GRACELAND! The most “priceless” real estate in the world
In 1979 Memphis Mayor Wyeth Chandler wanted the city of Memphis to buy Graceland his asking price for the 13 acres real estate was rumored to be US$11 million dollars. Jack Sodens business partner, who handled Lisa Marie Presleys estate for Priscilla Presley, wanted to sell Graceland in 1981. It is a good thing for Lisa Marie Presley that neither got their wish. Sodens business partner, Morgan Maxfield, died an untimely death in a private jet crash Labor Day weekend in 1981, leaving Soden to pursue his vision of opening Graceland to a hungry public.
When Soden took over Graceland and began the formation of Elvis Presley Enterprises, Graceland itself had haemorrhaged money. Colonel Parkers accounting for Vernon Presley had bled the estate dry. The IRS wanted a big chunk of change from the estate, too. Fans wanted to visit Graceland, but security costs and upkeep kept the estate finances in negative territory to the tune of approximately $500,000 a year. Elvis reputation had taken a beating during the Dr. George Nichopoulous trial as well as from the tawdry details of Albert Goldmans book Elvis. Elvis world did not look so good.
Elvis chronicler Bill Burk wrote in June, 1982: “When Graceland swings its doors open Monday, it will be like the founding of a new industry in Memphis” And right he was! Admission was $5.00 a head and thousands of fans (and fanatics) lined up every morning for the new tour. Graceland could handle three thousand per day, and in the first year Elvis Presley Enterprises took in $1.35 million. Cash poured through the doors
The next task Soden had was to corral all of the unlicensed Elvis products on the market and create a new paradigm for the intellectual property (trademark and copyrights) of a celebritys image. Soden and company did not just re-write the book on the celebrity image business; they created the rules of the industry. There is no doubt that they were the force behind the 1984 Tennessee statute regarding Protection of Personal Rights. EPE has used its war chest and lawyers to pursue the rights of Elvis image to the ends of the earth, sometimes at a major negative publicity cost. Seldom has Sodens team lost, and when they have, it has been over inconsequential financial circumstances. Their litigiousness has made hucksters reconsider illegally using the Kings image and has increased the negotiation value of the estate with any legitimate licensees.
Twenty-two years later, Elvis image is restored. EPEs business is intact, running like a well-oiled machine and clearing $12 million a year in profit (a surprising figure, given the very few music rights available to EPE for Elvis biggest hits, an unfortunate Colonel Parker legacy). EPE has just negotiated a sweetheart deal for Lisa Marie Presley. Presleys new benefactor is media mogul Robert Sillerman, who made a massive fortune selling his concert company SFX to Clear Channel for over $4 billion in 2000. Presley will receive $53 million in cash; $25 million in debt assumption; and $22 million in preferred stock of Sillermans new company as well as 500,000 shares in common stock of Sillermans new company. She will still own 15% of Elvis Presley Enterprises, which Sillerman is buying.
What did Presley have to give up for this treasure trove of receivables? She keeps her fathers personal effects and Graceland , which is a great PR move to appease the zealot Elvis fans as well as a physical and emotional tie to her father. She will continue to license the use of “>Graceland and these effects through EPE to Sillermans company. She merely extends the licensing capabilities from EPE to Sillermans company for worldwide promotion and exploitation. In effect she is giving the rights to Elvis image, those that EPE has accrued and has been licensing worldwide, to Sillermans new company for a huge chunk of change plus approximately 15% of Sillermans new company. If Sillerman creates a bigger licensing market for Elvis, she will profit nicely. If not, she will have received almost 8.5 times EPEs net profit per year for those rights. Although all employees of EPE are listed as remaining, were he to retire after this deal, Soden could smile, knowing that he had mastered the art of the Colonel Parker deal, getting far more than ever imaginable from the use of Elvis.
One thing concerning the deal that gives Presley watchers pause is Lisa Marie herself. How has EPE built $25 million worth of debt on the basis of $12 million in net profit per year? Obviously her marriage to Michael Jackson taught her the profligate ways of Hollywood. Or perhaps this deal will merely cover some sort of massive Scientology debt she owes. Ms. Presley is approaching her maximum spending years, and if she continues to spend more than she makes, this deal would merely be a one time stopgap. Either way, once the dust has cleared on this deal, Lisa Marie pockets $50 million, erases her debt, keeps the house, and becomes a large shareholder in a company destined to succeed with the worlds number one entertainment image in the growing industry of celebrity licensing.
In her press release Lisa Marie Presleys quote is a big disappointment, making this deal sound like it is in her fathers interest: My greatest responsibility to my father is to preserve and protect his legacy. Au contraire! This deal is about maximizing Ms. Presleys financial interests with the prospects that visitations to Graceland may continue to slow down with the aging of the 50s generation of rock n roll fans. Maximizing the return on Elvis and his image has been the focus point of Elvis career since the Colonel got hold of him, and this deal is no different, albeit a sweet once-in-a lifetime one that the Colonel himself would be proud of. Indeed it is good to be the kings daughter
Lisa Marie talks to Larry King on “The Sale of Graceland” KING: You sold 85 percent of the Presley estate, and it got a lot of controversy. Explain that.
PRESLEY: OK. Well, it’s kind of a misconception in the way it was — it’s a very complicated business deal. It took me weeks to understand it, but it was misleading the way the press ran it, because it is complex. But it wasn’t — there’s two separate entities. There’s Elvis Presley Enterprises and Elvis Presley estate. Now, 85 percent — what we did is we merged with Sillerman. He bought 85 percent of the Enterprises, which is different from the estate. Estate’s mine, his things mine, everything’s still mine and in order. He has the 85 percent, but I also still have — we have a 15.
It was a united decision, because you know, pretty much things don’t stay the same. They either go up or down. So — and we’ve known for a very long time that we need to merge and sort of get with someone, to sort of take it to a bigger and better place than we were able to do, or you know, wanted to do on our own, you know, standing alone.
So it was a united decision that’s been, you know, being deliberated on for years. And so what happened is that the money that came back actually went — got reversed, and the lot of it went right back into stock, to form a huge — a bigger new company, merging with Sillerman, who has got a very good track record, you know.
KING: He sure does.
PRESLEY: And he knows what he’s doing.
KING: And Enterprises includes what, the music?
PRESLEY: Name, likeness, image, music, you know, films, merchandise. You know, things like that.
KING: So you now have in essence 15 percent of that.
PRESLEY: I own 15 percent of that, but we — he and I are partners, and my mother is on the board. There’s a new company now, which is going public, and my mother’s on the board of directors for that. And we — everyone who works at the estate and who has worked at the estate this entire time is still in order, intact, everyone still got their jobs. We all made the decision because we wanted to grow bigger and better.
KING: No one lost anything.
PRESLEY: No one lost anything. CEO is still there, head of — everyone is still there. My family is taken care of. It was something — it was a move we had to make to grow. And oddly enough the money that came out of the sale thing, went right back into — it was the stock, preferred stock in a bigger company, which means that we believe he can take it a lot, you know, to a bigger and better place.