The Houston-based company will rename the nightclub Rick’s Cabaret and will occupy 10,000 square feet on three levels, the maximum square footage allowed in New York City. The company will acquire an additional 4,000 square feet for office space.
The location fits in with Rick’s Cabaret’s strategy of locating strip clubs near sporting venues and offices — Paradise Club is located near the Empire State Building and Madison Square Garden, and less than 10 blocks from Times Square.
“That’s the strategy of Rick’s, and in this case you’ll have a lot of traffic from those leaving the hockey or basketball game,” company spokesman Allan Priaulx told XBiz.
Through its RCI New York subsidiary, Rick’s Cabaret also will assume a lease with 19 years remaining. The company also is studying a variety of proposals for additional financing of $1.4 million that will be used to remodel the existing venue.
“Once we have finished remodeling the club early next year it should add significantly to the company's annual revenues and is expected to be accretive to earnings in fiscal 2005," CEO Eric Langan told XBiz.
The total purchase price for the assets and stock of the existing club is $7.625 million, payable $2.5 million cash at closing and $5.125 million payable in a promissory note at four percent.
Priaulx said the deal was inked Wednesday and that it is expected to close in December.
According to Securities and Exchange Commission filings, Rick's Cabaret earned $438,000 on revenues of $15 million in fiscal 2003. For the nine months ending June 30, total company revenues were $11,891,000 with net income of $698,000.
The company owns and operates seven adult nightclubs under the names Rick's Cabaret and XTC in Houston; Austin, Texas; San Antonio, Texas; and Minneapolis, Minn. It licenses Rick's Cabaret in New Orleans, and owns an adult-themed club called Encounters that serves swingers market and a sports bar called the Hummers, both in Houston.
Rick's Cabaret also owns two adult Internet membership websites at couplestouch.com and xxxpassword.com that contain content acquired from wholesalers, and a network of nine online auction sites under naughtybids.com.
In midday trading on the Nasdaq, Rick’s Cabaret was up by 3 cents at $2.50.