 2020

The "No Brown M&Ms" Story: Contract Theory at Work

 Eddie van Halen, the rock guitar legend for the eponymous band Van Halen, died a few days ago. I suspect that many readers already know the "no brown M&Ms" story, but it still seems worth memorializing here. 

The story is that when the Van Halen rock band was touring, they required that the promoter or the venue at each location sign an extremely long and detailed contract, with many seemingly arbitrary demands. One item in the contract stated that among the backstage munchies to be provided would be a bowl of M&Ms, but the contract then added "(WARNING: ABSOLUTELY NO BROWN ONES)."

The contract was quite clear that violation of any part was cause for the band to immediately cancel the concert, but still receive its full financial payment. I'm not aware of the band ever cancelling on these grounds, but there were stories that upon finding a brown M&M in the bowl, band members would go on a destructive rampage in the dressing room before being gradually talked down so that they were willing to perform. 

Years later, the logic behind this particular contract provision was explained. Here's how the lead singer David Lee Roth told the story in his autobiography (according to 

Van Halen was the first band to take huge productions into tertiary, third-level markets. We’d pull up with nine eighteen-wheeler trucks, full of gear, where the standard was three trucks, max. And there were many, many technical errors — whether it was the girders couldn’t support the weight, or the flooring would sink in, or the doors weren’t big enough to move the gear through.

The contract rider read like a version of the Chinese Yellow Pages because there was so much equipment, and so many human beings to make it function. So just as a little test, in the technical aspect of the rider, it would say “Article 148: There will be fifteen amperage voltage sockets at twenty-foot spaces, evenly, providing nineteen amperes …” This kind of thing. And article number 126, in the middle of nowhere, was: “There will be no brown M&M’s in the backstage area, upon pain of forfeiture of the show, with full compensation.”

So, when I would walk backstage, if I saw a brown M&M in that bowl … well, line-check the entire production. Guaranteed you’re going to arrive at a technical error. They didn’t read the contract. Guaranteed you’d run into a problem. Sometimes it would threaten to just destroy the whole show. Something like, literally, life-threatening. ...

The folks in Pueblo, Colorado, at the university, took the contract rather kinda casual. They had one of these new rubberized bouncy basketball floorings in their arena. They hadn’t read the contract, and weren’t sure, really, about the weight of this production; this thing weighed like the business end of a 747.

I came backstage. I found some brown M&M’s, I went into full Shakespearean “What is this before me?” … you know, with the skull in one hand … and promptly trashed the dressing room. Dumped the buffet, kicked a hole in the door, twelve thousand dollars’ worth of fun.

The staging sank through their floor. They didn’t bother to look at the weight requirements or anything, and this sank through their new flooring and did eighty thousand dollars’ worth of damage to the arena floor. The whole thing had to be replaced. It came out in the press that I discovered brown M&M’s and did eighty-five thousand dollars’ worth of damage to the backstage area.

Well, who am I to get in the way of a good rumor?

Here's a 2012 video of Roth telling the "no brown M&Ms" story. For economists, of course, the story lives on as an example of contract theory at work. In some cases, it will be costly and time-consuming to check every aspect of a contract (a fact that applies in business and also personal settings). Rather than paying those costs of time and money, over and over, it may save time to choose one perhaps seemingly unimportant item that will be checked first. If that one part of the contract is breached, then overreact. Your reputation will lead future contractual partners to be more careful, and you will ultimately save time and energy.