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Is New York's most vital music venue suddenly gasping for breath? For many employees at the Knitting Factory, payroll has been late in every pay period since the beginning of September, and the September 15 checks bounced; some employees were given checks and asked not to cash them. KnitMedia impresario Michael Dorf claims he hasn't drawn his own salary in five months, and says others have volunteered to wait. Senior managers are leaving, and many staffers at the Knit's L.A. branch are mutinous. A brand-new webcasting studio in New York has been converted back into a performance space, and plans to open a third club in Berlin later this year are on hold.
"For a long time we were allowed to cash our checks at the bar from the register, but now we can't," says Jordan Worley, named three weeks ago in the Voiceas New York's Best Barback in a Music Club. "A lot of people who work here are squatters and anarchists, and they don't have bank accounts." "The Knitting Factory is a great company," says a senior manager who wished to remain anonymous, "but it is unacceptable under any circumstances not to pay your employees."
Former compatriot Kramer, who sold his Shimmy Disc label to the Knit in 1997 but retained the title of Shimmy Disc's A&R director, says he's "not sure the label exists anymore" and will soon sue to enforce the deal (Dorf says the label is "operating").
The empty purse affects audiences and artists, too; refunds are still owed to some ticket holders from rained-out shows at the Knit's four-city Bell Atlantic Jazz festival in June, and there were delays in paying performers. Switchboard staff describe angry calls from creditors fruitlessly circling the centrex; at various times last month the Leonard Street club ran out of cups, napkins, candles, merlot, and postage. For a few weeks, only three of the 18 taps in the basement Tap Bar were flowing.
"You couldn't get a Jack and Coke," says Glenn Max, the programming director. "I drank elsewhere. This is as bad as I've ever seen it, but I've seen it get pretty bad. I've seen the power turned off." Performers at the club were never shorted; in keeping with the club's long-standing policy, artists receive at least 70 percent of the gate (some receive a straight guarantee), although on a few nights managers had to dip into cash registers to settle up.
This should have been the Knit's year: At the spiritual if not the geographical center of pre-crash millennial Alley fervor, the inventive Dorf was poised for world domination. "By leveraging content around our globally recognized brand name in the Knitting Factory club, we have consistently had strong gross margins across our multiple product lines," crows the business plan posted on its Web site.
Many employees feel that Dorf bit off more than he could chew. Jennifer O'Connor was promotions manager for the club until she was laid off in July for financial reasons. "If there was less focus on how 'smart' the club is or how 'connected' or whatever the buzzword is this week, and more invested in the people who make the club what it is, there would be less of a cash flow problem," she says.
Dorf attributes the financial crisis to a Bermuda Triangle of bad breaks. "Construction at the L.A. club went way over budget and delayed the opening. We lost money on the jazz festival. And we were relying on Internet money, parties, and sponsors, and in April that just dropped off the face of the earth."
Back pay is now up to date, and Dorf says he will pay any fees incurred for bounced paychecks, but as of press time last week's checks were three days late. At least one staffer was not surprised: "We've been lied to about that constantly." In an e-mail to employees, he promises that come December, "I will certainly be making the rounds doing my jewish santa thing."
The new hires in L.A. may not be willing to wait that long. Several employees staged a sick-out on Yom Kippur, the day before a party for publicists, and returned to work when Dorf promised to pay them by the end of the week.
The L.A. club cost Dorf $5 million in venture capital, and looks it, once you find the entrance (it's hidden away in a mall on Hollywood Boulevard, with frontage on a side street). The 459-occupancy main room feels like a TV studio, with shiny wood floors and a soothing gray carpet in the expansive balcony. There's a smaller "AlterKnit" space for work more in tune with the Knitting Factory's "brand," and a Melrose-esque restaurant serving $9.50 burgers. Staff say business has picked up steadily since the club finally opened on August 11.
"In New York, if you don't have all your approvals you can open but you can't sell liquor," says Max. "You can't do that in L.A. Everything goes by the book." The 10-week delay forced Max to cancel an opening round of heavy hitters like Sonic Youth, Violent Femmes, and Diamanda Galas; the club paid cancellation fees to artists but not the staff, and key employees walked. Max scaled back his booking ambitions until he was sure the club could open, and so far only three shows have sold out.