Rhythm Cafe Has a Chance for New Life

Two clubs, one operator.

That is one possible outcome of the recently concluded war between the Rhythm Cafe in Santa Ana and the Coach House in San Juan Capistrano.

The war didn’t last long. The Coach House, Orange County’s dominant concert club over the past seven years, remains in control of the market after the upstart Rhythm Cafe’s closing Sunday night.

Rhythm Cafe opened on Halloween with high hopes and ambitious plans of expanding into a national concert chain, but the trick was up after just 135 days.

Last Tuesday, Curt Olson, the Newport Beach developer who bankrolled the operation, told the staff he was shutting it down.

“He said: ‘It’s not living up to our expectations,’ ” said Paul Fabre, the cafe’s technical director, who was there when Olson announced he was pulling the plug.

The Coach House’s owner, Gary Folgner, said Saturday that he may now try to take over the 550-capacity Rhythm Cafe and run it in tandem with the Coach House, which seats about 500 people.

“There’s a possibility,” Folgner said. “I have talked to Olson regarding that.”

Folgner isn’t the only one interested. Michael Feder, the Rhythm Cafe partner who oversaw day-to-day operations at the uncommonly comfortable and well-appointed venue, said he is trying to assemble new investors to strike a deal with Olson and revive the club.

Also, Folgner said, Olson told him there is a proposal to put the Rhythm Cafe building, at 3503 S. Harbor Blvd., to other uses that have nothing to do with entertainment.

Olson, whose Nexus Development builds shopping centers and other commercial projects, could not be reached for comment.

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Folgner said if he were to operate the Rhythm Cafe, “I would find that niche in the marketplace that they missed. There’s a definite niche in the market that needs to be worked.” He declined to elaborate on how the two clubs would be run together, except to say that only one or two acts in a typical month would be strong enough to play both.

A Folgner takeover or a Feder rescue of the Rhythm Cafe could preserve the chief benefit it has brought to Orange County music fans: expanded concert options. And putting both operations under one management might prove easier on fans’ wallets; both sides have said bidding wars for talent were driving up ticket prices for some shows, duplicating in miniature the expensive Orange County amphitheater wars between Irvine Meadows and Pacific Amphitheatre.

Folgner’s ability to move quickly toward an ownership stake in the Rhythm Cafe, however, could be complicated by his current legal situation. In January, he filed for personal bankruptcy protection under Chapter 11. Folgner has said the bankruptcy isn’t related to operations at the successful Coach House and its sister club, the Ventura Theatre, but to losses incurred in his ill-fated attempt in 1990-91 to turn the Raymond Theatre in Pasadena into a concert hall.

“I don’t want to say anything until I get answers from my attorney,” he said when asked whether the bankruptcy might affect his ability to maneuver in possible dealing for the Rhythm Cafe.

But Folgner already has made one expansionist move in the concert business since his bankruptcy filing: He recently took over management (though not ownership) of Sun Studios, a new, 350-seat venue in Palm Springs that opened March 4 and is offering shows by some of the same acts that play the Coach House.

Feder, meanwhile, said he is trying to put together a new deal that might satisfy Olson. The developer holds a controlling interest in the Rhythm Cafe--apparently 100% share, or something approaching it, in what Feder would describe only as “a fairly complicated (partnership) agreement.” Feder says Olson acted unilaterally in closing the Rhythm Cafe to “cut his losses.”

Feder said he is confident that he can raise $500,000, an amount he said would pay off the club’s existing debts and give the Rhythm Cafe a sufficient stake of cash to resume booking and presenting shows.

The options, he said, are to “buy Curt out completely, or (form) an association where his money stays in as equity and he’s paid back on his investment.”

Feder said that the Rhythm Cafe was his own brainchild, and that he brought Olson in as its financial backer. A third partner, Rich Meaney, oversaw the club’s booking.

The problem, as Feder sees it, is that Olson didn’t stick with the operating strategy Feder had drawn up.

“The original deal was (to open) four clubs in a certain period of time--four clubs for $3 million,” Feder said. The plan also called for national expansion.

Having the four clubs initially would have given the Rhythm Cafe a chance to compete with the Coach House, whose power to reel in popular acts rests in part on booker Ken Phebus’ ability to offer one-stop shopping to performers seeking to route club tours through Southern California. Besides Folgner’s Coach House and Ventura Theatre, Phebus also works as booker for the Strand in Redondo Beach, as well as the new Palm Springs venue.

Two Rhythm Cafes opened at the start--the Santa Ana club and a San Diego venue that lacked the flagship’s swank and its dinner-club setup. Feder said that a Las Vegas branch was to have opened shortly after the first two, but Olson “decided to back out of that for whatever reasons.”

In February, the Rhythm Cafe in San Diego closed: Olson “felt if he was losing money there, he should close it to keep (the Santa Ana) one going.”

“I think abandoning the plan of a network of clubs came back to roost,” Feder added. “Rich’s ability to book was undermined. He had no ammo left.”

Folgner said any club-level act that wanted to play in both Ventura and Orange counties would have to play the Coach House or else lose the date in Ventura, where Folgner’s venue is dominant.

“I’m not Joe Nice Guy; not that nice, anyway,” he said of his hard-line competitive stance.

Feder is now trying to line up investors willing to implement his original plan of a network of clubs that either have the same ownership or form a coalition to enhance their booking clout.

“I believe (the Rhythm Cafe) should be open and here for a long time, and I’m going to do all I can to see that it is,” he said. “It’s been a labor of love, and I don’t think it’s time to give up.”

Feder readily concedes that the Rhythm Cafe made missteps besides its failure to carry out the expansion plan.

“Being fledgling owners, none of us had a lot of history in the club business. But we made huge progress over the four months, so something was going right. I had a lot of ideas,” he said, including starting regular Tuesday and Thursday night dance parties. “But I didn’t know I wouldn’t have the time to get to them.”

Feder said the Rhythm Cafe lost money from November through January, but that the performance improved each month until it broke even in February (he would not disclose any figures). But by then, the San Diego Cafe was closed, and Orange County bookings had dwindled. “It has to be worked out where we can do a minimum of 18 to 20 shows a month,” Feder said. “The first three months it was right there, then it dropped off to 12. March was a dead month, and April wasn’t looking much better.”

Ironically, Phebus, the Coach House booker who proved to be the Rhythm Cafe’s nemesis, almost became one of its key assets.

Feder said he contacted Phebus early in the two-year development process for the Rhythm Cafe and Phebus was closely involved in the club’s planning, but in the end, he decided to stay with Folgner.

“I remained at the Coach House for some good reasons,” Phebus said Saturday. “The most important for me is that Gary gives me control over the booking, and he gives me a free hand to do what I do best.” The Rhythm Cafe was the latest in a series of challengers that have arisen only to be knocked out by the Coach House. In chronological order, Club Postnuclear (now a dance club) in Laguna Beach, Hamptons, on the same site as the Rhythm Cafe, and Peppers Golden Bear in Huntington Beach were the previous failed contenders.

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Each new one has posed a more serious challenge than the one before. The Rhythm Cafe attracted by far the most impressive array of talent, including shows by such prestigious acts as Los Lobos, the Neville Brothers, George CarlinB. King, Foreigner, Social Distortion, Dr. John, Ronnie Wood, X, the Temptations and Johnny Cash. But it wasn’t enough, as the Coach House continued to draw the greater share of prime attractions.

“It has been proven over and over again that anybody who comes into the Orange County market is going to have to fight the Coach House,” Phebus said. “Nobody has come close to succeeding.”