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« Good Deal, Bad Deal
Good Deal: Priscilla Presley’s Control of the Elvis Estate (1982)
When Lisa Marie inherited the Elvis estate was worth a paltry $4.9 million. Today, thanks to her mom's shrewd business decisions, the younger Presley is worth up to $600 million.
What Went Right: Elvis Presley was arguably the most popular entertainer of the twentieth century, and billions had been spent on his records, movies, concerts, and merchandise even at the time of his death. Still, he left an estate of only $4.9 million. Worse, the estate appeared to have little means of growing and was getting eaten up by expenses. By the time of Elvis’ death in 1977, he was waylaid financially by bad business deals and bad spending habits. Elvis sold a billion albums in his life, but had a poor royalty deal. His manager, “Colonel” Tom Parker, negotiated a good deal in 1957, but rarely had it increased as record prices increased over the next 20 years. In addition, Parker received 50 percent, and Elvis also had an agent who received 10 percent.  For all the management fees Elvis was paying, he should have been shielded from an incredibly stupid deal in 1973. Hard up for money, Elvis directed Parker to sell the 700 master recordings he had made during his career (which included the rights to future royalties as well as the ability to use the masters to make future compilations). RCA bought them for the rock-bottom price of $5.4 million.
After paying Parker ($2.7 million) and the IRS ($1.3 million), Elvis received less than $1.5 million for what were arguably the most valuable recordings in music history. With the huge increase in demand for Elvis recordings immediately after his death, the estate probably lost out, even after deducting for Parker, between $10 and $15 million in royalties in 1977. Twenty-five years later, Elvis was still earning more per year for RCA than any other artist. Then there were Elvis’ spending habits, which necessitated the sale of the master recordings. Elvis owned at least five lavish residences, four airplanes, and scores of expensive automobiles. He was generous to a fault, buying hundreds of cars as gifts, giving away untold sums to family, friends, and hangers-on. In those days of higher tax rates, Elvis never received — or never listened to — tax advice. He always paid the top rate, never took advantage of legal tax shelters then available, and did things such as donating $50,000 to local churches every Christmas and not claiming the deductions. Elvis could get away with these extravagances during his life because his answer when the money ran out was so simple: get more. He was good for $1 million per movie (even when the movies were lousy), $250,000 for a recording session, and more than $100,000 for a concert. In his later years, as his dangerous lifestyle began to catch up with him, he still toured extensively because he needed the money. His estate of $4.9 million, however, could not call on Elvis to make more money any of those ways. (At least, it didn’t realize it could.) Vernon Presley, Elvis’ father, was the executor for two years, until his death in 1979. Priscilla Presley, Elvis’ ex-wife and mother of Lisa Marie Presley (the will's beneficiary), became executor, along with Memphis accountant Joseph Hanks and a representative of a Memphis bank. Under Elvis’ will, the estate was to be held in trust for Lisa Marie until she turned 25 (in 1993). Priscilla was shocked to find out, however, that the estate was being depleted and might not last that long. Elvis’ Memphis home, Graceland, had been shuttered but ran up expenses of $500,000 per year, mostly for security and insurance. (All those loyal fans wandering around outside the gates were an expensive nuisance.) Yearly income from Elvis’ post-1973 royalties and some merchandising (after Tom Parker’s 50 percent was deducted) was $1 million the year after Presley’s death, but only half that amount by 1981. Worst of all, the federal government had recalculated the value of the estate, taking into account the money made since Elvis’ death, figuring it at $22.5 million, and slapped on a $10 million inheritance tax. Beginning in 1979, Priscilla educated herself on ways to save the estate. Working with Jack Soden, the junior partner of Priscilla’s financial advisor (who had just died in an airplane crash), she worked out a strategy. Rather than sell Graceland to cut losses and pay the IRS, they would invest the remaining cash in the estate (about $560,000) and open Graceland to the public as a tourist attraction. To manage this and other nascent businesses, they created Elvis Presley Enterprises, Inc. (EPE). They spent nearly a year visiting residences on display throughout the United States such as the Hearst Castle and Monticello. Graceland was an immediate hit with the public when it opened in July 1982 (a month before the five-year anniversary of Elvis’ death). It took just 38 days for Priscilla and Soden to recoup the estate’s investment. Now with some breathing room, the pair, along with the other executors and a small team of advisors, mapped out a comprehensive strategy. First, they would salvage what they could from Elvis’ music catalog. Second, they would do something about Parker and his confiscatory contract. Third, they would use some of the money to fight merchandisers who were capitalizing on Elvis’ name and image without paying the estate. They would also expand into the merchandising business themselves. Fourth, they would continue improving and capitalizing on Graceland. Parker had wisely insisted that songwriters trying to get Elvis to record their songs give Elvis a songwriter credit, but he had been careless about registering and obtaining royalties for the music publishing rights to the songs. EPE began asserting those rights, and now generates a stream of income from them. Nothing could be done, unfortunately, with the rights to the pre-1973 performances themselves, though the estate litigated the matter with RCA and won, at least, $1 million in royalties withheld from post-1973 music. The disputes with Parker were resolved in 1983. A guardian ad litem (a court-appointed representative, in this case because Lisa Marie was a minor) protecting Lisa Marie’s interests concluded that Parker, since Elvis’ death, “violated his duty both to Elvis and the estate,” taking actions that were “excessive, imprudent...and beyond all reasonable bounds of industry standards.” At the probate court’s direction, Parker was sued. He settled, agreeing to sever all ties with the estate. EPE then hired lawyers and lobbyists to stake its claims to Elvis’ likeness and name. When a federal court ruled against EPE on the issue of whether there is an intellectual property right to a dead person’s image, EPE convinced the state of Tennessee to pass a law similar to California’s establishing such a right. The law has been upheld in court, and the estate remains vigorous in controlling Elvis’ likeness, approving all merchandising (and getting a cut). EPE has filed more than 100 lawsuits on the issue. Finally, Priscilla Presley and Soden have carefully mined the public’s interest in Elvis through Graceland. In its first year, it attracted 300,000 visitors. That number rose to 500,000 in 1988, and it increases a little every year. In 1999, 750,000 people visited. Graceland brings in more than $20 million annually. Prices have gradually risen, and the quality and quantity of the attractions have improved. A visitor can now tour not only the mansion but a museum of Elvis’ cars, his tour bus, and two of his airplanes. Surrounding land has been purchased, and Graceland now contains a visitors’ center, complete with merchandise. EPE even paid Colonel Parker an estimated $10 million for his collection of Elvis memorabilia, including some of Priscilla’s love letters to Elvis. Working on the model developed and refined by Disney, the estate is always on the lookout for new ways to extend the Elvis brand name: A shopping-mall tour of Elvis memorabilia with several permanent sites brings in $5 million per year; hotels, restaurants, night clubs, theme parks, and expansion outside the United States are all under consideration. Everything is being done with care. Although, for example, it is easy to imagine an Elvis-themed restaurant, or even an entire resort hotel, thriving in Las Vegas, the estate is proceeding slowly, first with a restaurant in Memphis. According to Jack Soden, “You might ask why we’re not there already. If Elvis fails in Las Vegas, he would not fail quietly.” Forbes estimated in 1999 that Elvis’ 1998 earnings were $35 million. (Dead Elvis began out-earning live Elvis’ best earning year in 1988.) With that kind of cash flow, estimates of Lisa Marie Presley’s net worth of being between $250 and $600 million are not unreasonable. Michael Craig 2/28/07
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