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By Gamal Hennessy
Late last week a new chairman was selected to head the New York State Liquor Authority. The new appointment comes at a time when the agency is facing scandals and being criticism both inside and outside of government. Can the new Chairman turn the agency around or should the SLA be abolished altogether?
The State Liquor Authority regulates who gets to sell liquor in within the state. Every legal operator needs to obtain a license from the SLA before they can sell liquor to the public. However, many of the laws regulating liquor haven’t been changed since the 1920’s when Prohibition was part of the fabric of American society. To make matters worse, there is a severe backlog of pending applications. Operators waiting for a liquor license can wait up to 11 months to have their application processed, which means that they can lose money for most of they year waiting for a response from this agency.
The problems surrounding the SLA evolved into a scandal. Several individuals working in the New York Office of the SLA were charged with taking bribes to expedite certain applications. The fallout from this investigation led to Governor Paterson naming Dennis Rosen, a former New York State District Attorney, to head the SLA.
Mr. Rosen’s new job will not have a long honeymoon period. During his confirmation hearing, several state senators complained that the licensing process takes too long and hurts the state’s economy. One senator suggested that the SLA can’t be fixed and might need to be abolished. At the same time, Governor Paterson has signed an executive order calling for several agencies to review and modify “antiquated and burdensome regulations on businesses”. The SLA was one of the agencies named in that executive order. It appears that Mr. Rosen will be called upon to modify the Prohibition Era laws that govern the SLA and clear the backlog of applications or the whole agency might go down with him.
It is unclear at this stage how much change Mr. Rosen can bring to the SLA. It is a step in the right direction to give the new chairman a mandate to assist operators instead of hindering them. It is a step in the right direction to recognize that the Beverage Control Law needs to be brought into the 21st century. But, Governor Paterson is facing political struggles of his own and anti-nightlife factions haven’t openly commented to Rosen on their position. As members of the nightlife community we have both the ability and the right to support change in the SLA that matches the interests and needs of our culture.
Have fun.
Gamal
By Gamal Hennessy
Last night I described the size and scope of nightlife venues and what they do to directly stimulate the economy. Today we’ll look at the other side of the equation and look at the economic activity of patrons in New York clubs.
Patron Population
All the venues and operators are useless without someone to actually serve. The 2004 Impact Study concluded that the attendance in New York clubs is more than 65,000,000 entries per year. Keep in mind that ‘entries’ is not a direct measure of the number of people who patronize nightlife on an annual basis, since club hopping and bar crawling could take one person to several venues in a night. A tourist might hit a club on her vacation in New York. A nightlife native might visit 50 or 60 venues in a year. Although total entries do not translate directly into 65,000,000 patrons, it is more than three times the amount of attendance at all 8 New York sports teams combined. 64% of nightlife patrons live within the five boroughs with each New York native visiting an average of 2.14 clubs per night out. The other 36% of all nightlife patrons came into the city from out of town and they visit an average of 2 venues per stay.
Cash Flow
Pre-Club Activity: Patrons don’t just magically appear on the dance floor at night. There are many activities that they engage in and spend money on before the night begins. The Study found that each native spent an average of $67 per person on these ‘pre-club’ activities including purchasing clothing, dining out and other activities. In addition, 82% of patrons used some form of transportation to get to the venue, for another $15 per person. So in total, each New York resident spent about $80 before she even walks inside the club. Tourist spending at non nightlife venues was even higher than resident spending. 86% of tourists people engaged in some other activity when they went to a club including dinner shopping, but also including hotels, theaters and sightseeing for an average of $90 per person. The out of town group also spent an average of $110 to get to and from the city and the venues they decided to visit, bringing their per person spending total to almost $200.
Liquor Purchases: The Study and the Zagat guide don’t estimate how much patrons spend when they are actually in a venue, but we can develop an educated guess. In our estimate, we’re going to assume that a person goes into a bar or club and buys four drinks; two for himself and two for the person he is with. I’m assuming a social unit of two, even though larger groups are just as common in clubs. I’m also assuming basic manners here, which means people not going Dutch. This might be overly optimistic in New York City, but in my experience New Yorkers can be very generous with alcohol, especially if they’ve already had a drink or two.
To keep things simple, I’m not including cover fees, coat check fees or bottle service, which would raise the numbers exponentially Let’s say each drink is $10. This is an average between the $5 beer and the $15 martini. That means in every club this guy goes into, our theoretical patron spends a total of $40. Let’s project that out to the total group. If there are 65,000,000 entries per year and only half of them pay for drinks then that’s 32,500,000 “drink entries” per year. If each drink entry is worth $40, then the estimated spending by nightlife patrons in clubs is 1.3 billion dollars.
Effect on the City
The amount of jobs, patronage and spending in nightlife might seem abstract until you put it in context. To place the numbers in perspective, we can look at the local film industry. According to the Mayor’s Office for Film, Theater and Broadcasting, local TV and movie production generates $5 billion dollars in economic activity for the city. In comparison, nightlife generates twice the revenue. The film industry has a government office to support and promote it. Nightlife has no such office despite repeated calls from operators to create it. If and when the city puts its full support behind the nightlife industry the benefit to the city could rise exponentially.
Have fun.
Gamal
By Gamal Hennessy
There is a movement building to transform millions of nightlife patrons into a political force. As organizations like the Nightlife Preservation Community begin to gain momentum, it makes sense to look at what nightlife brings to the New York economy in hard numbers. When you look at the number of jobs, the number of patrons, the amounts the clubs spend and the amounts the patrons spend you begin to see how vital nightlife is to the financial health of the city.
Where the numbers come from
The New York Nightlife Association (NYNA) is an organization that represents the nightlife industry in New York. The NYNA commissioned a study in 1998 and again in 2004 called “The $9 Billion Dollar Impact of the Nightlife Industry on New York City”. Two weeks ago, Zagat released its 2009-2010 New York nightlife Guide with an updated analysis of the club industry. The numbers in this article are based on these two studies and my own calculations. The numbers coming out of the study have been verified, but since I can hardly add, my calculations are suspect at best.
Venues and Operators
According to Zagat, New York City currently has more than 1,300 nightlife venues, including 100 new venues added in the past year. This finding is supported by our own Trends Report that has continued to track new venues opening almost every week in spite of the economy. While there is no mention of how many venues were lost in 2008, the number of new venues is remarkable considering the economy and the stiff competition for drinking dollars.
Each venue needs several different people on hand to service and entertain customers on a nightly basis. The employees included management, security, bartenders, bar backs, dancers, waitresses, sound and light technicians and food service people such as cooks and chefs. It did not cover people who worked in the club, but were not direct employees of the venue, like musicians, DJ’s and promoters. According to the Impact Study, each bar has an average of 17 people on staff and each nightclub having approximately 38 people working there for an average of 27 operators per venue. That means that the total number of operators currently hovers around 35,000 people. The secondary group of natives who work in the club but do not work for the club is also considerable. Based on the study, nightlife generates 8,600 more local jobs as a direct result of its activities. This means that nightlife employs almost 44,000 people locally.
Spending by Operators
Wages: There are three major costs that operators pay for to keep their businesses running; wages, operational costs and taxes. Employees on the payroll of venues earn approximately $531,000,000 in wages and salaries every year. Freelance operators pull in more than $320,000,000 dollars per year. I can tell you from personal experience that the distribution of these funds varies wildly. If an unknown DJ spins at a club, she might get free drinks. If I DJ at a club, I might get $250 for a night. If a superstar DJ spins for a night, he could get several thousand dollars. While the distribution of these funds fluctuates there is still more than $850,000,000 in wages being generated by this industry, with a majority of those funds getting pumped back into the local economy.
Operational Costs: A bar or club has to purchase a significant amount of goods and services in order to offer its service to the public. While liquor and food are obvious examples, venues also have to purchase capital improvements to their spaces, furniture, cleaning and sanitation, electricity, climate control, accounting, legal advice, advertising, marketing, permits, music licensing fees and financial services. According to the Impact Study, nightlife spends more than $755,000 million dollars worth of goods and services in the city every year.
Taxes: Nightlife venues have to pay business taxes, sales and use taxes and in certain cases real estate taxes to stay in operation. The employees have to pay income taxes on the wages that they have earned (although I believe some payments are made on a cash basis to avoid taxation). The Impact Study estimates that nightlife pays the almost $104,000,000 million dollars a year in taxes to New York City and another $46,000,000 million dollars to New York State.
Part II of this study will be available tomorrow…
Have fun.
Gamal
By Gamal Hennessy
On February 25, 2006, Imette St. Gullien left the Falls Bar with Darryl Littlejohn. Two days later her body was found. She had been beaten, raped, murdered and dumped on the side of a road in Brooklyn. Her killer was convicted late last week, but the shockwaves from her death are still being felt in the industry. The creation of the CEI and the passage of Imette’s Law are directly tied to Ms. St. Guillen’s death and have permanently altered the nightlife landscape in New York.
The Sean Bell Connection
The Club Enforcement Initiative (CEI) was set up by the New York City Police Department shortly after the Ms. St. Gullien was killed. Fourteen officers were recruited out of the vice and narcotics squads and sent into clubs undercover where they would investigate drug sales, prostitution and other alleged crimes. The officers were allowed a two drink minimum to help them blend into the venue and they would take deliberate steps not to reveal their identity once they were in the club.
Unfortunately, the police of the CEI were themselves accused of nightlife violence shortly after the unit was created. In November of 2006, Sean Bell and his friends left a strip club called Club Kalua in Queens after his bachelor party. Believing Mr. Bell to be armed and the suspect of a crime, the CEI proceeded to follow Bell’s car. Police reports indicate that after the car hit one of the officers and slammed into an unmarked police van, members of the CEI fired 50 rounds into Sean Bell’s car, killing him and wounding two of his friends. It was later discovered that Bell was not armed and was not guilty of any crime. This incident touched off heated debate within the city about police brutality and racism within the department.
The Best Practices Connection
On the other side of the coin, the murder of Imette also led to increased cooperation between operators and the NYPD. In 2007 a Nightlife Summit was held to discuss the issue of crime and violence within nightlife. City Council Speaker Christine Quinn organized the summit that brought together Police Commissioner Ray Kelly, David Rabin, the current president of New York Nightlife Association and other various club owners.
The result of that summit was the 58 measures of the Nightlife Best Practices which were supposed give club owners incentive to call the police if trouble occurs. In theory, the call would not raise the specter of disorderly premises citations that interfere with liquor licenses and the ability to stay open. Shortly after the summit, the New York State Assembly’s passed Imette’s Law which required video surveillance in clubs and stronger background checks for security staff
Unfortunately, not every measure discussed during the summit translated into policy. The operators at the Summit also called for finding ways to get more cops to patrol outside clubs and bars, increasing accountablility for teens that use fake IDs, targetting the makers and sellers of fake IDs, raising the admittance age for venues from 16 to 18 or 21, and fostering a better relationship among club owners, the NYPD and the SLA. Unfortunately, these measures have yet to be been implemented. Even though they could have improved safety from all types of crime and violence these recommendations were pushed aside for a quick fix at the operator’s expense. A chance to support nightlife was rejected for a one sided demand for operators to assist a police investigation after a crime as taken place.
A camera can record who goes into a club, who leaves, when they leave and who they leave with. If a person like Ms. St. Guillen leaves with a murder like Mr. Littlejohn, then the homicide division will be able to look at the tapes and compare them to criminal profiles once the body turns up bound and asphyxiated. But if there were police patrolling the club areas, criminals might decide to not commit their crimes at that point. If there were Paid Detail officers standing outside of The Falls then perhaps Ms. St. Guillen would have had other options on how to get home instead of walking away with someone she never met. Maybe nothing would have changed, but even the likelihood that nightlife could be safer should be enough of an incentive to take up the Summit’s recommendations.
Littlejohn has been convicted of murder, the lawsuits against the operators of the club are still pending and operators and patrons socialize under the new guidelines. Although violent death is extremely rare in New York nightlife, the steps left on the table during the Nightlife Summit could make nightlife even safer. Hopefully more political action on the nightlife issue will lead to more progress in the wake of Ms. St. Guillen’s death.
Gamal
By Gamal Hennessy
Hidden away from the major media outlets, a struggle is brewing over the nightlife industry in New York. The fight revolves around the laws that govern bars and the way nightlife is perceived. The latest battle in this conflict concerns the Beverage Control Law and how it is interpreted. Anti nightlife groups are planning to change current SLA law to serve their own interests and if their influence isn’t counterbalanced nightlife will suffer.
The current law requires a public hearing for any potential liquor license opening up within 500 feet of two other licenses. If you consider how dense New York is, you’ll quickly realize that almost every new venue requires a 500 foot hearing. Residents who oppose nightlife venues in general often use the 500 foot rule to protest the opening of new venues.
A judge in a recent court case involving Hudson Terrace held that a 500 foot hearing is only necessary for establishments of the same type, not for any liquor license. For example if a bar wants to open up within 500 feet of three other bars, then a hearing is required. But if a bar wants to open up within 500 feet of three clubs, or two clubs and a restaurant, or a club a restaurant and a cabaret, then no hearing is required.
Anti-nightlife elements within the city don’t plan to lose their main weapon without a fight. Daniel Squadron, a new State Senator who turned his back on nightlife before he was even elected, plans to re-write the law to tighten the restrictions and circumvent the judges ruling. He claims that “the decision undermines the spirit of the law”, so the law needs to be fixed.
There are at least three unspoken concepts that are flawed when it comes to the way anti nightlife elements deal with the 500 foot hearing process. First, they assume that more venues are automatically a problem. However, it is just as likely that more venues could reduce crowding and increase revenue for the city and the state. Second, there is an assumption that the community board is the best forum for making decisions about additional nightlife venues. But that body does not and cannot take in to account the cultural and financial impact of the venue on the city. Third, that the BCL needs to be changed to inhibit and restrict nightlife growth when in fact much of the law dates back to Prohibition and needs to be revised not to inhibit nightlife but to bring the law in line with the realities and needs of nightlife in the 21st century.
The BCL does need to be revised and the 500 foot rule needs to be examined but pro-nightlife and anti-nightlife groups need to weigh in on the subject. People concerned with the character of the individual neighborhoods and the viability of the city overall need to be heard. Hopefully organizations like the NYNA and the NPC will get involved with this issue and prevent further erosion of nightlife in New York.
Have fun.
Gamal
By
Gamal Hennessy
Unless you are having a heated political discussion over beers, nightlife and politics don’t usually mix. Think about it, what does politics have to do with grabbing a drink with your friends, chatting up a girl for her phone number and dancing like no one is watching? Why not sit back, have a good time, and leave politics for the politicians?
That isn’t a good idea because if we don’t see nightlife as a political issue, we don’t have a voice. Various groups including community boards, law enforcement agencies, and real estate developers weigh in on what they want in relation to nightlife. The only major group that does not have a seat at the table to push its agenda is us. Patrons do not have an organization that directly represents their needs or even defines what those needs are.
A group of nightlife advocates are taking steps to improve this situation by creating the Nightlife Preservation Committee (NPC). Utilizing their ability to reach voters, their substantial connections in media and entertainment and the financial strength of their industry, the NPC plans to be a forum for nightlife that has not been seen in local politics before.
In the short term, the NPC plans to establish political influence in the New York City primaries by reaching out to almost 500,000 club goers who are also registered voters. That voting block could make or break the career of an aspiring politician, since local primaries are often decided by only a few thousand votes. At the same time, the NPC want to act as a bridge, connecting nightlife patrons to the local community, law enforcement, health agencies and other groups that have not seen eye to eye in the past. In the long term the NPC plans to represent the interests of the nightlife community as the issues and concerns about nightlife evolve.
The members of the NPC were kind enough to let me sit down with them as they planned their inaugural event, which is scheduled for June 22nd at M2. I met with Ariel Palitz (Sutra), Steven Lewis (Good Night Mr. Lewis), David Rabin (the New York Nightlife Association), Paul Seres (Sol), Morgan McLean (Rebel) and Paul Insalaco (BF9 Media). I posed several questions to the group to get a better idea of how they planned to connect nightlife and politics.
NYN: What are the long term goals of the NPC?
David Rabin: “In the broadest sense, we want to have an impact on state and local politics as they relate to the nightlife industry.”
Steven Lewis: “We want to revive the concept that New York is the City That Never Sleeps in the same way that Vegas embraced the concept of What Happens in Vegas Stays in Vegas. We want to spotlight the link between the prosperity of the city and the prosperity of our industry in the same way that the two concepts are connected in Vegas and Miami.”
Are you planning to use the NPC as a pro-nightlife organization to counter anti-nightlife groups within NYC?
Ariel Palitz: “We aren’t trying to polarize the discussion. We don’t want one group of people to automatically vote against any new club. We also don’t want anyone to fight for every venue as a knee jerk reaction. Our goal is to have each venue and each issue judged on its own merits.”
Paul Seres: We are trying to create a more balanced discussion, rather than increase the level of conflict between nightlife and the community. Most of us serve on community boards, so we know there are a lot of things that need to be considered with each club and each operator.
What public relations challenges does the NPC face?
Morgan McLean: “The media paints the entire industry with one broad brush. If one of us is accused of something, then all of us are assumed to be guilty, but an entire industry should not be defined by a few bad operators.”
Rabin: “When someone gets robbed inside a bodega, the cops don’t make the bodega liable. If a fight breaks out in a pizzeria and someone gets hurt, the pizzeria isn’t blamed. In the current environment if those same incidents happen in a club, then it’s the club’s fault. It’s the entire industry’s fault.”
Lewis: “We need to change the way we are perceived. Nightlife brings jobs and taxes and tourism and life to the city. We generate twice the revenue of film and television in New York. Our annual attendance is more than every major sports team and Broadway combined. We want to work with the city and the community boards to continue to do that and more.”
Morgan: “We can’t build our individual businesses or enhance nightlife in general because we spend so much time trying to defend and justify our existence.”
How is the NPC different from NYNA? Both groups are run by operators. Both groups support and advocate local nightlife? Why is a separate group necessary?Seres: The NYNA is a trade association of nightlife owners. The NPC is a conduit of information for nightlife patrons. It is designed to mobilize people who are interested in the political and policy aspects of nightlife in a manner that is similar to a political action committee.
The NPC will officially kick off on June 22nd. What happens on June 23rd?
Seres: We plan to launch a website on the same day as the initial event and use that as a way to get information out to our people on an ongoing basis. We’d also like to have a series of meetings and events where candidates running for office can meet patrons who are interested in protecting nightlife. Many people never get to meet or talk to the people that they vote for. The NPC will give them a platform to express how important nightlife is to their entire life.
Have fun.
Gamal
By Gamal Hennessy
In recent months, the New York State Liquor Authority has gone through turmoil. Political pressure from the outside and illegal activity on the inside has left the agency vulnerable to criticism. While Governor Paterson tries to clean house by appointing a new Chairman, the question is can this new appointee reshape the agency into something more relevant and beneficial to New York nightlife.
The SLA has faced several problems under the leadership of its former Chairman, Daniel Boyle. Carl Andrews, an aide to Governor Paterson, was forced to resign after he allegedly tried to force Boyle to renew the liquor license for Cipriani when the iconic restaurateur’s license was in trouble last year. Just last month, the New York offices of the SLA were raided as part of a corruption investigation. Other SLA officials have recently resigned under a cloud. It was only a matter of time before Boyle had to pay a political price for all of this. His appointment was not renewed after the term expired in February.
Boyle’s successor is Dennis Rosen, a graduate of Harvard Law School who has been with the NYS District Attorney’s office since 1982. During his tenure, Rosen has prosecuted civil and legal cases against attorneys, stockbrokers, insurance agents, telemarketers and construction contractors. His most relevant investigation involved going after infractions regarding the SLA. After his nomination is confirmed, the agency he inspected will be the one he has to lead.
The agency that Mr. Rosen inherits has a number of problems that need to be addressed. It was the agency’s chronic lack of inspectors that created the circumstances for corruption to occur in the first place. The overall number of licenses granted is down, limiting the industry’s ability to be a viable economic force in the state. There is a backlog of about 2,400 outstanding license applications due to both the lack of inspectors and the conservative stance of Mr. Boyle. On top of all of that, the SLA is governed by a set of laws that haven’t been changed in any meaningful way since Prohibition.
It is an open question whether Mr. Rosen will be willing or able to bring in more inspectors, clear the backlog, and revise the laws to bring them in line with the economic and social realities of the 21st century while at the same time dealing with state politics, local government and community boards. The nightlife advocates I spoke to last week didn’t have any preconceived opinion of Mr. Rosen, but they are hoping for more balanced treatment than the previous administration.
Have fun.
Gamal
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