The most significant record contract sale in music history
It was 65 years ago, in November of 1955, when the biggest record contract of the time was sold and bought. Music historians say that this contract was the equivalent of the Red Sox trading Babe Ruth to the New York Yankees.
Elvis Presley had one year left on his contract with Sam Phillips and Sun Records. Sam Phillips owned Sun Records, the famous record company and recording studio in Memphis, Tennessee. Some say Sun Records and that studio was the birth of rock n roll.
Under contract at Sun were Elvis, Roy Orbison, Johnny Cash, Carl Perkins, Jerry Lee Lewis and Charlie Rich just to name a few. Sam Phillips was vital in launching their careers. Sam had signed Elvis Presley in 1954 and knew he had a big talent on his hands but wasn’t sure what to do with him at first.
They recorded five singles, double sides and they were marginal hits. But there was something so strong about Elvis, and Sam started to market him and it started to pay off.
Sam's signing of every up-and-coming star to his roster made him constantly short of cash. In November of 1955, with Elvis having a year left on his contract, and Roy Orbison, Jerry Lee Lewis and Johnny Cash needing marketing seed money, Sam Phillips sold Elvis’s contract for $35,000. $35,000 in 1955 is the equivalent of $330,000 today.
The happy buyer was RCA records, which paid $35,000 to Sam Phillips and an extra $5,000 went to Elvis’s manager Colonel Tom Parker who would receive 25% – 50% of every dime Elvis would make. Sam Phillips also used the money from the Elvis contract sale to invest in a small hotel chain called Holiday Inn. He made millions as one of its first investors.
In 1973 RCA would pay Elvis and Colonel Tom $5,400,000 just for Elvis’s back catalog. That equates to over $35,000,000 in today’s money. Not a bad deal for RCA or Colonel Tom.
I had the pleasure of getting a tour of Sun Studios, which was very tiny but powerful when you think of the major talent that walked through those doors. Sam Phillips was rightfully inducted into the inaugural group of The Rock and Roll Hall of Fame. His footprint in rock and roll will live on.