They've been going over their books for the last six years, measuring their space, doing appraisals, and checking for code compliance, according to several club owners.
"It's like we're being harassed," says one club owner, who didn't want to be identified because of a pending mediation hearing and fear of reprisals. The city owns most of the property in the entertainment district and is partners with the shopsteaders who own their buildings. "The city can be vindictive," he says.
Some owners see a grand plan by the Herenton administration to gain control over Beale Street's revenue streams as well as neighboring property on Union Avenue for a new convention center. Two weeks ago, the CCL Label building on the south side of Union across from AutoZone Park was demolished, opening up 3.5 acres. Guy Kiraly of CCL says "we're very interested in getting rid of it," but he has no offers. His former neighbor on Union Avenue, Lit Equipment and Supplies, has not been approached by buyers either, according to attorney Lester Lit.
A couple of things have fired up the rumor mill. John Elkington, head of Performa Real Estate, the management and leasing company for Beale Street since 1982, has made it clear he is ready to walk away from his long-term lease if the terms are right. A mediation hearing for Performa, the city, and Beale Street Development Corporation is scheduled to take place in a few weeks to determine who owes what to whom. Performa hasn't made any payments to the city but pays for security and sanitation. Elkington says profits have been put back into the street.
"We're spinning our wheels and going nowhere," Elkington says. "The city is spending thousands of dollars on legal fees, the tenants are unhappy, and all we're doing is spending a lot of money on lawyers."
Mediator Hayden Lait declined to comment. Ricky Wilkins, the private attorney representing the city, did not return calls seeking comment. Another city official who requested anonymity said the issues might be settled before the mediation hearing.
Adding more grist to the rumor mill, Nashville has moved forward with plans for Music City Center, a new downtown convention center whose cost has been reported by Nashville media as anywhere from $340 million to $660 million. Memphis mayor Willie Herenton says Memphis is in an "arms race" with Nashville and other cities for conventions. In January, Herenton appealed for a new convention center and appointed a committee to study the feasibility.
"It's no secret that it's going to come back that the best location is probably across from AutoZone Park on Union," says Kevin Kane, head of the Memphis Convention & Visitors Bureau.
The site was runner-up to the current site of FedExForum when that project was in the planning stage. In contrast to the west side of the arena, which features Lee's Landing and the new Westin Hotel, Union from Danny Thomas to the Greyhound Bus Station is marked by demolitions and the $80-a-night Kings Court Motel.
Kane said Nashville already has nearly twice as many hotel rooms as Memphis. A new convention center in Memphis, he says, would need a 700-room hotel attached to it and could cost $600 million, based on what Nashville is prepared to spend.
The chances of Memphis getting a new convention center are about as slim as the chances of the University of Memphis getting into the Southeastern Conference. The city has tapped out its main source of funding, the so-called bed tax on hotels and motels that is helping to pay off bonds for FedExForum and the existing and recently expanded Cook Convention Center. Anything left over will go to the Bass Pro Pyramid if that project moves forward. The developers of the Mid-South Fairgrounds and Graceland and Elvis Presley Boulevard are also relying on Tourism Development Zone tax rebates.
Not only is the mythical tourism-and-convention jackpot stretched thin, it is also shrinking. In a meeting with seven members of the Memphis City Council earlier this summer, Beale Street merchants said their business was off 10 to 15 percent.
At that meeting, veteran club owners and operators including Tommy Peters of B.B. King's Blues Club, Bud Chittom of Club 152 and Blues City Café, Preston Lamm of Rum Boogie Café, and Mike Glenn of the New Daisy Theatre expressed their concerns about safety, panhandlers, crowds of teenagers roaming the street, a recession, and district management. There have been more cops on the street and fewer negative headlines since then, but the next headache is never far off. Actor Morgan Freeman, part owner of the new Ground Zero club, was involved in a serious car accident and a well-publicized divorce. Last week, a bicyclist was roughly treated by an officer, causing a group of fellow bicyclists to organize an upcoming protest ride and walk.
Onzie Horne, head of the Beale Street Merchants Association, has conceded that Beale Street is ripe for new leadership, greater minority ownership, and a sharper sense of direction. He declined to comment about the mediation or the ongoing audits. Club owners said the city's sudden interest is unusual. "They're looking hard at all the buildings, but I don't know what is up," says one operator. "The city has not inspected them before."
Elkington, however, says the city has been gathering facts for nearly 15 years.
"If people are unhappy then I'm willing to make a change," he says.
One theory has Elkington and some of the merchants being replaced by an investment group that would include the mayor's friend E.W. Moon or someone from the Tunica casinos. Another envisions a joint board of control consisting of three city representatives and three club owners.
Elkington, I believe, will walk off into the sunset. He has operated for 26 years with the indulgence, if not always the blessing, of three mayors. He reaped the rewards, but he can argue that he is like an investor who jumped into the stock market in 1983 and hit a ten-bagger. The city has had plenty of time to produce any evidence of fraud, complete an audit, and demand its money. But the city's hired legal guns either can't or don't want to do that.
From the vantage point of a tourist, Beale Street delivers a variety of live music. While FedExForum and AutoZone Park are dark more nights than not and Peabody Place is emptying out, Beale Street is open every night and cleaned up every morning. It has safety and image issues, but what bar-hopping area doesn't?
A change is coming. As one operator said this week, "I just hope it's not worse."