It's been a troubled year for Magic Island, the private Newport Beach club devoted to legerdemain. A reputation scarred by lengthy bankruptcy hearings, charges that mismanagement left the once-stylish establishment "a sorry mess" and the latest blow, a fire that swept through the kitchen this week, have confronted the new owners in their efforts to revitalize the club.

The club's problems started long before Monday night's blaze. After opening to a swirl of success in 1981, Magic Island reportedly began to slip in quality, and interest among its members waned. The owners, claiming that making a $4.1-million debt disappear was one trick they couldn't perform, filed for bankruptcy under Chapter 11 on June 25, 1985.

Hoping to make the 4-year-old club solvent, the court began accepting bids from prospective buyers. Magic Island, located in Lido Marina Village, finally was sold last March to a Santa Ana businessman and a Piedmont surgeon, who hired a public relations firm to help resurrect the club's image.

The fire, which Newport Beach fire officials say started in or near the kitchen and caused $150,000 in sooty damage to the first floor, has clouded but not ruined those plans, according to the owners. Magic Island will be closed for six to eight weeks as the damage is repaired and renovations continue, said Terry Giles, chairman of Grand Illusion Enterprises Inc., which owns the club. Giles controls 74% of the company's stock.

Thomas Sciarrino, Magic Island's executive vice president, said: "This (the fire) is just another obstacle to overcome, one of many. We'll be ready to go by the end of July."

He added that the club is awaiting official word on the cause of the blaze. City Fire Inspector Jim Upton said arson is being investigated. The new management may have made enemies, Giles said, when it dismissed some employees during the ongoing changes.

A former criminal attorney turned entrepreneur, Giles knows it will take more than positive thinking or sleight-of-hand to move forward. The comeback starts with money. Magic Island's insurance should pay for the fire damage, but the improvements will be financed by the owners and loans they secured, he said.

Giles joined with Dr. Robert Albo, who controls the remaining 26% of Grand Illusion Enterprises' stock, to buy the club for $1.25 million. He said the partnership so far has spent more than $1 million for improvements ranging from painting the club to remodeling the kitchen.

The renovations are not frills but essential steps in the club's recovery, said Sciarrino.

The only administrator retained from the old order, Sciarrino joined Magic Island seven months before the bankruptcy petition was filed and vividly recalls its sorry condition at the time.

"It was simply in a terrible state of disrepair, a sorry mess," he said. "There had been four years when almost nothing was done to improve it. The quality went downhill in some dramatic ways."

There were problems in almost all of the two-story club's eight showrooms, he said. Carpets and drapes were dirty; the myriad brass fixtures throughout the club's Egyptian setting were tarnished, and the two major attractions, a seance room and trick elevator (both equipped with illusion-creating gadgets) routinely broke down. Even the restaurant, once ballyhooed as among Newport Beach's best, became mediocre, Sciarrino said.

"You should have seen it; even the plants were dying," lamented club manager Tony Maloof.

The blaze has added a new carpet and revamped kitchen to the list of needs, said Sciarrino.

Besides the general face lift, the process for granting memberships needed reworking, Giles said. Magic Island at one time boasted 5,500 members, but the figure was deceiving, he said. Only about 1,000 actually paid dues, the club's primary income.

"We had about 4,500 people who had honorary memberships that did not cost them a thing," he said. "Many of them were celebrities; others were just people who had been mailed honorary cards. The problem was that no money came from those members."

The new owners promptly trimmed all honorary members from the rolls. Giles said Magic Island now has "a good strong base" of 1,500 paying members and hopes to reach a limit of 2,000 to 2,500 in the coming months.

All members pay $750 to join, $200 a year in dues and $85 a month in credits that can be accrued and used to buy drinks or food. Sciarrino said the monthly dues will be suspended while the club is closed.

He sketched the typical member as an upper-class professional who makes at least $75,000 a year, visits the club once every three months and usually brings family, friends or business associates along. While there is no minimum income requirement to join, said Giles, Magic Island does not try to attract patrons who might wince at the charges.

Glenn Hicks, Magic Island's president and former head of Disneyland's private Club 33, whose main job is reorganizing Magic Island's restaurant, said the decision to keep the establishment private was based more on good business sense than elitism.

"We couldn't get people to come regularly if we opened it to everyone; most people would just think it was a restaurant, and I doubt we'd make enough money," he said.

The club's location also works against making it public, Hicks said, because no main streets pass it. "People don't see it, they don't come in," he said.

While trying to attract new clientele, Giles concedes that it will be a challenge keeping members happy.

"I think it is very true that the old Magic Island had trouble holding their interest, mainly because it failed to improve the environment and acts," he said. "What we have to do is learn from the mistakes of the past."

The first priority is an image makeover, he said. To achieve this, the owners have hired a public relations and advertising firm, and an "aggressive and far-reaching" advertising campaign is under way. In addition, a Magic Island newsletter, Hieroglyphics, will detail the club's progress and should be mailed to members by the end of June, added Sciarrino.

Giles emphasized that the future hinges on whether members feel secure about the club's financial stability. "Once they know we aren't going to go under again, I think they may be open to what we're doing," he said.

The most optimistic scenario includes the appearance of seasoned magicians, including stars like Doug Henning and David Copperfield, Giles said. But he admits that before the club can attract the best, it must adopt a better attitude toward performers.

"We know that the old owners were accused of not paying their magicians and that they (performers) are wary of us," he said. "We're trying to woo them back by making some real promises of (on-time payment and) generally better treatment."

The club also has forged a reciprocal agreement with Magic Castle, the well-known private Hollywood club that also specializes in the magical arts. Under the agreement, their members can visit either club, Giles said.

Bill Larsen, the president of Magic Castle, said the arrangement has helped reverse the ill feelings that developed when the clubs began competing for customers in 1981. He noted that Magic Island's previous owners often disparaged the Magic Castle as old-fashioned, and his club, in turn, blamed Magic Island for stealing its concept.

"It got to be a little hostile when they said that if we were the Cadillac, they were the Rolls-Royce," remembered Larsen. "We're giving them the benefit of the doubt now. We honestly hope they make it. There's room enough for both of us."

Albo, a longtime Magic Castle member and amateur magician, has helped to temper the feud through his involvement at both clubs, Larsen added.

But in the end, what Magic Castle thinks of its southern neighbor has little to do with Magic Island's future, Giles acknowledged.

"We have to prove ourselves on every level, from entertainment to our lasting stability," he said. "That's our challenge; it's what we have to do to make it out here."

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