Graceland getting prepped for face-lift
EmptyMEMPHIS -- The thousands of Elvis Presley fans descending on Memphis for the 30th anniversary of his death Aug. 16 won't see much sign of it, but plans are moving along for big-time changes at Graceland.
Managers of Presley's famous home want to overhaul its tourist complex -- with a new visitors center bigger than a football field, a convention hotel and high-tech museum displays that can give a new, digital life to the King himself.
All it will take to bring about those wonders is $250 million or so; the total reorganization of CKX Inc., the New York-based company that controls all things Elvis; and a publicly supported face-lift for Graceland's struggling neighborhood.
The obstacles are far from small, but the people behind the plans, led by CKX Chairman Robert F.X. Sillerman, have a history of putting together big deals and making money for investors.
Sillerman, a multimillionaire dealer in media and entertainment assets, took over Graceland in 2005 when he bought the rights to Elvis' name and image from daughter Lisa Marie, Presley's sole heir.
When Presley died, his finances were in sad shape. Led by his ex-wife, Priscilla Presley, the estate formed Elvis Presley Enterprises, opened Graceland to the public and solidified the legal rights to make money on Elvis' name and image.
Last year, Graceland took in $27 million in revenue, and the overall Elvis business brings in more than $40 million a year. That made him the second-highest grossing dead celebrity in 2006, behind only Nirvana's Kurt Cobain, according to Forbes.
Lisa Marie Presley still owns her father's house and 15% of Elvis Presley Enterprises, but CKX controls Graceland and its sprawling complex of souvenir shops and memorabilia museums.
"As great as it is," Sillerman said after a recent visit to Graceland, "it can be so much better."
The big, white-columned house Presley bought in 1957 for just over $100,000 draws nearly 600,000 visitors a year, and for a week around the anniversary of his death on Aug. 16, 1977, it attracts legions of his still-adoring fans.
Graceland's current visitors center, souvenir shops and museums were cobbled together by renovating a small strip mall across the street from what the Elvis faithful affectionately call "the mansion."
The new plans call for leveling all that and building a 80,000-square-foot visitors center designed from the ground up for handling big crowds and high-tech exhibits.
"To put that in perspective, that's about six or seven times the size of the mansion," Sillerman said.
The center will be equipped for the kind of technical wizardry that allowed singer Celine Dion to recently perform what appeared to be a live duet with Elvis on the "American Idol" TV show, which CKX also owns.
"People will actually think Elvis is there," Sillerman said. "It's going to be, 'Oh, wow,' I can tell you that."
For years, Elvis Presley Enterprises, now a CKX subsidiary, has been buying land for expansion and has put together 100-acres needed for the renovation, which would move the tourist center to the same side of Elvis Presley Boulevard as Graceland.
"We've continued all these years to be a major destination attraction with a busy, pretty unattractive street running right through the middle of it," said Jack Soden, EPE's top executive and a major player in opening Graceland to the public in 1982.
Graceland's 128-room Heartbreak Hotel, also on the wrong side of the four-lane street, is to be replaced by a convention hotel, on the better side, with up to 500 rooms.
No timeline for the expansion has been set, Soden said.
"But moving straight ahead, with every intention of keeping the ball moving, we're probably looking at something in the neighborhood of a three-year process," he said.
Top CKX managers, led by Sillerman, want to buy the company for $1.3 billion, at $13.75 a share plus stock equaling 25% of FX Luxury Realty, an affiliate with plans to develop hotels, casinos or other such projects with CKX.
Shareholders are expected to vote on the proposal perhaps in October, said Sillerman, the company's largest stockholder with 34%.
The plan is to take CKX private, with a small group of big-dollar investors including Sillerman and "American Idol" creator Simon Fuller, and continue its focus on intellectual property and entertainment content.
Fuller is CEO of CKX subsidiary 19 Entertainment, the company's biggest revenue source and owner of the "American Idol" franchise. After the buyout, CKX would become 19X.
FX Luxury Realty, as FXLR, would remain public with a much broader shareholder base to develop real estate projects in Memphis, Las Vegas and elsewhere, including abroad.
CKX, which also owns the rights to former heavyweight champion Muhammad Ali's name and image, might have a better shot at other such deals as a private company, since celebrities are often reluctant to have their financial dealings made public, Bear Stearns analyst Christopher Ensley said.
Bear Stearns, which is not involved in the buyout, predicts a total cost, including expenses, of $1.5 billion, with $600 million in equity and $950 million in debt. CKX management is expected to provide $200 million with the rest coming from institutional investors.
With Sillerman and other CKX managers holding more than 45% of its shares, approval for the buyout is likely, with a closing perhaps by the end of the year, Ensley said.
"I looked at the transaction several different ways, and I thought the valuation was full and fair to investors," he said.
Sillerman's past success in putting together investment packages may help attract buyout backers, Ensley said.
In the 1990s, Sillerman helped put together a group of radio stations that sold for $2 billion, and he was a leading founder of a SFX Entertainment, a sports and live concert company that sold for $4 billion in 2000.
Graceland managers have been working on their expansion plans for more than a year, and Sillerman has come to Memphis to talk with city, county and state officials about their assistance.
CKX wants a "mutual cooperation agreement" with local government for major highway and utility improvements and renovation help for other businesses in the area, particularly along Elvis Presley Boulevard, a once vibrant commercial strip now dotted with used-car lots and empty buildings.
"We don't want to create an island," Soden said. "We want to be a catalyst for the right kind of growth and the right kind of revitalization of the commercial corridors."