AMA / Magic Castle issues

[CraigMitchell]

Richard posted on his FB page news regarding the AMA & MCE ... this centred on the below email sent out by the BOD:

"Many of our Members have reached out to us regarding the status of the AMA’s lease with our landlord Magic Castle Enterprises (“MCE”).
At our Summit with MCE on October 28th, 2023, and confirmed at our Summit with MCE on January 9th, 2024, MCE has notified the AMA’s Board of Directors of its intention not to renew or extend the AMA’s lease when it expires on December 31, 2028. The AMA and MCE are in active negotiations to try and reach a workable agreement whereby the AMA will remain at 7001 Franklin Avenue in perpetuity.
Until a new agreement is potentially reached, the AMA will continue to oversee the club’s daily operations and—as per our current lease agreement—will continue to pay rent to MCE each month.
The AMA appreciates our loyal Members’ and incredible staff’s support as we continue to uphold our fiduciary duty to make decisions in the best long-term interest of the AMA.
We will be keeping our Members apprised on a regular basis as our talks move forward and we navigate through this extremely important matter.
The Board of Directors
The Board of Trustees
Academy of Magical Arts"

Richard commented on the above: "The email is a blatant attempt by the Board of Directors of the AMA to attempt to drive a wedge between Magic Castle Enterprises (MCE: the owners, the Pitchfords, and the founding family, the Larsens) and the members of the Academy of Magical Arts. MEMBERS: do not fall for this ploy. You are being manipulated into thinking that the Pitchfords and Larsens are engaged in activity that will be harmful to The Magic Castle and the Academy of Magical Arts when exactly the opposite is true. It is the Board of Directors of the AMA that is inhibiting all kinds of wonderful improvements and projects that MCE (the Pitchfords and Larsens) want to implement in the near term."

Sara Ballantine responded: "How do you interpret that Richard? I’m so sorry you see it in a negative light. The Board of Directors and the Board of Trustees just wanted to let the members ( who elected us, and to whom we have a fiduciary obligation to) know that we are talking with MCE to try and reach an agreement for the AMA. In no way are we trying to create a wedge. Rumors have been flying around the Club and we felt it was time the members understand from our perspective what is going on. I’m very excited to see how MCE and the AMA can dazzle the art of magic even further together.

With a mysterious remark by Richard: "You will get no details from the BOD. They have a vested interest in NOT telling the members what is actually going on."

Richard also has additional commentary and insights on his FB page which are worth reading.

Randy Pitchford stated: "I think it is extremely irresponsible for the AMA Board to share a message that creates fear among the members and staff when the AMA Board of Directors knows first-hand that the future we are interested in creating is one where there is no lease because that means no term limit and what we need now is an all new arrangement between the AMA and MCE that will commit to a symbiotic relationship between them forever."


As an outsider looking in - I'd be interested to know what the possible motives would be for the Board/Trustees to "inhibit" all the "wonderful improvements and projects" that were planned and why they would seek to "drive a wedge" ? What are these vested interests? There are some well respected names on the Board/Trustees who no doubt must also love the Castle ... so what is the actual point of contention that is polarizing everyone?

[JHostler]

Corporate entities - for-profit and nonprofit - almost all exhibit self-preservation instincts extending beyond "what's good for the customer." In this case (pure speculation), it sounds like an LLC and a 501(c)(3) are dancing around some sort of formal merger or permanently binding legal arrangement of similar effect. If the AMA board(s) knows what it's doing, their decision to send that email was made with a great deal of strategic consideration. Idioms involve cats, mice, and chickens. Again, PURE SPECULATION. Fascinating and a bit sad.

[erdnasephile]

Randy Pitchford stated: "I think it is extremely irresponsible for the AMA Board to share a message that creates fear among the members..."

Well, mission accomplished in my household.

IMHO, that AMA email is not the thing you want to read after you've just plunked down hundreds of dollars for your annual dues in January.

After re-reading the email, I can see that it is factual. However, given the history of past financial troubles (which loyal members have repeatedly helped the AMA get through), I think it might have been better to have issued a joint statement from AMA and MCE emphasizing that they are committed to working together going forward instead of projecting uncertainty to those of us who don't know the full context.

[Richard Kaufman]

I have to believe that Craig has some misguided agenda here in quoting only the first part of what I wrote. Here is the second part. It explains why the lease between the AMA and Magic Castle Enterprises will be replaced by a long-term agreement that will be better for the AMA. This is the balance of what I posted on Facebook:

I texted Randy Pitchford to ask him what he thought of the AMA e-mail to members and this is what he said (he also gave me consent to share):
"I think it is extremely irresponsible for the AMA Board to share a message that creates fear among the members and staff when the AMA Board of Directors knows first-hand that the future we are interested in creating is one where there is no lease because that means no term limit and what we need now is an all new arrangement between the AMA and MCE that will commit to a symbiotic relationship between them forever."
Now for my additional commentary, which explains more of what is going on. The first thing is to inform you exactly why the AMA Board of Directors has been disingenuous in the statement it released today. Everyone knows the lease will expire in five years. And that will be the last lease the Academy of Magical Arts will ever have to sign with Magic Castle Enterprises. But what the BOD hasn't told you is that there is no longer the need for a lease. You have been falsely led to believe that if there is no lease the AMA is being kicked out of the building. THAT IS NOT TRUE, and the Board of Directors knows it is not true. The AMA will always be in The Magic Castle. The salient point is that there is no longer a need for a lease and I will explain why in a moment.
Magic Castle Enterprises wants to come to a new arrangement with the Academy of Magical Arts which no longer involves short term leases that continually need to be renewed. There would never, in the future, be a lease that expires. That sword of Damocles which has always hung over the Academy of Magical Arts will vanish. That type of arrangement worked well in the past when the land and building were owned by Tom Glover, Sr., and the IP was owned by Bill and, later Milt.
But now that the land, building, and IP are all owned by MCE, a different type of arrangement is called for, a modern arrangement, and MCE wants it to be one of perpetual life-long partners. Not short term arrangements that need to be renewed, but a permanent arrangement that is not subject to short-term bumps in the road based on who sits on the Board of Directors at any given time.
The goal is to strengthen the bond between the building and the club that occupies it by removing any uncertainty about the relationship.
Unfortunately the Board of Directors is taking this opportunity, this moment, to attempt to create an illusion of peril in the relationship between the AMA and MCE both to erode good will with MCE and to make themselves seem like heroes when a permanent agreement--one that will ALWAYS ALLOW THE AMA TO RESIDE IN THE CASTLE--is announced.
I hope this clears up some confusion.

[Jaybo]

Thank you for explaining the issue and providing reassurance. The email from the Board was unsettling, as it came with no context or perspective. Personally, as an aging hobbyist, I joined the AMA in 2000 as a non-resident member to support the vision of the Larsen family for creating and sustaining the AMA, Magic Castle, and Genii magazine. I'm glad that Erika Larsen, the Pitchford family, and you are safeguarding these institutions for those who come after us.

Jay Burke

[CraigMitchell]

No misguided agenda - Richard. I have no dog in this fight. It’s your forum so well knew you would post your commentary and insights.

What does the legal framework look like that sees the AMA remaining in perpetuity at the Castle without the need for a lease ?

Out of interest - what does the AMA own and bring to the table ?

Can the AMA exist without MCE ?

And conversely - does MCE need AMA ? Hypothetically - Why would MCE not just offer their own private club experience ? Practically what would change from the current members perspective ?

[West McDonough]

Here is a VERY long post I wrote for the Owl Bar on Facebook, but I thought it might be of interest here for those not on that group.

I'm rarely on Facebook any more, but I came because I wanted to see the reaction to the very misleading by implication and by what it DOESN'T say post by the BoD this morning. And I thought maybe it would be helpful if I add a little history from the perspective of a member of the family that was the landlord for 60 years.

First of all, what some here may not realize is that originally the lease was NOT held by the AMA, but by the Larsens personally. The AMA was a magic club that had a home there, but they didn't run the business. Bill Larsen was the one in charge, and my grandfather (the sole owner of the property in those days) was VERY involved, with everything from personally arranging the traffic light at the entrance, to building the Annex when the Castle kept getting shut down by the fire department for exceeding capacity. It was a cooperative relationship that worked beautifully, and it was, as far as I can see, a Golden Age for magic and the Magic Castle.

Over the years, however, things changed. My grandfather and Bill Larsen both died. The building was now owned my my grandmother, my mother, my aunt, and my uncle (though my generation did each own 5% of the parking lot!), and over time my grandmother passed on her interest to her children and my mother and aunt passed theirs on to my generation. We were unable to be quite as hands on because there were so many of us, and we did not always agree within our own group. Milt, god bless him, was always a visionary, but he was NOT the businessman that Bill was, and now he was sole holder of the lease. Many of you may remember those days, when the business finances were a mess, and the Castle had to resort to such things as selling life memberships to keep the doors open. My family became convinced, rightly or wrongly, that if things continued as they were, we wouldn't have a tenant much longer. We believed that if the lease was held by an organizational Board of Directors, that things would be more stable and professional and accountable, and Milt could relax and go back to being the visionary spirit of the place. The lease was expiring for the first time (the original term was 40 years), so we used those negotiations to get the new one transferred to the AMA, with Milt's income now also getting a percentage of the sales for the use of the intellectual property.

Our family had already sort of bowed out of active involvement, necessitated even more by a deepening schism within our own ranks. Things were a little better, but not as much as we had hoped, so the next time the lease came up we got the MFB years (which, I will point out, was pushed through by the proprietors of MFB to their own benefit, and was not a decision by the Glovers as a whole), which was not actually any better for us as landlords, but which was actually pretty profitable for the AMA — even though their income did not include f+b then, their expenses were also WAY down, and they did very well. Separating out the functions can work. But the majority of my family was no happier with MFB (as a specific entity) than many of the members, and we supported and facilitated the operations going back to the AMA.

Over the years, I've often wondered if we did the right thing when we gave the lease to the AMA. I do think it was necessary in the short term, but it also brought its own set of problems, depending on who was elected to the BoD. There were some who were overly tempted by the power, and who tried to seize more. There were also times it worked really well (the best of all being when Erika was in charge). But the lack of continuity in the accountable entity made it a roller coaster, and often a very scary one, and I more than once regretted the structural changes. But there was nothing I could see that the Glovers could do about it because of our own increasing fragmentation — by necessity we had mostly given up any real say in how things went, as long as rent was paid.

But the Magic Castle is a part of our family's legacy too, and we protected it as best we could for 60 years, but it was getting harder and harder for us to do under the circumstances. We also couldn't see a way to hand off the challenge to someone else, because we were as divided about the idea of selling as we were about so many other things. I, for one, had no desire to sell to anyone who would tear down the Castle and substitute high-density luxury housing — I moved to LA in 2009 specifically to try and smooth out the storm that threatened the Castle at that time, and many of you know me from the years in which the Castle was my other home. I became very close with the Larsen family, and even fell in love with and married a magician who has always considered himself to be a "Castle kid" (despite his coming along before the Juniors program).

But Randy Pitchford saw a need, and had the energy and vision to make it happen. He spoke to family members with such enthusiasm of his vision for saving the Castle. He didn't want to tear it down, but rather to make it live on, winning over those of us to whom the legacy was central, but was also willing to pay as much as the developers were offering, thereby making it easier to get the members of the family on board who had less of a connection to the Castle itself. He saw the importance of combining the physical and intellectual properties, and had always treated Milt like a king, so he was able to secure both. And one of the most important aspects to me was that he wanted the Larsens involved in everly aspect of running the new entity. Erika and Jessica between them, to my mind, are a combined Bill Larsen reincarnate, and Liberty is one of the purest souls I know. I didn't know Kristy as well at the time, but I talked to her more in my last visit to LA, and I'm coming to believe in her too. After a long and difficult process, the family came together because we believed in the MCE vision, and were willing to entrust our stewardship to them... and it has even had the side blessing of uniting our long-divided family moving forward since then, in a way I believed impossible.

In my opinion, it was incredibly short-sighted of the Board not to have welcomed the blessings of a newly active and involved landlord structure. I will not speak to individual motivations in people I don't know well, but it certainly appears to me that at least some Board members were more fixated on their own power and benefit than on the good of the club. I was aware of both summits, and saw the necessity of them under the circumstances. I have talked at great length with the Larsens and the Pitchfords, and I know beyond a shadow of a doubt that they are NOT trying to push out the AMA, but rather to bring it back to a Golden Age like the years when Bill and Milt and Irene Larsen and Tom Glover worked hand in hand to make the Castle a true "Mecca of Magic," and I think it is to the Board's detriment and shame if they continue to try and make MCE look like the "bad guys" here. I hope every member will make it clear, especially during the upcoming elections, that they aren't interested in power grabs and undermining, but rather WANT to see a Castle in which the AMA and MCE can be true partners, working together to make the world of magic a better place for all of us.

[CraigMitchell]

Thanks for posting - very insightful.

[erdnasephile]

Ms. McDonough: Thank you so much for your perspective, and thanks even more for all you did to keep the Castle going during some tough times!

[erdnasephile]

On 2/4/24, we received the following email from Magic Castle Enterprises. I was not going to post this, but in the last sentence of the email, Erika L. says they do not have access to all of the members emails and would like this email passed along. After careful consideration, I think this issue is important enough that if there are dues paying members who haven't received it, perhaps they could see it here and participate. (To limit this only to members, I have deleted the Zoom link and suggest that interested parties contact MCE directly for it--their townhall email is in the body of the message). Finally, Richard and Dustin, if you think this post doesn't belong, please delete this. Thanks!
--------------------------------------------------------------------------------------------------------------------
Greetings Members of the Academy of Magical Arts,

We would like to invite you to join us in a town-hall meeting featuring officers of Magic Castle Enterprises and the owners of The Magic Castle.

We believe this moment will be a landmark, historic moment for the future of The Magic Castle and we sincerely hope that every member will take this opportunity to participate.

Our aim is full and open transparency.

We intend to share a brief introduction of the owners and officers of Magic Castle Enterprises along with a short presentation about our vision for the future of The Magic Castle. We will also disclose the behind-the-scenes interactions we have had with the Academy of Magical Arts Board of Directors and Board of Trustees as well as our interactions with the Executive Director and General Manager, along with the positions they have taken with us collectively and individually.

After our presentation, we will open the floor to both live and remote participants so that any of you may ask our panelists any question you would wish to have answered. It is really important to us to hear from you as we know that the best future for the Magic Castle is a future we build together.

We have invited the Trustees and Directors to join us, including invitations to join as panelists, and we are hopeful that as many of them as possible will choose to participate.

The event will take place on Saturday, February 10th at 2pm Pacific Time at the Brookledge Theater (ancestral home of the Larsen family and the very place the AMA was originally founded) and will broadcast via Zoom to anyone who would like to attend remotely. If you would like to attend this event live at Brookledge in Los Angeles, please send a message to townhall@magiccastlegroup.com and include your name and member number to have a seat confirmed. Please do not show up in person without a confirmed seat. (Address will be provided with seat confirmation.)

To participate remotely (where you may easily submit questions) you can use the following Zoom link, which will become active shortly before the event:

We are excited to see everyone live and virtually at the Magic Castle Enterprises Town Hall and look forward to a lively discussion about the future of The Magic Castle. If you know of any members (particularly Associate members, as we do not have their email addresses) who have not received this message, please feel free to pass it along.

Thank you!

Yours in Magic,
Erika Larsen,
President, Magic Castle Enterprises

[Richard Kaufman]

You should repost it with the Zoom link intact.