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Celebrity Theatre Operator Loses Anaheim Lease : Entertainment: Bankruptcy court orders control of the venue turned over to its landlord, who will seek another client.

April 06, 1994|MIKE BOEHM | TIMES STAFF WRITER

SANTA ANA — The operator of the Celebrity Theatre must surrender control of the Anaheim concert venue by Monday, under a court order issued Tuesday in U.S. Bankruptcy Court.

California Celebrity Theatre Inc. had been struggling to continue operating the 2,800-seat theater since mid-December, when it filed for Chapter 11 bankruptcy protection from its creditors. Under an agreement reached between the operator and its landlord, the Leo Freedman Foundation, California Celebrity had until Monday to pay $160,000 in delinquent rent and other costs, or else lose its lease.

On Tuesday, bankruptcy Judge John E. Ryan refused the Celebrity's request for an extension until the end of this week.

Because the 3,000-seat Orange County Performing Arts Center rarely rents space to pop attractions, the Celebrity is the only Orange County venue suitable to well-known acts too big for the 500-seat Coach House in San Juan Capistrano, but not big enough for the 15,000-capacity Irvine Meadows Amphitheatre or the Anaheim Arena, which can seat from 11,000 to 19,000 patrons for a concert.

Richard D. Brady, attorney for California Celebrity, said that the judge ordered his client to be out of the building by Monday. A concert Saturday night by singer Rocio Durcal will go forward as scheduled, according to the theater box office. The Celebrity has no other concerts booked.

Brady was uncertain Tuesday whether Edward J. Haddad, the president and sole shareholder in California Celebrity, would appeal to try to keep control of the theater. Haddad could not be reached. According to the California Celebrity bankruptcy file, Haddad also has petitioned separately for personal bankruptcy protection.

The Freedman Foundation, a nonprofit organization that supports the arts, will seek a new operator for the theater and its adjoining restaurant. Before financial difficulties struck, drastically curtailing concerts in recent months, the Celebrity's rotating stage had featured a wide array of pop talent. R&B singers Luther Vandross and Gladys Knight, rapper L.L. Cool J, country singers Willie Nelson, Merle Haggard and Garth Brooks and rock acts Squeeze, Guns N' Roses and Ted Nugent are among those who have performed at the in-the-round venue.

Ellis Stern, co-trustee of the Freedman Foundation, said Tuesday that two major concert promoters, Avalon Attractions and Nederlander Concerts, have expressed interest in running the Celebrity. Avalon is the promoter at Irvine Meadows; Nederlander, former operator of the Pacific Amphitheatre in Costa Mesa, is the concert promoter for all shows at the Anaheim Arena.

Until last December 31, Avalon also had promoted shows at the Celebrity Theatre under a management contract with California Celebrity.

"I would hope to have a new tenant within 30 days," Stern said. "We want to make sure we have a reputable entity that will . . . make their payments timely and in full. We feel the people we're talking to will do that."

Stern said that California Celebrity's 10-year lease, which began in 1987 and ran through May, 1997, called for monthly rent of $20,000 plus 10% of gross revenues. He said the foundation wants to negotiate a new lease with a flat rental fee so that the charity will no longer have to monitor theater receipts, and will be able to assume a "passive" ownership position in keeping with government rules governing tax-exempt foundations.

In a case still pending in Orange County Superior Court, the Freedman Foundation has sued California Celebrity, alleging that it improperly withheld about $50,000 in rent owed under the lease's revenue-sharing provision.

According to court documents, the Celebrity's business had fallen drastically in recent years. In 1991, the theater staged 87 concerts, selling 153,000 tickets and generating $3.7 million in ticket revenue. In 1992, 71 shows drew 115,000 ticket buyers, bringing in $3 million. Last year, the business dropped precipitously, with only 29 shows, 39,000 tickets sold, and $1 million in ticket revenues.

Avalon attractions became involved in the Celebrity in 1992, and in March, 1993, it took over day-to-day operations under a management agreement that called for Avalon to share profits or losses with Haddad on a 50-50 basis. The last Avalon-promoted show there was a New Year's Eve concert by comic Howie Mandel.

In its bankruptcy filings, Haddad and California Celebrity alleged that "Avalon and Freedman have conspired to eliminate Celebrity from this venue. . . . Avalon reduced the sales and performances during its management of the venue to dry up the cash flow to Celebrity." Stern denied the allegation.

"Clearly, the foundation was not in conspiracy with anyone," Stern said, adding that the Freedman Foundation had no dealings with Avalon while it was managing the theater.

Randy Brogna, vice president of operations for Avalon Attractions, labeled Celebrity's allegation "totally bogus and erroneous."

Brogna said that the drastic drop in concerts and revenues at the Celebrity during 1993 was due entirely to "a terrible economy" that has affected all Southern California concert venues.

Avalon maintains that California Celebrity owes it $260,000 in promoter's fees and other costs of operating the theater during 1992-93. Brady, California Celebrity's lawyer, said his client, in turn, believes that Avalon breached its management contract and owes the Celebrity an undetermined amount of money.

Brady said that Haddad's efforts to raise the $160,000 that would have allowed him to pay off his back rent and hold onto the theater were complicated by a recent death in the family. "He needed to go back to Chicago to tend to the funeral arrangements," the lawyer said.

Brady said he offered that as a reason why Haddad should be given a few more days to raise the rent money, a request that he said was refused first by the Freedman Foundation, and then by Judge Ryan.

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