Losses Force Playboy Out of Club Business : Company-Owned Facilities in L.A., New York, Chicago to Be Closed

After a lingering economic illness, the Playboy Club era in the biggest U.S. cities--including Los Angeles--was pronounced dead Thursday by founder Hugh Hefner’s corporate empire.

The Los Angeles Playboy Club in Century City will be shuttered as of June 30, along with Playboy’s two other remaining owned-and-operated clubs in New York and Chicago. The Los Angeles club started in 1965 on the Sunset Strip and later moved to the present site.

The first of the Playboy Clubs, in Chicago, was created Feb. 28, 1960, with almost instant success. It and later clubs around the country and abroad featured waitresses called Bunnies who were dressed scantily with cottontails and rabbit ears.

Steinem Chronicled Experience

But 1986 is light years away from those times. The change is illustrated by the career of author Gloria Steinem, who has said her experience as a Playboy bunny in 1963 while on a journalism assignment helped turn her into a leader of the feminist movement. Her caustic assessment of the treatment of women at the clubs was made into a television movie last year.

Christie Hefner, president and second-in-command to her father at Chicago-based Playboy Enterprises, said Thursday that the company made the decision after assessing “the likelihood of reversing significant, continued operating losses” at the three big-city clubs.

The company at the same time reported a $3.2-million net loss in the third quarter, largely because of a $3.5-million operating loss by the three clubs. In the same period last year, the firm’s net loss was $346,000. Third-quarter revenue of $42.8 million was down slightly from $45 million a year earlier.

In the earnings announcement, Christie Hefner recounted the unsuccessful attempt of the last three years to revamp the clubs’ image.

Ironically, it was just last November that the New York club was reborn as Playboy’s Empire Club, then intended as a prototype for Los Angeles and Chicago.

However, Christie Hefner said the company still intends to introduce its program of franchised Playboy Clubs in smaller cities, adding that some of “the new concepts to which customer reaction was very positive” at the New York facility will be included.

In another indication of the changed social climate, she said these popular changes had included “male waiters called Rabbits, new costuming for the Bunnies and a return to an emphasis on live entertainment.” The company has franchised clubs in Des Moines, Iowa; Lansing, Mich.; Omaha, and four others in Japan.

The best financial times of the Playboy Club division came when it also had gambling revenue from casinos in London and later in Atlantic City, N.J.

Ruled Unfit for Casino License

But tough times began in October, 1981, when British authorities revoked the casino licenses there after hearing evidence of illegalities in operating the Playboy Club on Park Lane and the Clermont Club on Berkeley Square.

That, in turn, had a strong effect in the New Jersey Casino Control Commission’s finding four years ago that Playboy Chairman Hugh Hefner was unfit to receive a license to operate the club’s casino in Atlantic City. The company fought the decision but later sold its holding there to its partner, Elsinore Corp.

In a continuation of Playboy’s string of bad luck, the casino was forced into bankruptcy last fall, and Playboy had to write off nearly $40 million on the Elsinore debt that it held.