Because the world of finance is at the centre of this recession, the rich and the super-rich are really taking it on the chin. Look no further than Manhattan’s ultra-swank Core Club, a member’s only spot for the wealthy to unwind in luxury. The venue has its own art galleries, spas, restaurants… well, you get the idea. It also required a $100,000 upfront payment to join.
Well, duh, all those hedgies and private equity guys that might’ve signed up a few years ago aren’t so keen on parting with that cash these days. As such, a number of early members who made an upfront “investment” with the promise of getting that money back won’t see their cash anytime soon. It seems that they applied as much due diligence to this investment as they did everything else they were buying and selling (which is to say, not much):
NYP: THE Core Club, launched five years ago in a gleaming new tower on East 55th Street, is unable to pay back its “Founding Members” who ponied up $100,000 apiece.
The club created by Jennie Saunders features a high-end restaurant set up by superchef Tom Colicchio, a screening room, fitness centre, beauty salon and suites for overnight stays. It attracted such high-powered members as Stephen Schwarzman, Bruce Wasserstein, Vernon Jordan, Teddy Forstmann, Ari Emanuel and Fred Davis.
In return for their investments, founding members received free annual dues worth $15,000 a year, plus credits and discounts on use of the facilities. They were supposed to get their money back after five years.
But Saunders sent out an e-mail earlier this month, saying: “I have heard from some of you that you would like us to operate with a greater degree of transparency and in particular address the disposition of the maturing Founding Members’ debt.
“We have been progressively meeting with Founding Members to review a variety of programs to address this situation,” the e-mail continued. “We anticipate having a proposal for you with all relevant information within 21 days.”
CityFile has more background:
It isn’t entirely unexpected that the club that counts Steve Schwarzman, Bruce Wasserstein, and Teddy Forstmann is now facing a cash crunch. Although it got off to a buzzy start when it first opened, the glossy venue—which features a gym, screening room, library and restaurant by Tom Colicchio—soon encountered difficulty reeling in people who were willing to cough up the $55,000 entrance fee. Club execs soon started doling out discounted memberships, which boosted the client list, but didn’t exactly help the bottom line.
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