Thursday, May 03, 2007

A Sense of Where We Are (and how we got there)

As we consider our options and plans for the future of Faces on Fourth Street, we felt it might be helpful to clear the air so everyone understands where we are now and how we got here.

First a cautionary note; many false rumors and myths have surfaced about Faces. Much of what the public thinks they know about us is not true. We were not evicted by the landlord. We own the building and it's contents. We have not "skipped town". The fact that we own the building and have operated it as one of the best known (infamous)nightclubs in the country for 14 years makes that rumor sound kind of silly and insulting. The owner is not wealthy, did not run off with all the money, did not bleed the bar to pay for his drug habit, his harem of boys, his swimming pool, his doll collection, or any other diversion. The owner and his family have not collected pay or money from the club in at least 4 years. They (the owner and his family) have in fact loaned money, morale support, and provided sweat equity to try to turn things around. We have not declared bankruptcy. The Bush Administration has basically eliminated that option for a small business trying to survive. We have not sold the building although if you ask any bar owner in town, they would answer the same way, everyone has a price and we would consider a sale for the right price if it meant the bar could survive.

Given a choice, we would have rather kept the club open as we worked to improve it ourselves. Unfortunately, we are faced with a perfect storm of events with some common themes that make that choice nearly impossible. The problems that have drained our cash reserves include several acts of god and several outrageous actions by government officials.

Several years ago, the abandoned building next door (now a vacant lot) collapsed onto our building, parking lot, and street. The owner of the property did not clean up the collapsed building, leaving it on our parking lot, patio, street, and roof. The resulting mess impacted our business as it looked like our building collapsed as well as rendering critical street and lot parking unusable for months. We were forced to hire lawyers to sue the owner to clean it up. The clean up was slowed by corrupt government officials (later sent to prison) who put greed and personal gain over public safety. The building was left to literally crumble around us (and on top of one of our employee's cars). We paid tens of thousands of dollars to lawyers who never reached a settlement or collected damages. Basically they were really good at sending us bills. We ended up cleaning most of the debris and brick up ourselves as well as attempting to protect our customers by securing the site with barricades and concrete barriers. Our lawyers couldn't even get the owners to secure the site or post warning signs. We were forced to drop the suit because it was bleeding our cash reserves.

We invested in a $100,000 liquor control system seven years ago. The system paid for itself in less then two years by reducing losses (through over pours of liquor). While controversial when we installed it, most large bars have similar systems, including the casinos and our neighbors, Pop's and Oz. Two years ago, our building was struck by lightning, destroying the liquor control system as well as damaging AC units,TV monitors, lighting, and sound equipment. Our insurance company refused to pay off on the claim. We were stuck with an unusable $100,000 liquor control system that we had leased. We had to pay off the lease even though the system was destroyed. We could not afford to replace the system so we were back to losing thousands of dollars a week in liquor sales while we settled and paid the lease. We were forced to pay to repair the AC units but left other equipment damaged because we could not afford to repair it. We hired a new lawyer to take this case on a contingency but nothing has been done yet.

Last year, someone climbed onto our roof from the abandoned Walgreen’s building next door. The Walgreen's building owners had failed to secure their property. The thieves gutted two of our AC units for the copper. Both units were for our cabaret. Our insurance company again refused to pay (nearly $8,000 to repair), leaving us unable replace the AC units and making it impossible to use the cabaret for 5-6 months out of the year.

Several years ago, a newly elected mayor went on TV and announced to the world that he would close all the East St. Louis bars at midnight on New Year’s Eve unless the city council gave into his demands. He tried to use the bars, one of the city's only revenue sources, as a bargaining chip with the city council. We were forced to hire a lawyer to prepare a suit against the mayor and to file a complaint with the Illinois Liquor Commission to obtain an order to keep our doors open. Our success was never reported in the news. The headlines and TV reports stating that all the bars would close, broadcast over several weeks in December resulted in our NYE business dropping in half.

Last Summer’s storm and power outage forced us to close for several days, causing us to lose thousands dollars of much needed revenue. Our power was restored in one day but the rest of East St. Louis was still without power so the mayor ordered a curfew, forcing us to stay closed. We never made that money back.

Late last Fall, the Illinois State Legislature and the Governor allowed Illinois utility companies to be deregulated, resulting in a huge windfall for Ameren and ConEd as they more then doubled their prices for both gas and electricity. To put it bluntly, the utility companies bought and paid for the legislature. No action has been taken to roll back or reduce these crippling utility rates. Our gas and electric rates have more then doubled since December. The utilities are making no effort to work with their customers (even though they testifed under oath that they would not disconnect anyone's service). Our electric bill was $2,500 to $3,000 a month last summer. We expect our electric bill to reach $7,000-$8,000 a month or an increase of over $350 to $400 a day this summer unless the legislature passes some relief.

While the legislature has basically said a big "fuck you" to small businesses being raped by the utility companies, they did manage to pass legislation reminiscent of the prohibition era. This week, both state houses passed a complete and total smoking ban in public places. Last year, Illinois allowed cities to pass their own smoking bans, while few cities actually passed the bans, small businesses in every town that passed the bans were hurt. Many were forced to close as they saw their sales drop. Now, the legislature has taken it a step further, taking away all personal choice..all rights as an individual to decide for themselves whether to support bars that ban smoking. Clearly that did not happen...the people voted by refusing to patronize bars with smoking bans so the legislature took the right to choose away. Our customers will be able to smoke in most bars in St. Louis but will be subject to arrest and fines if they smoke across the river in Illinois. We have no way of knowing how much this ban will hurt us but evidence from other cities that passed bans while their neighbors allowed smoking indicates that this will hurt.

As all these events took their toll on our finances, we began to experience a steady decline in our core business. Most events we planned did a fraction of what we expected. Nightclubs all over the country were experiencing similar drops, resulting in a steady stream of club closures. In St. Louis, the most prominent example was the closing of Velvet on Washington Avenue. It is generally agreed that this trend is in part due to the rising popularity of social networking sites. Many of our regular customers can be found on line when they used to be in nightclubs. Our community has substituted crusing on Manhunt,, and Man4SexNow to cruising at Faces. Another factor that has decimated our community is the rising addiction to crystal meth. We have lost many friends and great customers to crystal. We kept planning events, we kept booking entertainers, we kept our shows going, hopng to excite the imagination of the community again. We tried to appeal to our customers for help, sometimes almost begging long time friends to come in for events and to bring their friends. We are grateful to everyone who did. There have been times when our own entertainers and staff went unpaid as we tried to get the crowd back. In hindsite, while we appreciate their sacrifices, efforts, and their support, we regret asking them to invest their time and effort. We are still indebted both emotionally as well as financially to several of them and we hope to repay that debt before we reopen. We are grateful to and proud of all the entertainers who have helped make Faces what it is. We have seen our entertainers and DJs grow and become incredible talents.

We have made mistakes. We admit that. Our actions sometimes met the classic definition of insanity...doing the same thing over and over but expecting a different result. We sometimes tried to live up to our own reputation, delivering increasingly expensive events and entertainers while the money was clearly not coming in to pay for it. We always thought that if we delivered more then the other St. Louis gay bars did and marketed it well, our customers would notice and continue to suppport us.

Acts of god, combined with the increased popularity of Internet social networking, a less the robust Bush economy, and our community's increasing addiction to crystal meth, are the primary reasons that we are in the position we are now. Basically, we were screwed by insurance companies, bled dry by lawyers, which prevented us from being able to update the bar or market it as we had in the past. The State of Illinois stepped in, rendering double blows, failing to pass utility relief while banning smoking. Our challenge now is to listen to our customers, brainstorm, and come up with a new business model that will allow us to survive these setbacks.