In 1979 Memphis Mayor Wyeth Chandler wanted the city to buy Graceland (asking price rumored to be $10-11 million). Jack SodenÕs business partner, who handled Lisa Marie PresleyÕs estate for Priscilla Presley, wanted to sell Graceland in 1981. It is a good thing for Lisa Marie Presley that neither got their wish. SodenÕs business partner, Morgan Maxfield, died an untimely death in a private jet crash over Labor Day weekend in 1981, leaving Soden to pursue his vision of opening Graceland to a very hungry public.
When Soden took over Graceland and began the formation of Elvis Presley Enterprises, Graceland itself had hemorrhaged money. Colonel ParkerÕs ÒaccountingÓ 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. ElvisÕ reputation had taken a beating during the Dr. George Nichopolous trial as well as from the tawdry details of Albert GoldmanÕs book Elvis. ElvisÕ world did not look so good.
ElvisÕ chronicler Bill Burk wrote in June, 1982: ÒWhen Graceland swings its doors open Monday, it will be like the founding of a new industry in Memphis.Ó 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 celebrityÕs 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 ElvisÕ image to the ends of the earth, sometimes at a major negative publicity cost. Seldom has SodenÕs team lost, and when they have, it has been over inconsequential financial circumstances. Their litigiousness has made hucksters reconsider illegally using the KingÕs image and has increased the negotiation value of the estate with any legitimate licensees.
Twenty-two years later, ElvisÕ image is restored. EPEÕs 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 ElvisÕ biggest hits, an unfortunate Colonel Parker legacy). EPE has just negotiated a sweetheart deal for Lisa Marie Presley. PresleyÕs 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 SillermanÕs new company as well as 500,000 shares in common stock of SillermanÕs 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 fatherÕs personal effects and Graceland, which is a great p.r. move to appease the zealotlike 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 SillermanÕs company. She merely extends the licensing capabilities from EPE to SillermanÕs company for worldwide promotion and exploitation. In effect she is giving the rights to ElvisÕ image, those that EPE has accrued and has been licensing worldwide, to SillermanÕs new company for a huge chunk of change plus approximately 15% of SillermanÕs 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 EPEÕs 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.
So Sillerman got taken on this deal, eh? Not exactly. Sillerman has enough resources and capital to take Elvis to the ends of the earth, where Elvis has not yet reached his potential. Translation: Graceland will still be ElvisÕ home base, but hello to Japan, China, and Europe, where Elvis is extremely well-known and his image use is very under-served. Not mentioned in the deal but certainly implicit is that Elvis the image has just become the star attraction and calling card in a new entertainment company. Sillerman will undoubtably use the Elvis image as bait to attract licenses from other celebrities (and their estates) alive and dead (ÒHey, kiddo, if itÕs good enough for the King, you canÕt go wrong with SillermanÉÓ). It would be hard to argue that the #1 entertainment image in the world is a bad one with which to begin a company. Most media buyers will take SillermanÕs calls just on the Elvis name, even if they were not familiar with the mega-entrepreneur previous to this deal. Memphis probably will not notice much difference in the use of the image, but other countries will most likely see a much higher presence of the King in all media formats
One thing concerning the deal that gives Presley watcherÕs 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 worldÕs number one entertainment image in the growing industry of celebrity licensing.
In her press release Lisa Marie PresleyÕs quote is a big disappointment, making this deal sound like it is in her fatherÕs interest: ÒMy greatest responsibility to my father is to preserve and protect his legacy.Ó Au contraire! This deal is about maximizing Ms. PresleyÕs financial interests with the prospects that visitations to Graceland may continue to slow down with the aging of the Ô50s generation of rock Ôn roll fans. Maximizing the return on Elvis and his image has been the focus point of ElvisÕ 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 king(Ôs daughter)!