Mama Mia! Don’t Wear Those Clothes Again

Swedish Pop group Abba has announced that they are releasing a new album and planning a series of virtual concerts in November of this year. Known for such hits as Dancing Queen and Money, Money, Money, the band was one of the top-selling pop groups of all time prior to their break up in 1982. In 1999, the musical Mama Mia!, based on the bands hit songs, debuted in London, then went on to be preformed on Broadway, toured internationally, and later went on to become a motion picture starring Meryl Streep, Pierce Brosnan, and a host of other Hollywood stars. It is estimated that the band has sold over 150 million records over their career and the musical Mama Mia! has grossed over $2 billion between the stage show and motion picture. During the height of their popularity, ABBA’s music was a leading Swedish export.

In addition to creating great music, the band was also known for the outrageous outfits they wore while performing. While many believed the glittering hot pans and sequined jumpsuits were worn to help the band stand out, it turns out the band had another motive for wearing these outfits: taxes. Under Swedish tax law, the band could write off their outfits as a business expense, much like one would take a deduction for a home office or travel expenses. However, in order to claim the deduction, the outfits “had to be so outrageous they could not possibly be worn on the street.” So while the outfits may indicate the artists’ creativity on the stage, they also highlight their creativity in filing taxes.

Questions/Discussion

1. What are some items besides costumes/uniforms that could also be considered capital, or not, depending on how they are used? How do tax authorities monitor how some of these are used?
2. Discuss the importance of international intellectual property rights in the context of exporting music and other creative works.
3. How does the cost structure of creating and distributing music affect a performers profitability? That is, describe the fixed, variable, sunk and marginal costs.

Sources: Reuters: Sweden’s ABBA museum to open, but reunion rumors quashed, BBC NEWS: Abba delight fans with new 10-song album and virtual concert , The Sydney Morning Herald: The way old friends do: ABBA reform, plan virtual tour and new album, Forbes: ABBA’s Money Machine Is Back In Service With First New Music Since 1982, The Guardian: Abba admit outrageous outfits were worn to avoid tax, Photo by Andrew Ebrahim on Unsplash