Beale Street hits record revenue level
Memphis Business Journal - by Andy Ashby
Photo Credit : LEE SWETS | MBJ
Although Performa Entertainment Real Estate, Inc., had a 2009 marked by lawsuits and other challenges, the company managed to lead the state’s No. 1 tourist attraction to record revenues with extensive plans for the upcoming year. Beale Street generated $31.8 million in sales for full-year 2009, up 3.2% compared to $30.8 million in 2008, according to Performa, which led the redevelopment of the street and handles leasing and management of the buildings. The company estimates 2009 sales generated $2.2 million in state sales tax and $715,549 in city and county taxes, not counting liquor sales taxes.
In February 2009, the city of Memphis filed a lawsuit against Performa, citing underreported income. The city used Philadelphia-based accounting firm Parente Randolf LLC , now operating as ParenteBeard LLC, to perform an audit, which was prepared by partner Paul Pocalyko. “This litigation has been a waste of time, effort and money,” says John Elkington, CEO of Performa. “We’ve been good stewards of Beale Street.” Performa hired Memphis-based Watkins Uiberall PLLC to do its own audit of Beale Street’s finances. “I have found no misappropriation of funds received by Performa or expenditures of funds related to the leased premises that were not permitted under the lease or Performa’s subleases with its tenants,” William H. Watkins Jr. wrote in the report. “The records indicate there were accounting errors, some of which were favorable and some unfavorable to Performa.” Pocalyko was asked to prepare a forensic audit for Jan. 1, 2002, through Dec. 31, 2008, for the city of Memphis. “The Pocalyko report does not reflect misappropriation of funds received nor expenditures made by Performa related to the leased premises, the lease and subleases,” Watkins said in his report. “All the receipts and expenditures are clearly reflected on the books and records of Performa’s financial records.” City attorney Herman Morris wouldn’t comment extensively on the suit. “It’s pending litigation and it’s moving on course to resolution by a trial date that’s in the not too distant future,” he says. “We’ve got very able council representing us in the matter.” Attornies Michael Fletcher, Jill Madajczyk, and Van Turner are representing the city. Elkington says Performa sends an annual report to the city every year and plans to make it available online. “They’ve created this tremendously false impression that we were hiding things and that we were not open about things, when in fact we’re the opposite of that,” he says. “This year, we have to show people that.”
The city owns all the buildings in the district except for the ones housing B.B. King’s and Club 152, according to Performa. Performa has a 50-year agreement with the city to develop and manage the district. The agreement was signed in 1982. While continuing to fight this lawsuit, Performa is moving forward with its plans for Beale Street this year. Most of the changes will be on Beale Street properties between Rufus Thomas and Fourth Street. Hard Rock Cafe at 315 Beale, People’s Billiard Club at 323 Beale and Eel-Etc. at 333 Beale all renewed leases this year.
The Ernest C. Withers Trust and Performa are moving forward with plans to develop a 7,000-square-foot museum and gallery dedicated to the famous Memphian’s photography this year. The gallery at 333 Beale is slated to open in April with the museum opening later in the year. Red Rooster Bar and Music Hall has signed a lease for 6,727 square feet at 340 Beale Street, formerly the Double Deuce.