Larry Flynt Welcomes G.O.P.!

“You know what I think New York is friendly to?” wheezed Hustler magazine’s Larry Flynt, speaking by phone from his office in Los Angeles. “I think New York is friendly to adult businesses that are not sleazy. I think that’s why Giuliani got the support to clean up Times Square, because it was a real cesspool over there. I don’t think the average New Yorker minds if this type of club opens up. But the [old adult businesses] attracted all the bad elements-the prostitutes, the peep shows. It was just really a sore eye for the city.”

Over the past year, unbeknownst to many New Yorkers, nearly 30,000 square feet of so-called “unsleazy” adult entertainment has landed on the Manhattan market, in the form of several McStrip clubs peppering the city’s far West Side. As the Republican conventioneers pour out of Madison Square Garden into the steamy late-August nights, they will be a short cab ride away from the Penthouse Executive Club, Scores West and Mr. Flynt’s own Hustler Club, which officially opened in June. The three clubs have created a new red-light district, a Dirty Triangle of sorts, spanning West 28th Street to West 51st along 11th and 12th avenues.

While the flashy new clubs are salivating over the prospect of a city ripe with randy Republicans, a good deal of their energy is spent courting those cash-cows of lower Manhattan: Wall Street traders and bankers, whose expense accounts provide for much of the new strip clubs’ business, according to the club owners. Although not everyone is thrilled with the idea of topless bars joining golf clubs such as Winged Foot as the venues of choice for Wall Street client outings: A high-profile sex discrimination suit filed by the Equal Employment Opportunity Commission against Morgan Stanley is due to go to trial this week, and client visits to strip clubs-which tend to exclude women, for obvious reasons-are the plaintiff’s allegations.

“We target the Wall Street professionals-brokers, traders, guys looking to come blow off a little steam,” said Mark Yackow, the Penthouse Executive Club’s chief executive. “We made this very upscale and exquisite, with a Las Vegas–nightclub type of theme. We have a dress code: no jeans, no sneakers, no hats, only suits or jackets, a nice pair of slacks, a collared shirt. It’s a very upscale clientele.”

Sitting in the shadow of the Intrepid Sea-Air-Space museum, in full view of the tourist families who take their kids to see the aircraft carrier, the Penthouse Executive Club is well positioned to separate an investment banker from his money. At 10,000 square feet (the maximum for an adult club in New York City) and representing a $10 million investment, the emporium has a $20 weekday, $30 weekend cover charge and a steak house upstairs offering $46 filet mignon and $12 creamed spinach. There are 23 types and sizes of champagne. A lap dance is $20, and for a little privacy, a tiny booth with a curtain is $200 per hour. A cluster of V.I.P. rooms, all dark and velvety with plasma screens showing sports, run from $600 per hour for two guys to $1,000 per hour for four. To have a woman dancer actually enter the V.I.P. rooms is extra, typically $500 per hour.

Mr. Yackow said he expects the club’s restaurant, Robert’s Steak House, to be highly profitable during the week of the Republican National Convention. “We’ve got a few hundred reservations for that week,” he said, “and we expect a lot more.”

The women who work there are also cultivating the upscale aesthetic, which seems to involve emulating Vanna White in spangly gowns clinging to large, upstanding breasts. On a recent Thursday, there were possibly more strippers than customers. They chatted by the bar and swanned among a few tables of finance types in khakis and blue button-downs and a handful of gray-haired European businessmen. Two couples hid tentatively in dark booths. One gentleman who weighed possibly 300 pounds indulged in a lap dance from a blonde with a high ponytail, who gave him a pitying little peck on the cheek at the end.

But not everybody was tickled. “The seedy places are more fun,” lamented one young Wall Streeter. “Here it’s like, ‘This is sexy!’, but the little dark places are much friendlier. Plus, I’m actually more into the smaller, more natural breasts.”

“The reason I like working here is they don’t allow regular Joes in,” said Tara, the club’s buttery hostess, as she painted on seashell-pink lips in the ladies’ room. “You have to be dressed properly, look classy, to get in here.”

And in the same way that Barnes & Noble infamously flattened independent bookstores, the mega clubs are affecting the mom-and-pop strip joints.

“My problem with the big Disney-fied places that charge a lot of money is that the small neighborhood places are closing,” said Abby Ehmann, the editor of Playground , a guide to New York City adult entertainment. “The typical clientele at the old places were more blue-collar, working-class people. Now there’s this hostility toward the blue-collar customer. That whole bottle-service, snooty, ‘Sit your ass down’ attitude is very offensive to me. If you want it to be like the Harvard Club, go hang out there. But if somebody wants to see some tits and ass, they should be able to without spending a ton of money.”

Mr. Yackow and other club managers claim that their “bread and butter” comes from the weeknight expense-account Wall Street crowd, who “feel very comfortable” entertaining clients in the Penthouse Club.

‘They’re Not Brothels’

Extracurricular activities, whether hockey games, golf, whitewater rafting or lap dances, remain a social lubricant in a Wall Street world that is driven as much by personal relationships and trust as by the bottom line.

Wall Street’s women, naturally, are less at home conducting business while other women in Lucite stilettos jiggle around them. (Not to mention that men don’t necessarily want women co-workers tagging along.) Although most are loath to go on the record, female bankers acknowledge that firm-financed client visits to strip clubs, an age-old practice that seems antiquated now, still take place-although less frequently or overtly than in eras past.

Allison Schieffelin, a former convertible-bond trader who is the intervening plaintiff in the EEOC’s discrimination suit against Morgan Stanley, dedicates a portion of her complaint to the “Exclusion of Women from Sporting Events, Social Events, and Other Client Outings.”

“Attendance at sporting events, social events and other client outings was and is very important to the success and career advancement of professionals at Morgan Stanley,” states the complaint, referring to Ms. Schieffelin’s time at the firm from 1996 to 2000. “It provided them with the opportunity to develop important personal and professional relationships with clients and with senior management at Morgan Stanley. ‘Strip club’ and ‘topless club’ outings with male clients and male professionals of Morgan Stanley were extremely common in the Convertible Department and in the Institutional Equity Division.”

While it is perhaps more discreet than in days past, young swashbucklers can still find ways to expense such entertainment to their firms. One young Wall Street analyst said that while he hadn’t engaged in the practice himself, he had heard of a strategy that involves substituting receipts from strip clubs with those accrued dining with one’s wife; another, more common strategy involves simply ordering one’s secretary to “jam” the expenses through and hoping accounting doesn’t raise a fuss. If the individual is a big producer, chances are good that the reimbursements will be approved.

Spokespeople from Morgan Stanley, Bear Stearns, Bank of America, J.P. Morgan Chase and Citigroup said that their firms prohibited such expenses; Merril Lynch and Goldman Sachs declined to comment.

In any case, tacit approval by investment-banking firms seems at blatant odds with their public commitments to foster diversity, according to some.

“It doesn’t matter at all if they are reimbursed or not,” said Martha Burk, the chair of the National Council of Women’s Organizations, the force behind the battle to open the all-male Augusta National Golf Club to women. “If they’re doing it as client entertainment, it’s inherently discriminatory because of the impact on the women at these firms. It hinders their ability to compete, and it sends a message regarding how they are valued. The company has a responsibility to put a stop to it.”

“In individual cases I’ve looked at against 13 different brokerage firms, men could take clients to those types of places and would frequently expense those bills,” said Susan Antilla, author of Tales from the Boom-Boom Room . Though she added: “I think their policies have changed since the headline-grabbing lawsuits of the late 70′s against Merrill and Smith Barney. I think, at the very least, male employees at those firms would be circumspect if they’re going to those places.”

In addition to issues of discrimination, there are tax and corporate-governance implications to businesses expensing such forms of entertainment.

“Taxpayers and stockholders, in the cases where it happens, are subsidizing behavior that many of them would not choose to subsidize,” said Ralph Estes, an emeritus business professor at American University. “The company takes a tax deduction, so their taxes are less. But they are also taking them out of their earnings, so their shareholders see fewer profits.”

Mr. Flynt, of course, knows who his most lucrative customers are.

“These definitely are not blue-collar clubs, like I had earlier in my career,” he said. “If you don’t make a darn good salary, or at least have a decent expense account, you really can’t afford the club. But that’s where the profit is. We’re basically going for the businessman who is looking for a night out where there’s a lot of pretty girls and he can sit and have a drink. They’re not brothels, they’re just clubs. You’d be surprised how many men will take conversation when they can’t get anything else.”

Mr. Flynt’s club, located on 12th Avenue near 51st Street, looks like it was airlifted whole from Las Vegas. The 6,000-square-foot, $8 million extravaganza has the McStrip club ambiance: shiny and vast, with a vacant-eyed dancer on a center stage and $10 cocktails.

Twenty blocks south, in the heart of the Chelsea night-life corridor on West 28th Street, is Scores West, the 10,000-square-foot sister club to the fabled Scores on East 60th Street. “That’s the foundation of Scores, from Day 1-businessmen entertaining their clients,” said Scores spokesperson Lonnie Hanover. “Our customers are all arriving in limos, town cars and cabs. It’s a fun night out-nothing sleazy.”

The fact that the Dirty Triangle clubs have spent millions trying to un-tart themselves doesn’t change the fact that, as adult establishments, their position in the city food chain is still somewhat insecure. Zoning changes could render their existence impossible, as Mayor Giuliani proved in the 1990′s with residential neighborhoods.

In 1995, based on quality-of-life issues and the economic argument that adult businesses discouraged investment in their neighborhoods, the City Council passed legislation making it illegal for them to operate within 500 feet of schools, residences or places of worship. The Giuliani administration began enforcing the change in 1998 by trying to shutter adult video stores and peep shows, particularly around Times Square. Manufacturing zones in the city, including the far West Side, were not affected. The original law also contained a loophole: Businesses with less than 40 percent adult content were allowed to stay open. In 2001, the city adopted amendments to close the loophole, but the State Supreme Court struck them down last fall.

Mayor Michael Bloomberg declined to comment, but Robin Binder, the deputy chief of the administrative-law division of the city’s Law Department, said: “We think the 2001 laws are enforceable, and we believe that the court’s decision striking them down was wrong and we’re appealing that. On that level, it’s a high priority.”

But should the 40 percent loophole be closed, the new strip clubs wouldn’t lose any sleep, located as they are in manufacturing zones. The City Council, however, is considering a law that would allow community facilities-churches, schools and medical offices-to build in manufacturing districts. (It seems churches in particular are growing at a fast rate and need more space.) And if that happens, it might not be long before churchgoers and parents of school kids start pressuring the Mayor and City Council to oust their Lucite-heeled neighbors.