From the Memphis Flyer:

COMMENTARY: ANALYSIS OF THE GRACELAND DEAL

“The King is Dead. The King is Dead. Long Live the King.”

In 1979 Memphis Mayor Wyeth Chandler wanted the city to buy Graceland (asking price rumored to be $10-11 million). Jack Soden’s business partner, who handled Lisa Marie Presley’s estate for Priscilla Presley, wanted to sell Graceland in 1981. It is a good thing for Lisa Marie Presley that neither got their wish. Soden’s 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 the formation of Elvis Presley Enterprises, Graceland itself hemorrhaged money. Colonel Parker’s “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 by the Dr. George Nichopolous trial as well as the tawdry details of Albert Goldman’s 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 celebrity’s 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, at times at a major negative publicity cost. Seldom has Soden’s team lost, and when they have, it has been over inconsequential financial circumstances. Their litigiousness has made hucksters reconsider illegally using the King’s image and has increased the negotiation value of the estate with any legitimate licensees.

Twenty-two years later, Elvis’ image is restored. EPE’s 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.

Presley’s 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 Sillerman’s new company as well as 500,000 shares in common stock of Sillerman’s 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 father’s personal effects and Graceland, which is a great p.r. move for her appeasing 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 Sillerman’s company. She merely extends the licensing capabilities from EPE to Sillerman’s company for worldwide promotion and exploitation. In effect she is giving the rights to Elvis’ image that EPE has accrued and has been licensing worldwide to Sillerman’s new company for a huge chunk of change plus approximately 15% of Sillerman’s 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 EPE’s 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 Elvis’ home base, but, hello, 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 (“Hey, kiddo, if it’s good enough for the King, you can’t go wrong with Sillerman…”).

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 Sillerman’s calls just on the Elvis name, if they were not familiar with him 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 watcher’s pause is Lisa Marie herself. How has EPE built $25 million worth of debt with $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 world’s number one entertainment image in the growing industry of celebrity licensing. In her press release Lisa Marie Presley’s quote is a big disappointment, making this deal sound like it is in her father’s interest: “My greatest responsibility to my father is to preserve and protect his legacy.”

Au, contraire! This deal is about maximizing Ms. Presley’s 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 king(‘s daughter)!