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Enjoy his clubs while you can

Sam Nazarian keeps his many places trendy by constantly reinventing them.

July 29, 2006|James Verini | Special to The Times

On a recent Saturday night, the parking lot outside of the West Hollywood nightclub Privilege was reminiscent of a movie theater before the release of a new "Star Wars" movie. The men and women lined up in their miniskirts and expertly torn jeans were better-looking, of course, and did not carry toy light sabers, but the frisson of anticipation was the same, as was the size of the crowd, which motorcycle police and bouncers tried unsuccessfully to hem in. Everyone buzzed about Privilege as though it were the latest thing.

But it wasn't the latest thing. It wasn't even this year's thing. Privilege has existed in one incarnation or another on that spot (the corner of Laurel, at the entrance to the Sunset Strip) since early 2003. You may remember when it opened as Shelter. Sam Nazarian owned it then too.

For the previous two weeks, however, Privilege had been closed, and now it was reopening, with a new design and new lifestyle to sell and the promise to every hopeful club-goer of a new lease on their nightlife. The Chamillionaire would still be set to jet-engine volumes, the vodkas-soda would still be $12, but as for everything else -- well, who knew? The new beach-themed decor might just save one's life.

Once inside, the revelers were ushered into "St. Tropez-on-Sunset," as Nazarian describes it. White sand-colored benches and navy blue trim, images of models on beaches projected on the walls, some big, tropical plants. It was not all that different from Privilege's previous, also mostly white, Nordic-themed incarnation. But it felt new.

And so the crowds spilled into the street, clamoring to get in.

In a nightlife market as saturated as L.A.'s, obsolescence is the one death-and-taxes certainty of the business. Thirty percent of hospitality businesses -- restaurants, bars, clubs -- go out of business in the first year, 60% by the third. No matter how modish your place, no matter how long the lines, eventually -- likely sooner rather than later -- it will go out of style.

Nazarian knows this. His flashy lifestyle -- at 31, he lives in Jennifer Lopez's former mansion in Beverly Hills, drives among other cars a Ferrari and goes out a lot -- leads some observers to overlook a sagacious mind for business. He admits readily that like any club, his clubs -- besides Privilege, he owns Hyde, Lobby, Prey and co-owns the Abbey, along with the restaurants Yu and the new Katsuya in Brentwood -- are always, by their very nature, in a state of slow death. So he tries to think of them as productions, events, ephemeral things. Movies, almost. (With the film arm of his company SBE, Nazarian also has a sideline executive producing those; the latest one was "Down in the Valley," with Edward Norton.)

"It's a set-design concept," he said. In business school speak, this is known as "refreshing the brand."

Nazarian's Hollywood shuffle works thusly: He keeps his clubs open for about eight months to a year at a time, then closes them, renovates them, at a cost of several hundred thousand to a million dollars, and reopens, often, though not always, under a new name. (He likes short ones. Privilege used to be Shelter. Hyde was North. Prey will soon be Area.)

Nazarian claims that his redesigns pay for themselves within a month and that they bring business back to the top line for about six months. But how long can this last?

Refreshing the brand is common to the world of consumer products -- and sometimes restaurants, and college and neighborhood bars -- but it's rarely if ever been tried in the world of high-end nightclubs.

L.A. may prove an ideal spot for this strategy or not, depending on one's business. Unlike in Las Vegas, Miami and New York, where clubs serve liquor all night, in Los Angeles they must stop at 2 a.m., leaving a very small window for making money. Most operators are therefore loath to put any more money into a club than they must to pay their investors and make a profit. And when they are willing to put a lot of money into a club, operators want to build a brand, something that will keep paying dividends. Changing looks and names would be inimical.

But Nazarian has no investors. A millionaire since his early 20s, so he claims, he owns most of his properties outright. What's more, with hotels, restaurants and more clubs planned for every corner of the city, Nazarian doesn't want to just get in and out.

The detractors have begun lining up, of course. Last fall the New Yorker magazine published an unsurprising profile of Nazarian that implied he was more Sammy Glick than Eli Broad. "It's a memento of a development deal," the author, Dana Goodyear, wrote of a golden shovel mounted on his office wall, "but, after a few hours with Nazarian, it begins to suggest another use."

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