Moneyball for Dead Celebs: This $5 Billion Business Sells Elvis and Michael Jackson
In April, Shannon Gagliardi, a 48-year-old nurse practitioner from Louisville, took the vacation of a lifetime. She’s a fan of Elvis Presley and still considers missing a 1976 New Year’s Eve concert by the King in Pittsburgh one of the biggest regrets of her life—even though she was only 6 at the time. So it was a dream come true when she stayed three nights at the Guest House at Graceland with her sister, brother, niece, and grandniece. Missing from the family pilgrimage to Elvis’s storied estate in Memphis: Gagliardi’s 17-year-old daughter, who didn’t know what Graceland was.
The range of a mother’s and daughter’s excitement about a trip to Elvis’s homestead shows both the business promise and the generational risk facing Jamie Salter, whose Authentic Brands Group LLC recently completed a $137 million makeover of Graceland, four years after buying a majority stake in the Elvis name. Authentic opened the 450-room, four-diamond Guest House hotel next door in late 2016, a notable upgrade to the worn strip of dollar stores and gas stations flanking the 14-acre property. A rundown RV park and “Heartbreak Hotel” nearby are scheduled for demolition. A new museum complex was opened across the street in March, quintupling the space to showcase all things Elvis, including 22 (out of 88) of the King’s jumpsuits.
Some might call that excessive adulation for an entertainer who died almost four decades ago and whose music and movies were hits long before the arrival of millennials. But if Salter knows anything, it’s how to raise the dead—at least financially. His company owns the commercial rights of not only Elvis’s name but also Marilyn Monroe’s and Muhammad Ali’s; it also manages the licenses for Michael Jackson’s estate. “This will be the biggest year that Elvis has had in a decade,” Salter says proudly.
Since setting up shop in 2010 with the financial backing of private equity firm Leonard Green & Partners LP, Salter has built Authentic into a $5 billion business by snapping up the brands of dead celebrities as well as living stars such as Shaquille O’Neal. The company also owns faded retail names such as Frederick’s of Hollywood and Aéropostale.
It takes a lot of work to keep even a good brand going, and it’s that much more difficult when the celebrity is no longer in the public eye, says Derek Pitts, head of restructuring at Peter J. Solomon Co., an investment banking advisory firm with a retail focus. “It’s a hamster wheel: Once you get on it, you’ve got to keep running,” he says.
Salter says he deals with that problem by working with studios and other media to create new content. Take Monroe, who Salter says is “more relevant than she ever was.” He says her biggest fans today are 15 to 25, in part because of the actress’s continuing presence on social media. She was the first deceased celebrity to be verified on Twitter, where she boasts 258,000 followers on an account run by Authentic; 14.6 million users like her on Facebook. A Marilyn Snapchat “selfie lens” introduced last year has been used more than 300 million times. Her iconic subway grate scene from The Seven Year Itch appeared in a 2016 Super Bowl ad for Snickers candy, and her image has adorned goods from popular brands including Converse.
Authentic also started a sub-brand featuring an animated version of Monroe, called Mini Marilyn, to capture audiences in China. Besides the younger fans the campaign targeted, Mini Marilyn has caught on with Chinese women in their 30s.
Elvis, meanwhile, is in the midst of a European tour. The Wonder of You features the King on screen, a live orchestra, and a live appearance by former wife Priscilla. A 2015 album of the King’s vintage hits accompanied by the Royal Philharmonic Orchestra was released in Britain, where it sold more than 1 million copies. Luxury goods maker Coach Inc.’s limited-edition Elvis-themed Rogue handbag, released in February, sold out, and there’s a new installment in the Elvis Lives video slot game series from Scientific Games. Still to come is an HBO documentary, a Baz Luhrmann biopic from Warner Bros., and a TV series from Weinstein Co.
Dead celebrities have their advantages: There’s no risk of them showing up late to events or lighting up social media with an out-of-character faux pas. They don’t cycle in and out of fashion like current idols. And those who passed away in their prime will never age.
Still, some of Authentic’s names inevitably change status. Ali signed with Authentic during his lifetime, sparking deals such as Ali-branded Under Armour tees. But after his death last year, Authentic started a campaign, “Ali in All of Us,” which will include an app that helps people find outlets for volunteer work, touching on the boxing legend’s extensive public service.
Salter says he uses a “moneyball” system that weighs a brand’s or name’s social media presence, its demographics, and the income level and involvement of followers. Celebrities account for about 25 percent of Authentic’s revenue, with sports licenses kicking in 15 percent, clothing 30 percent, and what Salter calls “lifestyle,” such as shoes and handbag brands, the remainder.
Salter won’t disclose how much he and partner Joel Weinshanker paid for 85 percent of Elvis’s intellectual property, with the remainder retained by Priscilla Presley. Since 2013, when they bought in, royalties have grown 20 percent, including a 50 percent bump in music revenue.
Then there’s the new Graceland. Revenue has more than doubled since Authentic’s acquisition, and more than 600,000 visitors came last year, about a fifth from outside the U.S. With its textured wallpaper, chandeliered conference areas, and sleek W-style guest rooms, the Guest House could be any upscale property, except for some singular touches: sconces in the shape of Elvis’s initials; the 464-seat theater that screens Elvis films nightly and hosts corporate events; the angled backs of the lobby chairs that evoke the collars of the singer’s jumpsuits. The hotel includes 20 suites, one Priscilla Presley helped design, which is modeled after Elvis’s lodgings in Las Vegas. Separately, for $30,000, guests can join the Founders, which gets them discounts and access to special events. About 45 have signed up so far.
Apart from the hotel, visitors now have other reasons to extend their stay beyond a day, Salter says. Across the street, the 200,000-square-foot Elvis Presley’s Memphis museum complex includes an 1,800-seat soundstage and concert venue. There’s a room devoted to jumpsuits and another to Elvis’s pink Cadillac and other signature cars. Visitors can sign up for the VIP tour, which includes a guide and a meal, for $159, or a basic museum package for $57.50.
Among those taking a recent VIP tour was Thefnie Boyce, a retired labor-and-delivery nurse who started listening to Elvis growing up in Barbados and heard about the hotel on the all-Elvis station she listens to at home in Brooklyn, N.Y. Her two sons obliged with a weeklong trip, and she insisted on two things: staying at the Guest House and taking the more elaborate tour. Besides the tour, “I have no plans,” Boyce says. “I am moving with the flow.” For Salter, that’s just fine.