Magic Castle difficulties

[undercut]

Here are some simple things that will indicate a turnaround, the way an experienced management team would do it:

-clean house (immediate)
-eliminate all expenses not needed for routine operations
(immediate)
-clean accounting for the last year, figure out what happened.
(over the next few months)
-initiate openness and transparency with the membership (now)
-begin weekly communications about this crisis, until resolved

If the MC lost $800,000+ last year, one quarter has ALREADY ELAPSED, and there are only three quarters left to fix this.

I would think that one of the toughest things is to not be fearful of informing the membership.

[Richard Kaufman]

Announcing what you think should be done immediately is not helpful to anyone.

[Dustin Stinett]

Kneejerk reactions to issues rarely succeed. Sure, sometimes they work, and the executives who make those decisions come off looking like geniuses. But again, its rare. The correct path is creating a solid plan that has steps that allow for midcourse corrections. Cleaning house, for example, only creates panic, uncertainty, and kills morale. (And its quite possible that some of those who are swept out just because they are there actually could be part of the solution versus the problem.)

As for figuring out what happened, that would be my first priority, but I wouldnt just look at last year. Id want to see what happened over the last five years. Id want to see what worked and what didnt. (Based on what I saw in the available financials, the food and beverage segment of the business is not the issue, so Id focus on club operations.)

Id review each position and its function. Then Id interview each employee to learn their views, strengths, and weaknesses. Sometimes one discovers that the right person is doing the wrong job. (Years ago there was an assistant buyer at a grocery company I worked with. He made an enormous error that cost the company a lot of money. Instead of firing him, they banished him into a job that many saw as a deep, dark hole; a place people are sent to die orhopefullyquit before they do. But instead he was given a challenge by management, and in less than a year he turned a department that was considered a necessary liability into a profit center. Its a business model that other companies emulate to this day.)

Undercut and I have had our disagreements, and I too am sorry for jumping the gun on him. But ultimately, while we might disagree on some things and how to go about others, I think weand everyonecan agree that we only care about the survival of the Magic Castle and the Academy. Ive said it before in the past: neither can exist without the other.

Dustin

[undercut]

Announcing what you think should be done immediately is not helpful to anyone.

I'm not sure I understand that, Richard?

Even though they don't post here, I am certain that at least some Board members read these forums. Having then gain some understanding of what members would like, and that members would be supportive of such things, would be likely to at least address the issues.

Somewhat clearly, there has not been any sense of urgency to fix things or change things (I mention that due to the 15 month lag in reviewing financial data). The same people who DID see this data, and thought it was just dandy, are still in place. In 45 days, the second quarter is over, without anything discernable being done, yet.

[Richard Kaufman]

Look, you can make all the prounouncements you like about what should be done. The president who led the AMA into its current financial situation is gone. The Treasurer ditto, though she still sits on the board. Having been treasurer during this period without alerting the other board members to what was happening would seem a perfectly good reason to dismiss her from the board.
But I'm not on the board, see, and neither are you. So it doesn't matter. The good people who are on the board have to negotiate all the bullsh*t from the board members who have their heads up their rectums. Change will come, but it never comes as quickly as most people would like.

[undercut]

Thanks for the thoughtful response, Dustin.

I agree that there are a number of ways to "skin the cat".

When I say "clean house", which was unclear, I mean dealing with the known issues.....and there ARE known issues. Decisively. As was done with the Treasurer position in the last meeting. Hopefully, other issues were dealt with, but that has not been disclosed.

I guess, being predominantly a numbers man, I focus on what seems to me to be an urgent situation.

In 2010, through Dec 31, the MC ran a loss of $857,884.
Also, as of that date, there was $646,686 cash.
Assuming that the "run rate" of loss has not changed (my best understanding that it has INCREASED, but lets say it is the same, I haven't seen the numbers, myself) That means that the MC will run out of cash in 9 months from Dec 31, 2010.

That would be Oct 1, 2011. However, 4 months have already passed. So that leaves 5 months, 4 really, as it is the 15th. Then they have to sell property/equip to pay bills. Even that only buys a few months, at best (but Irma will have no piano, and there will be no cash registers to collect money)

Usually, one would want to undertake an intervention, then see how it works. I'm not sure there is time for that.

I really like the idea of interviewing the employees. Let's say there are 100 (I'm guessing more). At the rate of 1/2 hour apiece, 14 a day (everyone needs a break, and lunch), that is 7 days to complete. The problem is, who does this? Presumably, the people running the Castle are not the ones you'd want, since they may be the problem, and no employee is going to finger them. The Board people all have outside lives.....plus, you need someone who actually has the skills to ask the right questions, and who the employees will talk to. A consultant? I see this as a time intensive process (and expensive).

I agree that kneejerk reactions are often fruitless, however, decisive actions in crises should not be that. As I think about it, I like the idea of a Marine Colonel involved. I don't know what he will do, but it sure won't be to sit around.

[undercut]

Look, you can make all the prounouncements you like about what should be done. The president who led the AMA into its current financial situation is gone. The Treasurer ditto, though she still sits on the board. Having been treasurer during this period without alerting the other board members to what was happening would seem a perfectly good reason to dismiss her from the board.
But I'm not on the board, see, and neither are you. So it doesn't matter. The good people who are on the board have to negotiate all the bullsh*t from the board members who have their heads up their rectums. Change will come, but it never comes as quickly as most people would like.

Well, I think the Forces for Change do need political support, to overcome the resistance to change. Time is not on their side, and as things tighten, any change will be met with increasing hostility.

For example, someone posted here about their doubt about renewing, with the uncertainty. Uncertainty is soley the result of lack of infomation. THAT is a curable problem! THAT can be cured through a transparent and open process that reveals decisiveness and SOME sort of clear plan, like the one that Dustin suggested.

Undoubtedly the Directors have been in a room all weekend, working this out with nothing else on their minds, and we'll hear all about it tomorrow.

[undercut]

Well, good news and bad:

Good, outstanding post by Elton Kelly, making the case for a standing audit committee, and by Harold K, noting that there has been an unused audit committee for years, apparently made up of finance professionals. Something that can jump into action, should the Board deem.

Bad, one of the Board members thought the problems so severe, he went out of state on vacation for the weekend with his girlfriend. Sheesh! A real sense of urgency and devotion to the Castle, eh?

[KirkG]

Undercut,

I don't know about you, but I plan and schedule vacations weeks if not months ahead of time to correlate with the schedule of my work and family. As a volunteer, I hardly think that I would drop that long standing plan to attend a board meeting.

Urgent input can be obtained via phone and fax and it is likely data needs to be collected before major decisions can be made anyway.

I don't know which member you are speaking of, but I think it is a bit melodramatic and mostly inflammatory rather than substantive.

Let's not panic and throw the baby out with the bathwater.

[houdini's ghost]

This has to do only with me, but, I mentioned my late friend, James Edwards in a post and I have been asked which James Edwards.
When I was younger, there was only one: the movie actor. Now there are athletes, a political pundit--a lot of people named James Edwards. This is the one I referred to:
http://moviemorlocks.com/2007/10/17/jam ... e-a-stand/
http://www.houdinisghost.com/jamesedwards.html
Patrick Culliton

[undercut]

-$64,000 additional dollars lost
-4months and 2 weeks unil the MC runs out of money, and can't pay it's bills.

How long before it closes? This is now measurable.

Where's the first quarter financials?

What's the hurry?

[Richard Kaufman]

Okay, undercut, I think you've made your point. Let's let the new Treasurer do his work.

[Roger M.]

Fixing something that's broken, and doing it in a responsible manner takes a bit of time.

Sitting at your computer and banging out missives, one every few hours takes nothing more than an internet connection and a computer.

undercut, perhaps in 4 months and 2 weeks you'll be able to say "I told you so" if the MC, in fact, runs out of money..........until then though, please give it at least a bit of a rest.

[Alan Bursky]

I hate when people do not tell you who they are! Hiding is for cowards.

Alan Bursky

[Richard Kaufman]

Alan, stop it. We've already gone over the business of anonymous postings and I don't want to get into it again.

[undercut]

Fixing something that's broken, and doing it in a responsible manner takes a bit of time.

Sitting at your computer and banging out missives, one every few hours takes nothing more than an internet connection and a computer.

undercut, perhaps in 4 months and 2 weeks you'll be able to say "I told you so" if the MC, in fact, runs out of money..........until then though, please give it at least a bit of a rest.

Roger, some might consider that a victory, I would consider it a terrible defeat. I don't disagree that working out a solution is complex, with probable real consequences for actual people. If you and others don't yet understand, there will need to be some MAJOR actions taken. When the Treasurer proposes those changes, there will be people who will throw hissy-fits and act like infants.

Will be people be willing to give up friday lunches, Saturday brunch, cutting out the additional venues, the magician lectures, the member discounts? I'm not advocating those things....I actually don't think they'll account for enough. But would people be willing to part with those, to save the MC?
Can you imagine the chaos of implimentation?

Roger, are you willing to stand arem-in-arm with me and say to the Board that we will support WHATEVER needs to be done?

I had a conversation with a "power that be" a week or two ago, in which they stated that the "guiding powers" would NEVER allow the Yearly awards show to go onto a break even budget. (It's probably the bigggest single loser). With that situation it is going to take a lot of cocktail napkin contracts to bail the club out.

By the way, Roger, if you don't want to read about MC difficulties, God gave you the ability to skip the thread.

[Richard Kaufman]

The AMA doesn't need to do any of the heavy-handed things you've mentioned. Simply cutting fat out of the existing budget should more than make up for their deficit.

[Terrence]

There are small things we can do as members.

Larry Horowitz and I have started declining our 20% Volunteer Discount at MC Meals until we're out of this mess. That doesn't help much, but we want to spread that attitude -- more positive than, say, nano-managing an individual board member's weekend life.

I'm increasing giving out of guest cards, and at the magic counter I'm keeping watch for prospective members/juniors.

One thing I've heard is that the BOD is working out how to get progress reports to the membership. (Of course they don't want to telegraph their strategy to those opposed to these efforts, so that's going to be tricky for awhile.)

[Roger M.]

Well, considering your tone undercut.....please let me be more frank in order that you might more clearly understand what I was saying to you.

You're a classic armchair quarterback.
You're incredibly repetitive.
You're extremely harpy and negative, without really offering anything of value beyond screaming "the sky is falling, the sky is falling".

In a nutshell, your posts are generally pointless and certainly a drag to read.

You obviously consider yourself an "insider", but based on your posts you probably are viewed by those who are truly "insiders" exactly as I view you............a harpy old lady, taking every opportunity to let everybody know that YOU know how to fix things, and that YOU have all the answers.

Poppycock........you appear to know nothing beyond how to blow your own horn..........blowing it in your grand total of 28 posts, and blowing it each and every time you post.

[undercut]

Thanks for your very productive post on your best evaluation of me and my abilities. It certainly adds to the thread.

As I said previously, if you don't like what I write, DONT READ IT. Can you say, DUH? If you have figured out the title of the thread, you can easily avoid it. Otherwise, it is pretty cheeky to ask me not to post in the thread that I started.

However, you don't actually appear to have read with any comprehension, or you would have seen that I have been castigated for the very specific suggestions that I have made, while you are attacking me for making none.

So let me be clear, this is EXACTLY what the Board is going to encounter when it starts to act (assuming everyone is back from vacations before it closes down)

[Edward Pungot]

The Magic Castle has such a rich history and so many shared, collected memories that I dont think we have to worry about it disappearing or being reverted back into an apartment complex. The big, long-term picture is the Castle is here to stay.

Short-term, there will always be a changing of the guard that will fare well with the magic body one cycle and not so much the next cycle. Such is the nature of politics. The attention that this thread and other circles like them generate is all that is needed to get upper management to get their act straight to avoid further defamation. Someone has to play devils advocate and undercut has done his or her job like an actor playing the part of a magician playing the part of devils advocate. Well done.

We all care about the Magic Castle for the reasons stated above. And we all do our part to show our concern any way we know how. Collectively we all keep the Castle on the straight and narrow to hold it to its proper glory. We are after all the eyes and ears of the Castle, and for most of us, the hands as well. We as the magic community are indeed the heart and soul of what keeps an establishment like the Castle alive.

Those who are in charge need to be reminded and remind themselves of the task and privilege it is to keep the business side of things in working order so that the Club can continue to do what it is world famous for doing and presenting. This will only come about when board and non-board members will remember the joy that magic has given them and the role and honor that they have in giving back by doing their part. For the board members, it will be a more transparent and accountable operation. For the non-board members, it will be a more proactive involvement and inquiry into the boards agendas and committee meetings via looking over the minutes and financial documents and open communication via actual sit-ins.

Im overly optimistic about the future state of the Magic Castle, again, because of such a rich history that makes the place so endearing for us all. Many of my most cherished memories are contained in that old Victorian mansion. The greats who are now relegated to our books and pictures come to life again in the showrooms and within those sacred walls. If we can all somehow manage to respect each others time and each other, than maybe we can all get back to more pressing matters like upgrading our sleights and improving our acts ;)

[Lisa Cousins]

At last night's Member Meet-Up, Irene Larsen drew attention once again to the critical connection between the Magic Castle and Genii Magazine, and spoke of the crucial role Genii played in spreading the Magic Castle's fame and contributing to its success. It made me wonder if the spill-over from the Magic Castle Forum onto Genii wasn't fueled by some mystical yearning for a renewal of this connection, and I'm thinking probably yes.

We had Milt Larsen speaking about his original inspiration for the Castle and some of the details of the hand-shake deal that got it going, all of which served to remind us of how tenuous and wing-and-a-prayer the Magic Castle has been from the beginning, and yet how enduring.

West Flanagan, granddaughter of the hand-shaker, recalled her visits to the Castle while she was growing up. She told us that Invisible Irma had a "theme song" for each member of the Glover family that was played when any of them entered the room. Cute!

We got to hear from new Board of Directors member Randy Sinnott, who shared information on his business, military, and magic background.

There were three magic presentations: one from Carl Christman, demonstrating a new mental effect he's released; one from Jonathan Pendragon, who used his presentation as a springboard to share some interesting magic theory musings; and one from Bill Goodwin, who told everybody to go to the library if they wanted to learn how it was done.

Irene Larsen then reminisced about the extreme wonderfulness of Bill Larsen, and we watched a video of Bill & Irene doing a spoof "code act" on a Magic Cruise. (Bill: "What kind of drink am I holding up, comrade?" Blindfolded Irene: "Vodka!") This was followed, to Irene's (and everyone's) surprise, by an "update" of the act starring Irene's granddaughter Libby wearing the blindfold, and Libby's boyfriend Brett signaling the code.

The monthly Member Meet-Ups were launched by Board of Trustees member Jon Armstrong at the beginning of the year, and have been (and still are) evolving in interesting ways. I thought the timing of this one, with its emphasis on "remember how it all began" was perfect, and had a reassuring and galvanizing effect on everyone present.

[JohnCox]

Thanks for that, Lisa. I'm been sick this week, so I couldn't make it. Sounds like I missed a truly great meet-up, dang-it.

[undercut]

-$80,000 additional dollars lost
-4 months and 1 week unil the MC runs out of money, and can't pay it's bills.

-new Treasurer, new President
-is the situation getting better, or worse---has weekly monitoring been established?
-where is the First Quarter financials, which they surely have
-is there some sort of monitoring plan in place?
-are there new monitary controls?
-is there a timeline for a comprehensive recommendation moving forward?
-is there a committment to transparency to the membership about what is happening?
-there is a new president-NPH-I'm surprised that he hasn't communicated about this.....about ANYTHING since becoming president---this is leadership in a crisis?

What the hurry? Why rush?

[Steve Bryant]

It is hard to believe that the Magic Castle has survived for 48+ years without you.

[undercut]

It is hard to believe that the Magic Castle has survived for 48+ years without you.

Thanks, Steve! You know that you are right when people don't contest the truth of what you say, or your reasoning, but they instead start to try killing the messenger, because they don't like to hear the message.

[Naphtalia]

What the hurry? Why rush?

Our new board member and the official appointment of NPH as president was on 5/10. Your questions come up just under two weeks after that.

I am both eager and anxious to get information. I don't think one can claim a lack of transparency at this stage with what's happening.

The new treasurer needs time to look over the books and to communicate his findings to the BoD and to the membership.

Give our new treasurer a chance to review the financials, to the BoD to meet again. Give NPH a chance to get information on what the situation really is before he talks about it.

In talking to the folks I know at the Castle, I am feeling more optomistic than I have in a while.

[West McDonough]

Just because they lost an average of $80k per month last year does not mean they are still doing so. Much of that was from large one-time expenditures and hopefully they're exercising a bit more restraint about such things now that they're under scrutiny. I know that our new treasurer is devoting an enormous amount of time on a daily basis going over the numbers and making an analysis, and I know he is in constant communication with both the president and vice president. Give them some time to solidify their understanding of the situation before expecting them to start talking about it publicly. I'd rather they take the time to make sure of their facts and develop a plan that will work, instead of running around talking about every half-baked idea that comes up in the process. Haste leads to mistakes, and in my opinion it's not what's called for here.

I've talked to many of the board members and they are fully cognizant of the seriousness of the problem and the importance of getting things under control. I still have a great deal of confidence that they will do so and, as I said before, I will forbear making any judgments as to their progress for at least a few months.

[Alan Bursky]

Richard,
I was absent that day. As for the Castle, it just needs new management, and a lawyer who charges less [deleted] . I am confident that those things will happen.

[houdini's ghost]

If the Magic Castle was Tammany Hall and they made a movie about it, Alan Bursky would be played by J. M. Kerrigan. Or by Jack McGowran, if Kerrigan was busy.

[Alan Bursky]

Thomas Mitchell, Alan Hale, Frank Morgan, & Ida Lupino.
At least I know who Houdini's Ghost is.

[Alan Bursky]

West,
One time expenditures 2 years in a row.

[West McDonough]

Alan,

Yes, I'm fully aware of that fact, and agree that it's a real problem. But there is new scrutiny by people who finally have access to data they weren't being given before, and I believe that will go a long way to making sure that the future doesn't repeat the last two years' mistakes. My point was only that a past average monthly loss doesn't necessarily correlate to current conditions, and that if they want to they can move very quickly to stop the hemorrhaging and I have great hopes that this is, in fact, what is happening.

[houdini's ghost]

No. Tommy Mitchell wouldn't have made a good screen Bursky--or Alan Hale or Frank Morgan. Not even Ida Lupino.
J. M. Kerrigan or Jack McGowran.

[Alan Bursky]

Tommy KIrk?

[Alan Bursky]

I am UNDERCUT!

[Jonathan Townsend]

Okay, who's really Irma?

[Rich Cowley]

I just had an flashback to that scene in 'Spartacus', where all the slaves on the hillside start standing up and confessing...

"I am undercut."

"No, I am undercut!"

{wink!}

[erdnasephile]

Mr. Cowley:

I am pleased that you chose to join this discussion and are presumably aware of the concerns expressed by some of the members on this site.

I realize that you are not able to comment in detail about future plans. However, is there any way you could please give us a general idea about the timetable for informing the membership about the way forward from our current situation?

Thank you for your kind consideration of this request.

[Richard Kaufman]

He has not "joined" the discussion--he made a joke.

AMA board members are legally prohibited from any discussion because of an insidious non-disclosure agreement that will hopefully be dumped sooner rather than later so the board members can once again speak with the members of the AMA.