The idea that all of Sillermans plans would somehow rush through to completion was a fairy tale idea. Things have been pretty quiet concerningA Little More Action
When celebrated deejay Junkie XL remixed a lesser Elvis Presley hit into a 2002 smash, it returned the long-dead king of rock 'n' roll to the spotlight of mainstream pop music. "A Little Less Conversation" was the first relevant blockbuster splash featuring Presley since before his untimely, unseemly death in 1977. And despite an attempt by bona fide deejay royalty Paul Oakenfold to copy Junkie XL's success with a laudable yet forgettable remix of "Rubberneckin'" the following year, Presley hasn't had a new original hit since. (At press time, a remix of the Elvis classic "Baby Let's Play House" by Italian DJ Spankox was released digitally by Sony BMG Music Entertainment.)
But give the guy a break — he's been dead more than 30 years.
This August marks the 31st anniversary of Presley's passing, and since the JXL remix, the biggest U.S. headlines involving the King included Presley losing his top spot in 2006 on Forbes' morbid richest dead celebrities list to iconic grunge rocker Kurt Cobain (though he regained it the following year) and a flurry of announcements in the financial pages, beginning with the sale of his estate by daughter and sole heir Lisa Marie Presley to billionaire Wall Street wunderkind Robert F X Sillerman in 2004.
Sillerman's acquisition took the cherished "family" business public, and since then he has released several statements relating to the expansion of the Elvis brand—be it in the form of casinos and cruises or hotels and touring shows—and plans for major financial stake in the economic development of the dilapidated Whitehaven neighborhood that surrounds Graceland. With the possible exception of some of the locals who live near Graceland, most believe the brand has been under-commercialized. Lisa Marie Presley said as much when she sold the stagnating company. Sillerman, renowned for building billion-dollar media companies, can mine capital for fuel, but ultimately, it's still the world's first rock star who will power the ship, which begs the question: How long can Elvis float in the famously fickle pool of pop culture?
Fame, Fortune & the Future
Since Elvis Presley Enterprises (EPE) went public, there has been little action, despite a lot of talk (or rather, a lot of announcements), and the corporate culture around Graceland has become much less interactive with the press. (Not unexpectedly, EPE declined to participate in this story.) According to analysts, the long wait should have been anticipated. "One thing I didn't fully appreciate is the time it takes to develop the sort of large-scale projects they have planned," says Mark Argento, senior research analyst at Craig-Hallum Capital Group."Developing anything that can drive big revenue and big profits will take a while," he continues, pointing out that the deal Sillerman's company, CKX, is hammering out with French Canadian circus troupe Cirque du Soleil has taken more than a year. "The planning that goes into it—the lead time is significant. They expect very little increase in revenue in 2008 and 2009, with it really kicking in in 2010 and 2011."
The original deal CKX made with Lisa Marie was announced in December 2004. CKX paid $114 million for an 85% interest in Elvis Presley Enterprises. Lisa Marie, who retained the remaining 15%, was paid $50 million in cash plus $26 million in CKX common and preferred stock. CKX also paid $25 million in EPE debt. Sillerman got a 90-year lease on Graceland, rights to Elvis' name, likeness, image and trademark, publishing rights to 650 songs and royalty rights to the few songs Elvis recorded after 1973, as well as to two dozen Presley movies.
Sillerman also paid $6.5 million to Elvis' ex-wife, Priscilla Presley. Fortune reported that CKX didn't have to pay Priscilla anything, but that doing so would make her more agreeable to appearing at grand openings and the like. It seems just that Priscilla would share in the sale, given that she was among the brain trust that turned the floundering, bankrupt estate into a trailblazing company—and Graceland into the most-visited private residence in the world. Barry Ward, former general counsel to the Elvis estate, was also in that management group, which included long-time family accountant Joseph Hanks; Jim Roscoe, trust officer at the National Bank of Commerce in Memphis; and Jack Soden, hired to head EPE. Ward helped appeal a court decision that denied Presley's estate rights to the rock star's name, likeness and image. This paved the way for the creation of the Elvis Law, the groundbreaking precedent that awarded celebrity estates control of intellectual property and trademarks after death.
"From where I sit, the Sillerman acquisition helped immensely, giving the estate the capital to ratchet up to a new level," Ward says, echoing a common refrain about the deal. When announced, Lisa Marie admitted that EPE could only grow so much and that it needed a bigger player to monetize future interest in Elvis.
"That's the amazing thing about the Elvis estate: just how many things they haven't done over the past 30 years," says longtime rock critic Stan Soocher, an entertainment attorney and associate professor of music and entertainment industry studies at the University of Colorado-Denver.
Elvis is one of the few examples in pop music of a star whose fame hasn't flagged, says Soocher, who is currently finishing his book, They Fought the Law: Rock Music Goes to Court, containing coverage of Elvis Presley's estate. (The book will be published in early 2009.)
"The CKX buyout is the most important financial development in the structure of the estate since it was founded," he says.
"Elvis Presley didn't do any international tours," he continues, "and because he's been so popular in England, it seems there is a pent-up demand to exploit." Soocher has a point: Presley's re-mastered No. 1 singles, which EPE released one at a time over the last couple years, tore up the British charts, which leads Soocher to think an international virtual, multimedia tour would likely reap large revenues.
But there's much more to the Elvis brand than music.
"Rockabilly may resurge, but it's never going to be mainstream rock again," Soocher says. "This whole other level [of enterprise] is so important to maintaining the Elvis brand."
He points to the proposed casino as one aspect of enterprise, as well as Elvis-themed destination venues around the world, à la Hard Rock Café.
"Domestically, there's a ton to do" says Argento, "but internationally, the opportunity to take the Elvis brand into a foreign market could dwarf the opportunities in the U.S.
"Put a casino in Macau or Dubai, put a replica of Graceland in Tokyo—the opportunities are huge. It would be epic for the Elvis brand."
The Mansion that Elvis Built
No kidding. Presley's estate has already earned far more than Presley did while he was alive, but Graceland in Tokyo? What would that do to local commercial and tax revenue streams? Most, including EPE and CKX, believe expanding the brand in such a way will increase interest and revenues in Memphis. According to Fortune, Sillerman's stake in the Presley estate exceeds its worth. Yet the company has announced a commitment to developing Graceland and its 120-acre campus. Plans include building one or more hotels and developing the surrounding neighborhood to the tune of hundreds of millions of dollars—not that many checks have been written yet."I believe they are still gathering information on the project building specifications," says Harold B. Collins, the city councilman for Whitehaven. Collins says funds have been appropriated for improved cityscape to assist the development of a mile-plus stretch along the Brooks Road corridor, which will coincide with Memphis International Airport's ambitious "Aerotropolis" redevelopment plan.
"We're excited that they are getting ready to move on it," he says, adding that he hopes to see ground broken before the end of the year. "I think Mr. Sillerman knows how important this is to our city and is as eager to get it off the ground as we are." Well, maybe not as eager.
Last summer, news broke on a looming CKX buyout by 19X, a privately held company led by Sillerman and American Idol creator Simon Fuller (the "X" is a Sillerman signature). But in mid-May, the company lowered its buyout offer from $13.75 to $12 per CKX share. Sillerman said in a statement that the private company "remain[s] committed to completing the acquisition of CKX at a price that we believe reflects the continued outstanding performance of the company and which provides a substantial premium above the current price to the company's stockholders. [The price] also takes into account the seismic shift in the buyout world since the time we originally entered into this transaction."
The companies are reportedly working to close the deal by September.
"[The deal] should not have any effect on the economic development [in the area]," Argento says. "One of the reasons to take this private now is that it's a pretty attractive time, especially before the redevelopment gets underway. The bigger risk is the broader credit market—access to capital will probably be the bigger issue."
Most locals involved in the area's development are not giving too much thought to Graceland's goings-on; some view the Graceland makeover and build-out as only a piece of the overall vision.
"[Graceland's] development to come is part of the dynamic of building out what is currently the only fledgling Aerotropolis in the United States," says Arnold Perl, chairman of the Memphis-Shelby County Airport Authority. "When Elvis Presley Enterprises announces and develops the initiative they're working on, it will provide a significant boost to America's Aerotropolis.
There is no official word from Sillerman or local EPE officials on when Sillerman's real estate spin-off, FXRE, might commence the grand reawakening of the King. But Memphis isn't the only city laying claim to Elvis, and it isn't the only city in which Sillerman is spending money on Presley-related properties. In addition to dealings on Elvis Presley Boulevard, FXRE also has plans in the works involving several acres on Las Vegas Boulevard for a hotel and casino, as well as entertainment, retail, commercial and residential development. It would all feature Presley, perhaps in conjunction with Muhammad Ali. (Sillerman also owns 80% of Muhammad Ali Enterprises.)
Elvis: the Next Generation
But despite all the effort, there remains the question: How Long?
Elvis is undoubtedly the most parodied person in history—Google search "Elvis Tribute Artist" if you don't believe it—and his place in the record books still looms over contemporary stars. In April, at age 38, Mariah Carey finally surpassed Presley for second most No. 1 singles on Billboard with 18 (the Beatles lead with 20), and Madonna, who turns 50 in August, finally passed Presley for the most top-10 hits with 37.
But can Presley reach a new generation that has grown up with Elvis the image, not Elvis the man?
"I think the story is timeless," Ward contends. "America cast's its heroes away very begrudgingly."
For Sillerman, this likely is just the buildup before the big bonanza deal, given his modus operandi of buying media properties at low prices, maximizing the brand, packaging them and then unloading at a higher price. He did it in 1989 with radio stations, which he sold to what is now Viacom for $389 million, and again in 1997 to Hicks Muse for more than $2 billion. Three years later, he sold a bundle of concert venues to Clear Channel for $3 billion.
One can only wonder if/when he will sell EPE—and what it will look like when he does.
Soocher doesn't believe it will happen any time soon.
"You have to kind of figure out where's the sweet spot for the sale," he says. "With Ali and the Elvis estate, you would think Sillerman would want to build up the brands—and they haven't hit the ground running.
"I don't think, as an investor, you would think they would be much more valuable together than apart."
Soocher argues that a more modernizing match would be some entity from the current list of stars that appeals to the younger fan base—and that, essentially, means hip-hop. Coincidentally, Rap mogul and entrepreneur Jay-Z just signed a 360 deal with an SFX spin-off company—the concert venue company Sillerman founded before selling to Clear Channel. The deal essentially turns Jay-Z into a property for commoditization, which is what Sillerman is currently doing with Elvis Presley.
Says Soocher: "I think the younger music fans are used to seeing music come at them from all possible ways, so they don't look at that as a violation. Fans are much more accepting today."
Nevertheless, what's unique about the Presley situation is that despite being dead, he is still a towering performance figure in pop music. The Presley estate may have outgrown the man, but it can never seemingly outgrow the performer. Unlike other industry personalities whose businesses can theoretically run without his or her explicit presence—an Oprah Winfrey or even Jay-Z come to mind—can you imagine a Presley industry without Elvis in the spotlight?
Source: BusinessTN magazine / Updated: Jul 2, 2008
the expansion and renovation. The fact that EPE (Sillerman) was not willing to take part in this story IMO says they are still questions yet unanswered on how to proceed and since they do not have the answers they will duck the questions.