Downtown Athletic, Once On the Ropes, Seeks Tower Money

On March 10, Senator Charles Schumer ventured to the Downtown

Athletic Club, the once shabby-chic sweat temple for the likes of Robert De

Niro and John F. Kennedy Jr. and longtime home of that symbol of youth and

athletic prowess, the Heisman Trophy. The Senator brought his cheerleader’s

smile and the governmental equivalent of a giant shot of cortisone: He chose

the club as the place to propose a $225 million package for non-profit

organizations hobbled by the events of Sept. 11. He indicated that the club,

which is located on West Street just four blocks from Ground Zero, would likely

receive a nice chunk of that money. “The club is one of the most venerable and

civic-minded institutions in the city,” he said, “and I can’t imagine a

downtown without it.”

For members of the club, it was an encouraging, even poignant,

sight. The D.A.C. has been closed since Sept. 11, and has been in financial straits

for at least three years before that. A particularly dark time came in

December, when the ceremony for the Heisman Trophy, which the club awards every

year to the best college-football player in the country, had to be moved to the

Marriott Marquis Hotel in Times Square because the club’s notoriously shoddy

elevators were condemned by the city.

And though management doesn’t know how much of that $225 million

it will eventually see, it’s clear that without several million dollars in

financial assistance, the Downtown Athletic Club may never open again.

“Chuck Schumer’s the man ,”

said James McNamara, who sat on the club’s 24-member board of governors from

1997 to 1999. “It’s like when [Governor] Hugh Carey saved the Radio City Music

Hall.”

“I really hope we get that money,” said Jim Corcoran, the club’s

president and a 42-year-old senior vice president at Morgan Stanley. “That

would be a great story.”

The real story, though, is how Mr. Schumer ended up fighting for

an institution that might very well have closed even if the terrorist attacks

had never happened. It turns out that despite years of alleged mismanagement

and withered revenues, the Downtown Athletic Club has retained some Tammany

Hall–era influence.

The club’s financial troubles started more than a decade ago, and

club insiders cite several reasons, including the demise of the maritime

industry in lower Manhattan; competition from cheaper, sleeker gyms; the end of

big tax deductions for corporate luncheons; and increasing uneasiness about the

nutritional value of corned-beef hash and martini lunches at the club’s Jack

Mowbray Grill.

“It was a bunch of lawyers

trying to become businessmen-and that don’t work,” said Frances Powers, who was

president of the club from 1995 to 1997, adding, “9/11 had nothing to do with

the failure of the club. The club’s been failing for years.”

The D.A.C. was charging up to $2,300 a year for memberships when

it closed. Joe Farrell, a former secretary and general counsel of the club,

told The Observer that some members

decided the D.A.C.’s mahogany moldings and antique racquetball courts-on which

the likes of disgraced financier Ivan Boesky once played-weren’t worth $1,900

above what a year’s membership at Lucille Roberts would cost.

By September, membership had dropped from a high of 4,000 members

to 700. Robert Kirk, who served as one of the club’s governors from 1997 to

1999, said that many of those remaining members had joined because of bargain

incentives. “Three-fourths of them were paying $1,800 a year,” he said.

For these reasons, Mr. Kirk alleged, “the club decided not to pay

taxes. That really put them into a hole-they just decided not to pay taxes!

They felt they were being financially savvy.” The club’s current president, Mr.

Corcoran, confirmed that the club management did stop paying taxes, but didn’t

elaborate the reasons for doing so.

In 1996, the city placed a number of liens on the club’s West

Street building. Two years later, the club filed for Chapter 11 bankruptcy.

After fending off takeover bids by several developers, the club agreed to sell

its 35-story building to creditors for $16 million. After the club paid off its

debts, it took out an $8 million mortgage on floors 2 through 13 of the

building and continued to operate.

The upper portion of the building, which had been the club’s

hotel, was sold to a group of developers that included Jack Lefkowitz. A source

close to the club said that Mr. Lefkowitz had to stop renovating the hotel

prior to Sept. 11; at the same time, he was facing troubles surrounding his

allegedly shoddy work at the Ice House, a tony building in Tribeca. As things

stand, the upper portion of the club building is an abandoned shell. (Mr.

Lefkowitz declined to comment for this story.)

Meanwhile, club insiders contend that the way the club

reorganized was not particularly savvy. “The hotel was making them money,” Mr. Kirk said. 

“They sold off the only asset that was making them money. Can you

believe it?”

What’s worse, Mr. Kirk said, the cash from the sale of the hotel

didn’t even keep the club afloat. “They still have an $8 million balloon

payment due,” he said, “which could be called in at any time. That’s the

balance of the building. For a while, they were just paying off the interest on

the mortgage and none of the principal. They hadn’t paid anything on the mortgage for some time prior to 9/11.” 

The club’s president, Mr. Corcoran, strongly disagreed and said,

“All mortgage payments were made up until Sept. 11.”

Mr. Kirk estimated the club’s pre–Sept. 11 debt at more than $13

million. Mr. Corcoran said the debt was “several” million dollars, but didn’t

provide an exact figure. He said the club has been leaking $500,000 a month

since it closed in September. Losing the Heisman ceremony further cost the club

an estimated $2 million in sponsorships.

For that reason, Mr. Kirk said that a government bailout would be

“a waste of money …. How can the government help them when they can’t get their

own financials together?” he asked. “Even [former Dallas Cowboys quarterback]

Roger Staubach, who actually won the

Heisman and who owns a real-estate company-Staubach wouldn’t touch it with a

five-foot pole.”

Mr. Corcoran said that rumors of the club’s demise pre–Sept. 11

were premature. “We’ve had difficulties for some time by not upgrading the

facilities,” he said. But shortly before Sept. 11, he said, the club had hired

Club Corp., which Mr. Corcoran described as “the largest operator of clubs in

the country …. They were going to come in and be the five-star developer. That

changed on the 11th. A lot of things changed.”

But the question remains: Why is Senator Schumer-who never won a

Heisman-getting involved? Mr. Corcoran said he didn’t know. “I don’t know where

it came from,” he said. “I’ll be honest: I had been in touch with FEMA, Empire,

Giuliani, Bloomberg, everybody. I was asking for money. Then this thing with

Schumer happened.”

“Why should they come to the rescue of a private club that was in

deep financial trouble before Sept. 11?” said Mr. Powers, the former club

president. “I know Chuck Schumer pretty well, but when you know the facts, it

doesn’t make any sense.”

Asked about the Senator’s involvement, a spokesman, Bradley Tusk,

said, “We think that it’s important to help New York City’s non-profits rebound

from Sept 11.” Pressed about the club, Mr. Tusk added, “Thinking about the

future of the club, they’ve offered to donate space to other non-profits hurt

by Sept. 11. Chuck thinks that’s important.”

But what actually brought the Senator downtown on March 10 was a

flurry of behind-the-scenes activity by one of the club’s more influential

members, Brian O’Dwyer. Mr. O’Dwyer is a well-connected lawyer downtown, a

20-year supporter of the D.A.C. and an even bigger supporter of the Democratic

Party. He’s contributed close to $30,000 to New York Democratic candidates and

political-action committees since 1990.

More significantly, he is the son of Paul O’Dwyer, a New York

City Democratic agitator who died in 1998, at age 90. The elder O’Dwyer was a

genuine Irish-American hero: an advocate for immigrants, blacks and the working

class with lots of political sway. He lost to Republican Jacob Javits when he

ran as a Democrat for the U.S. Senate in 1968, but was elected City Council

president in 1973. When he died, The New

York Times ran a 2,000-word obituary.

So when Brian O’Dwyer decided the government should bail out the

club, he didn’t have much trouble getting Mr. Schumer’s attention. 

“I was very upset about the fact that the club was closed,” said

Mr. O’Dwyer. “It looked like it might not reopen.” He said his friend Mr.

McNamara, one of the former governors of the club, told him the Federal

Emergency Management Agency was “taking the position that they were only going

to help for-profit organizations hurt by Sept. 11, and not non-profit

organizations.”

Indeed, the federal government is planning to spend $2 billion in

aid to downtown for-profit businesses. 

“We lost 65 employees!” Mr. O’Dwyer said, referring to the club

employees who had to be let go when the club closed. “All of them were

unionized. These are people who have been long-term employees. You develop a

fondness for them.

“The distinction between for-profit and not-for-profit made no

sense to me,” he continued. So he did what any well-connected Democrat would

do: He called the state’s senior Senator.

“I consider him a friend,” Mr. O’Dwyer said.  “I’ve been a supporter for many years; I

supported him when he ran for Senate in 1998. I guess that’s the best way to

put it: I really do know him.”

Mr. O’Dwyer placed a call to Senator Schumer’s office. “They were

terrific,” said Mr. O’Dwyer. “They looked at it and they said, ‘Yeah, we agree

with you.'”

The next thing anyone knew, Chuck Schumer was standing next to

the Heisman and making his announcement. 

Mr. Corcoran, who said he was unaware of Mr. O’Dwyer’s shadow

diplomacy, said that if the money comes through, the club will stay in

business.

“It was a tragedy for so many,” Mr. McNamara said of the World

Trade Center attacks. “And it was harmful to the future prospects of the club.

We weren’t out of business yet.”

Not everyone cares whether the club re-opens. At the Heisman

ceremony, several onetime laureates said they were glad the D.A.C. wasn’t

hosting the ceremony anymore. “I like the Downtown Athletic Club, and I

appreciate the things they did, but the Marriott is a better atmosphere,” said

George Rogers, a 1980 Heisman winner, speaking to a reporter from ABC.  “You get to go and see everything in town

being here at the Marquis. When you’re downtown at the D.A.C., there’s not many

places you can go.”