What a cloak & dagger mess.
This is one of the things that made me shake my head about the Academy of Magical Arts 8 years ago. People doing the he-says-she-says blame game dance around club matters – with a lot of people putting a ton of subjective emotion into the fray & few people actually putting up fact. 8 years ago, I ended up putting my membership on hiatus -mostly because I was having money troubles – and forgot all about it. I rejoined this year only to find that… well, not much has changed.
What am I talking about? Start with this:
- Hollywood Reporter: “Magic Castle at Center of Family Fight Over Profits”
Now, if you dig up some messages and do your research, you’ll find that Milt Larsen, founder of the Magic Castle wrote this on the topic – sort of a response so to speak:
- Milt Larsen’s Blog #22: “Milt Larsen is not the bad guy!”
The relevant portion of the post reads:
“In the March newsletter in Maurice’s report mentions: “Looking at our operating costs, rent approximates $700,000 per year and payments for creative services to Milt Larsen amount to well in excess of $400,000 per year.” On the AMA books I am being paid that money for “creative services.” That’s true, but what is the definition of “creative services?” In my book that’s the royalty of 5.5% of the food and beverage sales at the Magic Castle as agreed upon by every Board of Directors since the inception of the club until recently. It is a fee in payment for my conceiving and physically building a Magic Castle clubhouse at no cost to the AMA, which includes the rooms of antique paneling, chandeliers, bars, art glass windows and ceilings, gimmicks and trademarks.
This past year the total gross of the AMA was in excess of $12,000,000. The $400,000 paid to me amounted to 3.33% of that income. As a writer I am a great believer in the rights of “Intellectual Property.” Inventors, authors, songwriters, artists, etc. deserve compensation for their work as long as it is enjoyed by future generations. After spending a half century creating a world famous facility and trademark I can’t tell you how much I am saddened by the fact that Magic Castle name is not to be found anywhere in the club. This year’s Founder’s Day was all about the founding of the Academy of Magical Arts. As far as that event goes the AMA acts as if the Magic Castle no longer exists.
At the request of the AMA there will be a mediation hearing on April 15th before a retired judge. The judge will attempt to resolve the AMA’s position that it should no longer have to abide by the contracts it signed. Whatever the judge recommends I will support the AMA and continue promoting the art of magic in our various projects under the banner of Magic Castle’s Inc.”
But then, a member of the AMA wrote the following:
- Facebook AMA Group: “Regarding the original agreement” https://www.facebook.com/groups/AcademyofMagicalArts/
Now, if you’re not a member you won’t be able to read the comment so, here’s the relevant portion:
“…that was not “the agreement going in”, as you so hopefully put it. The agreement has been modified time and again, and the question becomes, when did its modification cease to be fair and reasonable?
I have said it before, Milt, Bill and Irene, deserve our thanks and financial support for their efforts on our behalf, but that must be tempered by financial responsibility on the part of the Board of Directors.
Was the last agreement fair, or was it fiscally imprudent and possibly beset by conflict of interest. That is what must be decided.
Milt was our landlord and our creative building director AND held the trademark. He has stopped being two of these things. Isn’t it appropriate that with less service he should receive less compensation?
[AMA member] feels that 5-7% is the “right number” to pay for a trademark. We only paid 4% for all three things in the past. Why the sudden climb of percent? Is it reasonable for our club? We have a history of not being very successful, needing to be bailed out by the members time and again. Joe Furlow and the BOD have done great work recently for the last few years, so let them continue to make improvements. I expect we will get to use the name Magic Castle for the future, the question is just how much is that worth and can we afford it.”
- AMA’s stance appears to be that:
- The Milt Larsen contract has been renegotiated regularly
- The last negotiation resulted in committing too much money to Milt – a 1.5% raise, from 4% to 5.5%. They believe this was a result of a bias by some previous folks on the board, stacking the deck against the overall interests of the club. Can the contract be voided on this point?
- Milt Larsen’s originally had 3 roles under the previous agreement and now has only 1 but is being paid the same, thus Milt’s payment should be reduced appropriately.
- Milt’s stance appears to be:
- The AMA Board of Directors signed the agreement – like it or not, they need to legally abide by it.
- Milt didn’t benefit from this arrangement for years – i.e. made no money – when the Magic Castle failed to turn a profit. Now that it has, they suddenly want to cut his share. How is it fair that he share in the “debt” but not the “profit”, esp. now the the Castle is finally making money?
- The AMA used the Magic Castle trademark for decades when they didn’t have to pay much for it. Now that they are paying a substantial sum for it, they’re choosing to eliminate it from use.
Personally, I think that a contract’s a contract and the AMA has to abide by it. If however there’s a term limit on the contract or a clause that says that the AMA can renegotiate it however at some time period, then they’re entitled to do that whether Milt likes it or not.
And this is where it gets ugly because Milt holds the Magic Castle trademark & largely commands public opinion. The Board of Directors holds the responsibility of making the Magic Castle a viable business as a commitment to it’s membership. And this time, it would appear that the board is made up of business men – not “family”.
This will get resolved, whether anyone likes it or not. The mediation will make it clear what renegotiation rights the Board has and what leverage Milt has in the AMA’s commitment to him.
I’ve noticed however that the Board has clearly brought an element of accountability to the financials of the AMA. They’re running it like a serious business (which the Magic Castle is) instead of a club (which the AMA is) And if the that means getting ugly on topics like this – well, welcome to the real world everyone.
In business, using everything you’ve got to drive the best deal for the people you represent, is standard operating procedure. It just is. If folks don’t like “putting on the big boy pants” and having the Board engage in real business tactics on their behalf, and think that a profitable club is not worth the angst or conflict, then perhaps they shouldn’t have elected this Board of Directors.