2009 Brings Hostile Takeover of Magic Castle Resto

Photo via LA Brunch Bunch

We're not ones for the magic, so we're certainly not members of the Academy of Magical Arts which holds court at the iconic Magic Castle in Hollywood, but a very interesting email landed in our lap late last week with two things of note. The castle isn't exactly known for the art if high cuisine, but for a kitschy night of dressing up to eat steaks and salad while watching magicians do their thing in a Victorian setting, you don't get any better. But who knew there was so much drama surrounding it? First, there was what sounds like a hostile takeover in the food and beverage department.

In essence, a company called Magic Food and Beverage has been managing both the castle and Yamashiro restaurants for the last four years, but the contract was up on Jan. 1, and from what we understand, they wanted to renew but the Academy of Magical Arts didn't want them to. There were legal squabbles, restraining orders, and in the early dawn of New Year's Day, the AMA took back the food and bev program---by changing phone lines and locks, and placing security guards around the building to "prevent interference" from heads of MFB. Now there's a slightly new menu (lowered prices, and the "heralded return" of Beef Wellington and tirimasu) and new furniture. Magic Food and Beverage, if that continues to be their name, still oversees Yamashiro.

There's also some news about the sale of the two Hollywood icons. The land on which Magic Castle and Yamashiro sit, of course, was put on the market last year; both venues received landmark status, and a clause with the sale says both must stay as they are. As we understood it, Sean MacPherson, he of Jones, Swingers, Bar Lubitsch, etc., planned to take over ownership of Yamashiro (and apparently the hotel at the castle, too), but now there's some issue between his group and the sellers. Everything sounds up in the air. While we await word from all parties involved, we have the full Magic Castle newsletter that went out to members to explain everything, just for you.

An Update From Robert Lamoureux

"A lot has happened at the Magic Castle in the last week and I wanted to bring everyone up to date with as much information as possible so that we can all beon the same page as we begin the New Year.

First, as many of you may have heard or seen, the food and beverage operations at the Castle are once again under our management and control. Effective January 1st, the waiters, bartenders, cooks, reservationists, events personnel- all of the employees and managers at the Magic Castle are AMA employees andnone are employees of Magic Food and Beverage. The four year contract between AMA and MFB terminated on December 31, 2008 and it was the decision of your Board of Directors, based on the recommendation of AMA management, not to renewor extend the MFB contract.

You may have noticed some changes already - a new interim menu was introduced when the Castle opened for business on January 2nd which featured reduced prices on some items and heralded the return of Beef Wellington and a popular dessert, tirimasu. Also, when you order an entrée, a dinner salad and garden vegetables are now included, with no need to order them a la carte and pay separately for them. Much of the new interim menu is the same as it has been over the last year, but there will be more changes coming.

You will undoubtedly notice that a lot of the faces are the same at the Castle. Many of the MFB employees had been AMA employees for many years before the MFB contract went into effect in 2005 and we were delighted to welcome them back tothe AMA family. Many of the newer MFB employees asked to sign up with the AMA to continue to work at the Castle and most all who applied have been hired -you will see very few new faces, although there are some. Please join me inwelcoming them all back. However some personnel changes were made and you willno longer see Andy Ulloa, Dave Williams, Alfred Mesa or Lesley Comfort, among others, working at the Castle.

You may also notice some changes in security at the Castle. MFB's securitypersonnel, including Omar Puga, are no longer present at the Castle, orpermitted on the premises. We have Jim Bentley to thank for handling our newsecurity arrangements with a crew of off-duty LA County Sheriff's deputies andoff-duty Los Angeles Police officers. These gentlemen may not be immediatelynoticeable - they are all very fit, well-dressed, polite gentlemen who arerecognizable only by the earbuds in their ears and the badges on their beltsdiscreetly covered behind their jackets. Unfortunately, it was necessary to have a large contingent of our own security present at the Castle beginning inthe very early hours of January 1st and they have been on duty 24/7 over thelast week. They will continue to be present for the near term; hopefully our need for them will diminish as time passes and the transition is accepted by MFB.

We all owe a great deal of thanks, also, to the on-duty LAPD officers andsupervisory personnel of the LAPD Hollywood Station who were needed each dayduring the first few days to assist our own security personnel in preventing interference from Mr. Ulloa, Mr. Williams and MFB during the changeover. Ifyou see any of these fine gentlemen in blue uniforms at the Castle over thenext few days, be sure to give them a smile and wave - they are there to helpensure that the Castle functions normally without any problems.

The logistical tasks were enormous as we transitioned to our own food andbeverage operations beginning late on December 31st. We have Mark Felicetti, Dave Clement and many, many other AMA employees and volunteers to thank forworking virtually around the clock for days to ensure that we were self-reliantand prepared to re-open on January 2nd and continue with normal operations atthe Castle without any MFB personnel or equipment. We have purchased and installed new telephone equipment, new Posi-touch hardware and software, new reservations systems, new dining room chairs (which look the same as the MFBchairs), new safes, new computers and new furniture in the offices. All of the locks in the building were changed in the early morning hours of January 1st and MFB is no longer in any of the spaces which we had permitted them to use in the AMA offices on the third floor over the last four years.

There have, of course, been a few glitches over the last week as we switched over to new systems and hardware - the new telephone system has needed somefine tuning, the reservation system needed breaking in and systems are beingchanged and refined as we move along. Please forgive the occasional hiccups aswe move through the tasks necessary to switch over to our own systems, but know that everyone is working hard and long hours to make things better for ourmembers and guests.

The transition has not been without legal controversy, of course. On the morning of Tuesday, January 6, 2009, Andy Ulloa and MFB's attorneys appeared in Department 86 of the L.A. County Superior Court to apply for a Temporary Restraining Order and OSC re Preliminary Injunction against the AMA. Mr. Ulloaand his attorneys requested that the Court issue an immediate restraining orderprohibiting the AMA from: (1) continuing to conduct its own food and beverageoperations at the Castle; (2) continuing to bar Andy Ulloa, Dave Williams andother MFB personnel from access to the Castle; (3) removing MFB's furniture,fixtures and equipment from the Castle; and (4) requiring that the AMA returnthe food and beverage operations to MFB's control. The AMA's General Counsel,George Juarez, filed written opposition papers and argued on behalf of the AMA at the hearing together with our Assistant Secretary, Maurice Newman. I'mpleased to report that the Court turned down all of MFB's requests and refused to schedule any further injunctive relief proceedings, as requested by Mr.Ulloa. Copies of the relevant pleadings and a transcript of the hearing willbe posted soon for anyone to review the details of the factual and legalarguments made by MFB's attorneys and George Juarez on AMA's behalf.

There will undoubtedly be further legal proceedings as the AMA seeks to recover damages from MFB and MFB asserts its claims against the AMA; but these issues will be over money and not about control of the Castle's operations. We are confident that at the end of these proceedings the AMA will be entitled torecover substantial damages against MFB, Mr. Ulloa and others.

Many have asked about the status of the sale of the Glover Family property andour lease negotiations. Unfortunately, there are conflicting reports at this point about what is happening with the property sale. We know that the sale ofall 10 ½ acres of the Glover family property, including the Magic Castle,Yamashiro, the Magic Castle Hotel and apartment properties, was in progress toa group lead by Sean MacPherson and was scheduled to close on December 31, 2008. As I have reported in the past, a negotiating team selected by the Board of Directors had been in discussions with Mr. MacPherson for some time and we had reached the basics of an agreement in principal for a new lease for the AMAon terms that would have been very satisfactory. The terms of the new lease included that AMA would once again be in charge of all operations at the Castle, including food and beverage operations. The details of the new leasewere yet to be finalized pending the closing of the sale transaction. The sale did not close on December 31, 2008 and we have had conflicting reports as to the reasons.

It appears that disputes have arisen between Mr. MacPherson and his group as the buyers and Tom Glover and Andy Ulloa on behalf of the Glover Family as the sellers. We anticipate that litigation is likely in the next few days between the parties over the status of the sale, but the AMA willnot be a part of that litigation. We have developed a very good relationship with Sean MacPherson and we anticipate that if, as he believes, the sale ultimately goes through, we will be able to quickly get back to finalizing a new lease for the AMA. In the meantime, we have a written agreement with TomGlover on behalf of the Glover family that the AMA will remain at the MagicCastle on a month-to-month basis until the land sale issues are resolved. There is much more to the story, but as we will be in litigation with MFB and Mr. Ulloa, and there will be litigation over the land sale, I cannot provide some of those details. But for now, the future of the AMA and the Castle issecure and we are thrilled to once again be able to coordinate all activitiesat the Castle under AMA control for the benefit of our members and guests. As further developments occur, I'll keep you updated!"
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