Paul Simon released this anthem about Elvis Presley’s historic Memphis home in 1986, about ten years after the famous singer’s death. A lot has changed.
Covid-19 has hurt Graceland so badly that Tennessee government bonds tied to tourism revenue have defaulted. The City of Memphis, State and Elvis Presley Enterprises are squabbling over how this happened and how to fix a situation that has turned about $20 million worth of Graceland Project bonds into “junk.”
Now, in the house of the king, there are many accusations.
“We did not default,” insists Joel Weinshanker, who was the managing partner of Elvis Presley Enterprises for ten years. “The state agency has defaulted,” he said, referring to the economic development agency EDGE of Memphis and Shelby counties.
Not so fast, countered Stephanie Barrett, the agency’s director of marketing and communications, in an email. “EDGE serves as a conduit… Graceland bonds must be redeemed from [taxes] they are all generated in Graceland.” Her email states, “Neither EDGE, nor the city, nor the county, nor the state, nor any taxpayer shall be liable … for the repayment.”
“Covid-19 has been the biggest crisis to hit the leisure and hospitality industry in history,” a spokesman for the Tennessee Department of Tourism Development said. Only 75 million people visited Tennessee in 2020, compared with 128 million a year earlier, according to the department.
Graceland’s default could have repercussions for other tourist attractions and cultural sites around the country that have pledged revenue to raise funding.
But this bond offering is “extraordinarily complex,” often an indication that problems could arise later, said Matt Fabian, a partner at the municipal think tank.
EDGE originally issued $104.3 million worth of Graceland Project bonds in 2017, some of which were unrated or identified as high risk. Graceland’s various revenue streams, tied to a host of new taxes—on sales, tourism, and property—were embedded in different series of bonds. About $20 million of them are now in default.
As for the bond advisor who approved the difficult bond issue, “we’re out of the loop,” Bass, Berry & Sims said in an email.
The proceeds from the bonds went to fund a massive expansion, perhaps too ambitious, critics say, starting in 2015 and eventually adding new buildings and a 450-room hotel.
Also added were the Elvis Automobile Museum, a collection of over 100 of his sequined jumpsuits and other attire, memorabilia and more from music history, including black artists who influenced or worked with Elvis. The singer’s ex-wife Priscilla Presley remarked at the 2017 opening that “this is what Elvis wanted.”
It worked. The hotel received the coveted Mobil received four diamonds and hosted the annual General Hospital fan convention twice. The cheapest adult hotel ticket, including a tour of the mansion, is $77. Absolute VIP Pass including new rides, private tour, lunch, and access to the singer’s private jets cost $190.
“A few years ago, visiting was a drive-through, now they were forced to stay for a few days,” Weinshanker said.
But as Graceland grew, the expansion pitted Elvis Presley Enterprises against the city of Memphis. Graceland sued City Hall in 2018 over delays in building plans a concert venue that may have violated the city’s ban on competing with the FedEx Forum and the Memphis Grizzlies. (City Hall did not respond to numerous emails.)
When this project was blocked, Weinshanker began talking in an interview about a possible solution that was tantamount to heresy: get Graceland out of Memphis.
Elvis Presley Enterprises owns the rights to the singer’s image and much of his music, and is still partially owned by his daughter, Lisa Marie Presley. (Weinshanker declined to state the percentage, but court documents list it as 15%). Letters to its representatives were not returned.
In the midst of Covid, the hotel was closed or operated with limited capacity and revenues plummeted.
But these financial problems may be temporary. Attendance has increased in recent weeks thanks to the movie “Elvis” directed by Baz Luhrmann. He passed the $100 million mark. in The U.S. box office on July 15 “was one of the rare films without superheroes or dinosaurs to hit that mark,” according to Variety.
Attendance at Graceland reached 200,000 in the second quarter of this year, Weinshanker said, up from all of 2020 and just 10,000 fewer than the same quarter in 2019. “And people are spending more,” he said.
It also helps that tourism picks up in August, when the city celebrates Elvis Week (the singer died on August 16, 1977, aged 42).
There’s a week-long series of events, concerts, and a huge candlelight vigil that shuts down the streets surrounding Graceland. Thousands of fans flock here every year, in what some visitors call a “pilgrimage”.
Meanwhile, what happens to investors in defaulted bonds? They just need be patient.
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