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“The Mississippi Delta shines like a National lute… And for reasons I can’t explain, there’s a part of me that wants to see Graceland.”
Paul Simon released that song about Elvis Presley’s historic home of Memphis in 1986, about a decade after the famous singer’s death. Many things have changed.
Covid-19 has hurt Graceland so much that bonds issued by the state of Tennessee tied to revenue from tourists have defaulted. The City of Memphis, the state, and Elvis Presley Enterprises are arguing over how this happened and how to fix the slippage that brought about $20 million of the Graceland Project bonds down. garbage”.
Now, in the King’s house, there’s a lot of palmistry going on.
“We are not insolvent,” asserted Joel Weinshanker, who has been the managing partner of Elvis Presley Enterprises for a decade. “The public agency has defaulted on its debt,” he said, referring to the economic development agency, EDGE, of Memphis and Shelby Counties.
Not so quickly, Stefanie Barrett, the company’s director of marketing and communications, protested in an email. “EDGE acts as a conduit… Graceland bonds must be repaid from [taxes] all created in Graceland. Her email states: “EDGE, City, County, State and any taxpayers are not responsible…for refunds.”
Graceland is one of the South’s biggest tourist attractions and for many years was the nation’s second most visited house behind the White House. Then came Covid.
A spokesperson for the Tennessee Department of Tourism Development said: “Covid-19 is the largest crisis facing the hospitality and entertainment industry in history. The state of Tennessee has just 75 million visitors in 2020, down from 128 million the year before, according to the department.
Graceland’s default could have an impact on other tourist attractions and cultural sites across the country that have pledged to raise funds.
But the bond offering is “unusually complicated,” often a sign of possible problems later, said Matt Fabian, partner at Municipal Analysis Management.
EDGE originally issued $104.3 million in Graceland Project bonds in 2017, some of which were either unrated or identified as high-risk. The various revenue streams from Graceland, tied to a series of new taxes – sales, tourism and real estate – are committed to different series of bonds. About $20 million of that is now in default.
For the bond advisor, who approved of the complex bond issue, “we’re out of the loop,” said an email from Bass, Berry & Sims.
Critics say the bond proceeds have been used to finance a massive, perhaps overly ambitious expansion, starting in 2015 and eventually adding new buildings and a hotel 450 rooms.
There is also an Elvis automobile museum, a collection of more than 100 jumpsuits and other costumes, memorabilia and more about his musical history, including black artists who influenced or worked with Elvis. The singer’s ex-wife, Priscilla Presley, noted at the 2017 opening that “that’s what Elvis wanted.”
It worked. The hotel gets a craving The award raised four diamonds and has twice hosted General Hospital’s annual fan convention. The cheapest adult ticket to the property, including a tour of the mansion, is $77. An ultimate VIP pass, included new attractions, a private tour, lunch, and use of the singer’s private jet, is $190.
“Years ago, a visit was a passing pass, now it makes them stay a few days,” Weinshanker said.
But as Graceland grew, the expansion competed with Elvis Presley Enterprises against the city of Memphis. In 2018, Graceland sued the mayor’s office over construction delays concert venue may have violated the city’s right not to compete with the FedEx Forum and the Memphis Grizzlies. (The Mayor’s office did not respond to many emails.)
When that project was blocked, Weinshanker began talking in interviews about a possible solution equivalent to heresy: moving Graceland out of Memphis.
Elvis Presley Enterprises holds the rights to the singer’s image and much of the music and is still partially owned by his daughter, Lisa Marie Presley. (Weinshanker declined to give the percentage, but it was reported in court documents as 15%). Emails to her representative were not returned.
During the height of Covid, this business had to close, or operate at low capacity and revenue plummeted.
But those financial challenges may be temporary. In recent weeks, the film “Elvis” directed by Baz Luhrmann has increased attendance. It crossed the $100 million mark in The US box office on July 15, “becoming one of the rare films without a superhero or a dinosaur to hit that milestone,” Variety reported.
Weinshanker said Graceland attendance in the second quarter of this year hit 200,000, more than all of 2020 and just 10,000 fewer than in the same period in 2019. “And people are spending more,” he said.
It also helps that tourism soars in August, when the city celebrates Elvis week (the singer died August 16, 1977, aged 42).
There is a weeklong series of events, concerts and a giant candlelit vigil taking place in the streets around Graceland. Thousands of fans flock there every year, what some visitors call a “pilgrimage”.
Meanwhile, what happens to investors in defaulted bonds? They will only have to patience. “Bondholders must wait for sufficient tax revenue from Graceland,” EDGE said.
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