Anything about Elvis
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Wed Nov 30, 2011 10:50 pm
There’s been some latter day revisionism about the sale of Elvis’ pre-1973 recording rights to RCA in 1973 for a mere $5.4 million. We’re told it was a great deal of money for the time (which is true) and that catalog did not sell in the 1970s (which is only partially true) and of course that Elvis was all for the deal (which is a deceptive truth). I thought I’d outline some of the reasons why this was probably the worst example of gross mismanagement in the history of relations between Elvis Presley and Tom Parker.
1. These were not just the royalty rights to oldies which Parker and Elvis sold to RCA. The contract called for all of Elvis’ recorded performances recorded before March 1, 1973 (this is verified in the suit the Estate filed against Parker). This was a group that included “Burning Love” which was at that moment anchoring an LP still on the charts, “Separate Ways” which was in a similar position, Elvis as Recorded at Madison Square Garden which had just left the Top 200 a week or two before the deal was signed, and unbelievably enough Aloha From Hawaii Via Satellite, an album that was about to be advertised in its entirety on national US television through a network special a month later and had already been advertised in Europe and other parts of the world in the preceding months. The deal also gave RCA all of what was left in the vaults, this meant stuff like 1972’s “Fool” which would be on the backside of Elvis’ next single and would anchor the first non-royalty current Elvis album Elvis (Fool). These were current earners that RCA was buying in the deal. The royalties Elvis would have drawn from, the #1 two million in its era selling, Aloha From Hawaii would have alone covered a lot of what Elvis got from RCA for the deal, which after taxes was only about $1.5 million.
2. Although the reissue market was not what it would become in the 1980s and beyond, especially after the introduction of CDs, by 1973 Elvis’ old recordings had proven themselves to be very solid, very consistent earners. Since 1958 RCA had been repackaging Elvis’ most recent hits on their Gold/Golden records collection with great success, landing in the top half of the charts (at least) and going Gold every time out (generally over the course of a few years). In 1970, they issued a high priced four-LP boxed set and moved more than 150,000 units of what was a luxury item sold only to the most well heeled and most devoted fans. Given the high list price and the fact that there no new recordings involved, this was probably RCA and Elvis/Parker’s most profitable recording venture that year. Even more than that the Christmas LPs and the gospel LPs moved the majority of their numbers as back items. Year in, year out they moved consistently. This is why RCA wanted more even though the gospel LPs never made it into the Top Ten and the Christmas sold only for six weeks per year. Additionally, as I noted in reason #1, not all previous recordings are over commercially or are oldies. In the mid-1960s, RCA scored Elvis’ biggest hit between 1963 and 1968 with a five year old recording of “Crying in the Chapel.” A year before they’d moved almost 800,000 of “Ain’t That Loving You Baby” a six year old unreleased recording. Given the structures of the deal, any new or second lives for recordings that Elvis had made in the previous five or six or even one or two years would not benefit him directly. It was crazy of Parker not to carve out some sort of exception for more recent recordings not just for potential unreleased material but for the possibility that yesterday’s flop can become tomorrow’s hit. The industry is littered of stories of songs that sat around for years, dying on LPs languishing in the vaults, that later became hits- the Miracles“Tears of a Clown,” Flack’s “First Time Ever I Saw Your Face” are but two examples.
3.They surrendered all control. Now given the half-assed way in which much of Elvis’ music was released to the public on LP especially in the previous few years, you wouldn’t think that this would be much of an issue. The problem was that the lack of control coupled with RCA’s hell bent determination to get all their money back in a hurry, meant that Elvis would be competing against himself. His new products would be competing directly in the marketplace with his old. Additionally, the lack of control meant that RCA could, would, and did package their reissues as a contemporary Presley product. This was not a heck of a lot different than what the label had done in the early part of the decade. This is a big part of the reason Elvis had few immediate super smash LPs in the era. The big difference here was that in the early 1970s Elvis was making money for all the products that were out there. After 1973 he would not, other than the money he received for the buyout which as you can see now with the money gone from Aloha, and consistent sellers like the gospel LPs was not really all that much. Further, the new deal put Elvis at another disadvantage. Unlike the Camden LPs, the primary source of Presley reissues early in the decade, which featured mostly obscure titles with a few exceptions, Elvis would now be competing with his most famous recordings, some of the most famous recordings of the 20th century. For a choice between “Hound Dog” and an unknown entity fans will choose “Hound Dog” even in an inferior version as Elvis’ live albums often proved.
4 The deal lacked vision. Vision of what is about to happen is one of the most important traits a manager could have. This deal showed that by 1973 Parker could no longer tell which the way wind was blowing. And this was not a vision like Tom Hagen’s warning that we could lose everything have, not now but ten years from now in The Godfather. This was the immediate future. Although RCA waited a year to put out its first in-store oldies compilation, in 1973 they licensed 20 of Elvis’ biggest hits for a television advertised compilation that sold 3 million units in short order. As the Legendary Performer set showed a market was there for new compilations of classic pop music already in 1973 not 1983 or 1993. Someone just had to exploit it. As Dave Marsh pointed out, Elvis’ death would make the catalog so valuable that the deal would border on obscenity. But it was already big bucks before.
5. Given all the above, the price tag was too low. The anemic royalty rate of Elvis’ next contract further lowered the price. Of course, RCA would have never come up with the type of money and bargain needed to finance such a project if Parker had made them pay full value, or strategic value. Why he didn’t is discussed below.
6. Parker’s side deals. The buyout was not the only business negotiated that day. There was also Elvis’ new one sided contract with the label that included a number of side payments exclusively for Parker. He received a $50,000 per year consulting fee for assisting RCA in the development of merchandising and promo concepts for the length of the new contract (seven years).. A $100,000 bonus payment (not split between him Elvis, but each) There was another $10,000 per year consulting fee for exploiting merchandising on the prior contract. Plus amazingly there was an astonishing $1.35 million for helping RCA with Elvis’ tours. Plus, an additional ten percent of RCA tour profits. So in other words as Parker is reportedly negotiating a new record contract for his client and the sale of that client’s back royalty rights, he is receiving about $2 million in special for himself only kickbacks. The end result was that Parker wound up making more money on the all the deals than Elvis with the manager pocketing about $6 million to the singer’s $4.5 million over seven years. Of course, Elvis’ total was actually even lower than that because the $500,000 he received in royalties was ultimately split with Parker. Is it any wonder he would convince his client to take such a deal? (Did I mention a manager is not supposed to make more on a deal than a client?) He was making out like a bandit. RCA in essence bought the catalog and a crummy deal for Elvis by buying Parker.
7. Given all the above and the tax laws which cut Elvis’ immediate earnings from the deal to about $1.4 million and the curb both deals placed on his future income. Elvis did not see a lot of benefit out of all this horse trading. Many authors and some fans have tried to let Parker off the hook by noting that Elvis was for this deal. That’s true but that fact is ultimately deceptive. Despite what Parker apologists would have you believe, Elvis did not initiate this deal. The deal was placed on the table by RCA Executive Mel Ilberman. When the idea was broached, Elvis was in desperate need of money primarily because of Priscilla’s new divorce attorney. For a man in need of quick cash, $5.4 million of which Elvis only realized less than a half sounds like great deal. However, this is where a manager has to step in. As a recording artist there is no way that Elvis is anxious to unload this catalog unless he’s in desperate need of money. Who would throw away a lifetime annuity and a significant portion of your current earnings? And while it’s true that Elvis was not particularly interested in the packaging of LPs etc. what stake would there be for him in surrendering control. Even if you don't use it, better to have it than to not. The entire reason he would sell is to make a great deal of money for work already done. It was Parker’s job to basically flat out reject RCA’s overture and to explain to Elvis why. It was also his job considering that this impacted his future earnings as well, to try and find Elvis some money elsewhere maybe even a loan. After all with Elvis’ touring revenue, and what he made on records, a $1.5 to 2 million loan would not be a huge deal to payoff. Hell, if he’d have the bright idea to come up with the Brookville Record he might have made most of the money just on that. As the Brookville LP was a double and Elvis received a $1 royalty for double LPs if Parker had the brains to come up with such an idea, you would have your windfall right there.
The myth of Parker is so strong and the sympathy earned by his early moves with Elvis so great, that many, even scholars like Peter Guralnick, have bent over backwards trying to put a good face on this. But as you see you really can't. And what's more the side deals that Parker made on the project clue you in that's it's not a sharp record executive taking advantage of recording artist without business savvy, and a manager whose time has passed. It was pure collusion with the record company bribing an elderly man with a ton of what Guralnick called "now money" to sell his client out.
Wed Nov 30, 2011 10:57 pm
All good points.
Not only does it show that Elvis needed new managemen, but also a new label.
I would have loved to see Elvis go in new direction and tell RCA to shove it.
Remember when Elvis got pissed off at RCA and threatened to go with "White Whale", it
would have been cool if Elvis signed a one year deal with another label just to
teach RCA a lesson, and then see how much they would offer to get him back.
This 73 buyout of course, did nt benefit his client, but it sure benefitted him, meaning the colonel.
This is one depressing subject.
Wed Nov 30, 2011 11:12 pm
The 1973 Buyout deal was a great deal for the Colonel not for Elvis.
I believe the Colonel being 64 years old at the time figured he wasn't going to live many more years so he made this deal to get a nice sum of money for himself.
Even if the Colonel hadn't of made this deal he wouldn't have gotten a share of any of the future royalties because he was no longer Elvis' manager or involved with the estate by that time.
All of the royalties would have went to Lisa Marie and Priscilla because she was Lisa Marie's guardian.
It turned out to be a win win for Parker.
Wed Nov 30, 2011 11:13 pm
ekenee wrote:Remember when Elvis got pissed off at RCA and threatened to go with "White Whale", it
would have been cool if Elvis signed a one year deal with another label just to
teach RCA a lesson, and then see how much they would offer to get him back.
I don't think that story is true.
White Whale went out of business in 1971.
Wed Nov 30, 2011 11:59 pm
All great points! Nice work on putting together a very interesting post. I'd say #3.They surrendered all control and #4.The deal lacked vision sums it up well.
Thu Dec 01, 2011 1:40 am
There is no way around it, it was a very bad deal.
Thu Dec 01, 2011 2:33 am
It was a disgraceful, short-sighted deal which no decent manager would have allowed, let alone profited from.
Thu Dec 01, 2011 2:46 am
Great post likethebike.That deal must be one of the most shortsighted deals in showbusiness and borders on criminality by the Colonel even although on the face of it Elvis was a willing partner there is no justification for Parker to contemplate even putting this to Elvis if he was doing his job
and protecting his client.
Thu Dec 01, 2011 2:48 am
RCA had a nickname in the industry.
Record Cemetary of America.
Thu Dec 01, 2011 3:12 am
The Colonel didn't purposely do it to screw Elvis. Both the Colonel and Elvis were short sighted. The deal would not have happened if Elvis had not agreed to it. Nothing happened without Elvis' approval.
Thu Dec 01, 2011 3:21 am
You might be able to say that DEH if Parker had not gotten $2 million on the side. This was not an honest broker.
Thu Dec 01, 2011 3:49 am
rickeap wrote:It was a disgraceful, short-sighted deal which no decent manager would have allowed, let alone profited from.
Not only was it clearly short-sighted, but it was extremely self-serving on Parker's part as well. A real breach of loyalty and duty to his client. It is a deal that is still universally referred to as one of the worst business decisions any artist every made.
Thu Dec 01, 2011 8:24 am
Excellent post 'likethebike' and very sad it ever happened!
Thu Dec 01, 2011 8:37 am
likethebike, you summed up the deal very well, and although I'm not one to constantly bash the Colonel, I agree this was a bad deal. Greed, just pure greed on Parker's part. Elvis was a big enough record seller, even in 72-73, he should have simply negotiated a higher royalty rate for his client, and left it at that. And Elvis should have gotten hip to the fact that RCA's release policy/packaging was making him look like a fool. It seems like Elvis just didn't care what happened with the material once he left the recording studio. Was that just a common attitude among artists of his generation? I can't imagine, say, the Fab Four or Zimmy allowing such shoddy releases on the market. They would have been raising hell about track sequencing, cover art, etc. Parker didn't care, as long as the stuff continued to sell at some level, but for the artist himself to be so blase about the whole thing is just baffling to me.
Thu Dec 01, 2011 9:36 am
Yeah particularily considering the extremely recent 1973 'Aloha' performance and later to be released 'Aloha double Vinyl Album Geez!!!
Thu Dec 01, 2011 9:57 am
Great post. However, Elvis had a personal lawyer (Ed Hookstratten?). Surely he vetted the document? Also when Elvis threatened to sack Parker and was presented with a bill of $2 million or so, again, he only had to run it past his lawyer not Vernon. Let's face facts, Elvis entrusted his business dealings to Vernon and Marty Lacker. Naive isn't in it. Also, after signing the rights to his back catalogue away Elvis them demonstrated a complete lack of desire to record meaningful new material. Whichever way you look at it none of it makes sense.
Thu Dec 01, 2011 11:45 am
Well, it is sad to say but Elvis was not the smartest person around and The Cononel... well... robbery was his game I guess.
Thu Dec 01, 2011 12:02 pm
What a wonderfully good post.
I am of the opinion that it did contribute to his early demise for he was forced to compete with himself which was ofcourse impossible for a number of reasons.
Thu Dec 01, 2011 12:04 pm
Alexander wrote:Well, it is sad to say but Elvis was not the smartest person around and The Cononel... well... robbery was his game I guess.
I strongly disagree. He was too trustful where it concerned the colonel but Elvis showed intelligence on a number of levels.
Thu Dec 01, 2011 12:39 pm
With so many people around Elvis being or having been in "the music business" did nobody tell Elvis it would be a stupid deal?
What did they talk about in Graceland?
Thu Dec 01, 2011 12:52 pm
Excellent Topic! My question is would Elvis have made more money without the deal by Aug 16th 1977? Elvis went through money faster than a bullet from a M-16. I think his spending habits put him in the position that he was in with that deal and the backbreaking tours that he needed to survive. Elvis could have easily retired and never worried about a dime well before 1973 had he not given all his money away to paid friends and bad deals and ripoff charities.
So lets not totally blame to Tom Parker for everything . I think if it wasn't for Parkers quick buck deals Elvis would have been broke long before any buyout deal .. Remember Elvis was a compulsive spender all the way till the end .
Thu Dec 01, 2011 2:25 pm
If I had been in Parkers position, I surely would have loved to make this deal. The Colonel had reached the age of retirement, had serious health troubles and his only client had developed a serious addiction. So it was certainly a good deal for him to receive 2.7 million dollars and make several side deals for himself at the same time.
But we have to remember that it was Elvis himselvis who was desperate for cash and was happy to receive so much money without having to do anything but sign a contract. If he hadn't wanted this deal, he wouldn't have signed.
We all know that Elvis wasn't interested in the business part of his job. If I would own an asset which generates permanent income and someone offers 5.4 million dollars, I'd expect my asset to be worth more than that. Simply, because the buyer wants to earn money with my asset for himself and surely doesn't wants to wait for ages for the amortisation of his investment. So if he offers to give me 5,4 million dollars now, I'd expect my asset to earn more than that within the next four or five years.
But Elvis didn't think this way. He needed the money now and his manager -for different reasons- didn't think different. So it wasn't mismanagement at all. Elvis and Parker wanted the same and they got it.
Thu Dec 01, 2011 3:21 pm
Of course it was mismanagement because there were many avenues available for Elvis to receive a lump sum of money. You have a personal manager to advise you against decisions such as this that may look good but are really fool's gold. It's the same reason you have a lawyer when you go to court. The prosecution says "plead guilty we'll get you a short sentence, isolated treatment etc. This is the best deal." Your lawyer says "no."
And I as I pointed out, this asset didn't have to age. They were months away from this asset and being a "hot artist" at the time the deal was done even a short term loan against short term royalties would have sufficed Elvis' need for immediate cash. At the rate that Elvis got on his next contract, $1 per double LP, Aloha From Hawaii would have paid of his debt in one year. But really what Parker should have done was hire an auditor to come through RCA's books and find every dime the label owed him and Elvis over the past seven years.
It can't also be ignored that Parker at the same time secured Elvis' service for a rather Draconian contract with the label for the next seven years. So he not only sold the royalty rights, he also allowed the label to buy Elvis' future royalties at a lower rate.
Was Hookstratten an entertainment attorney? You would need an entertainment attorney to know exactly how bad the deal was, but someone from a tax basis should have told him as well.
Most of the people at Graceland that were involved in the music business were kind of low end players.
Lonelysummer- Some of Elvis' generation like Ricky Nelson got into the LP as LP thing but I think Elvis looked at LPs like a marketing tool and not a vehicle of artistic expression for the most part, save the gospel LPs and Elvis Country. Elvis said what he had to say in the individual songs, some worked a little more than others. At Sun he left it up to Phillips to decide. At RCA he did it himself for a long time but RCA seemed to think everything was great (or at least commercially profitable) and commercially they were right.
Promised Land- I don't know how much the extra income for the songs would have helped Elvis personally at the end because as you said he did blow through money. However, it would have been there to help pad things out and compete with himself less, It also would have helped the Estate in the years following his death.
Thu Dec 01, 2011 3:43 pm
Are there any newspaper articles from the time giving their opinion about this buyout deal?
Would be interesting to read what reporters thought about it in 1973.
Thu Dec 01, 2011 5:30 pm
I remember a deal James Brown worked out with his record label,sometime in the 80s,I think,where he got a $30M advance against future royalties.
Certainly,if Parker were the genuis his "amen corner" make him out to be,he could have gotten a similer deal for Elvis,who was a far bigger seller than JB.
Parker was great before 1960-after that terrible.