In this edition of her Toronto-nightlife history series, Denise Benson revisits the biggest, most ambitious, and most fatally expensive nightclub the city has ever seen.
The beginning of the end: It’s impossible to discuss CiRCA without addressing the financial troubles, variety of court cases, and competing economic and artistic priorities that ultimately led to its downfall. The fact that CiRCA opened carrying millions of dollars in debt is irrefutable. Once doors had opened, the priority was paying rent, the interest on those early loans, and for day-to-day operations. There was a swirl of rumours about who or what was paid under Gatien’s watch.
“Talk to any bartender, waiter or bus boy who was there; I never missed a payroll,” Gatien insists. “When I was there, we also never missed our withholdings to the government, we were current with our rent, all that stuff.”
“The staff was getting paid for the most part at that point,” verifies former general manager Bristol. “Sometimes it was late, but it always got paid. I was behind, but the other managers were not, and the promoters were behind.”
Arena Entertainment already owed more than $600,000 in back rent by the time CiRCA opened in October 2007 (according to a Notice of Intent and Proposal from Arena’s eventual 2010 Bankruptcy and Insolvency Act [BIA] court proceedings), but RioCan did not provide monthly specifics prior to April 2007, despite Kulidjian’s repeated requests. The landlords do not appear to have initially demanded arrears, but instead made compromises and granted credits towards CiRCA’s rent. RioCan Statement of Arrears (SOA) figures from November 2009 do indicate that CiRCA’s monthly rent was generally kept current during its first year of operations. The big troubles began in December 2008, when—according to the aforementioned SOA—rent was not paid in full, followed by no payments in both January and February 2009.
This was a time of great turmoil at the club. By late 2008, Ari Kulidjian had hired accountants to do a financial audit, ostensibly with the goal of cutting CiRCA’s costs. This not only led to a falling out between Kulidjian and Gatien over the funds devoted to the club’s art department, aesthetics, and DJ/performer fees, but also a $20 million civil lawsuit that pitted the two (and related parties) against one another. Kulidjian and Arena Entertainment accused Gatien of financial mismanagement, breach of contract, slander, and more. Gatien, in a counterclaim, filed for breach of contract and back pay. (The lawsuits were dismissed for delay in 2011.)
Things came to a head when Gatien resigned in February 2009, leaving Kulidjian and Stephan Katmarian as the remaining co-directors of Arena Entertainment Inc. In a January 2010 affidavit (from the Arena Entertainment vs. Peter Gatien, PJG Holdings Inc. and Alexandra Gatien proceedings), Kulidjian stated that Gatien had quit in response to meetings of Arena’s Board of Directors in which the Board had criticized Gatien’s “mishandling of Arena’s financial affairs.”
Gatien tells me he left CiRCA because “I was not going to be associated with something that I considered to be a sub-standard product. Long story short, I very much believe that you have to continually reinvest in your club. That’s why our art department was so extensive, our installations changed all the time, we reinvented all of the rooms, and that sort of stuff.
“My two primary partners [Kulidjian and Katmarian] saw that as a waste of money and felt that we should cash in and just become a bridge and tunnel [suburban/commercial] club. I got tired of trying to explain that if you want to last 10 or 20 years in the business, you can’t be shortsighted on your profits and try to shortchange the public. The art component of the whole club and the DJs—to do it right costs money. There’s a lot that goes on behind making a place become an institution versus a place that’s just okay.” (Ari Kulidjian rejected my requests for an interview, stating only that I should refer to the court documents related to Arena’s BIA proceedings.)
Following Gatien’s departure, things took a turn for the worse. Just weeks after, in March 2009, RioCan made a formal demand for payment of CiRCA’s full arrears, listed as $822,754.58, within seven days. A series of such demands did result in Arena, under Kulidjian and Katmarian, prioritizing monthly rent and payments towards arrears for a period. But other aspects of CiRCA suffered: the club’s art department was unceremoniously closed that month.
“I showed up for work one day and was told that I was no longer allowed on the property—not even to clear my desk of personal belongings,” says artistic director Baird, who has worked to design a number of INK-owned clubs of late, including the soon-to-open spot at 473 Adelaide W., former home of Devil’s Martini.
“After a solemn promise from these investors to pay me back wages of approximately $30,000 they instead cut the art department down to the one person—someone we had hired as a costume seamstress. It was all done with the hidden agenda of catering to the lowest common denominator, thinking that the patrons wouldn’t know the difference or care.”
“After Peter left, the directors and the powers that were left over became a lot tardier with their payments,” adds Bristol. “Some people’s payments stopped totally.”
Promoters including Chambers, GEM, and A.D/D all mention promised pay that was never received.
“Peter definitely started to ring up the unpaid bills, but it really started when he left and the guys who took over thought they could run the club by not paying people at all,” offers A.D/D’s Mario Jukica. “Slowly but surely, when you don’t pay people, they start to talk. When you stop paying promoters, people stop coming.”
As a patron, it was hard not to notice that CiRCA no longer felt as magical, that damaged furniture was slow to be repaired, or that DJ and entertainment bookings dried up.
“The art and the vision were gone,” says Bristol. “The creativeness slowed and then came to a halt.”
Bristol left two months after Gatien, going to the Guvernment and taking a lot of CiRCA staff with him. (Bristol continues to work for Charles Khabouth’s INK Entertainment; today he is director of venue operations for the company.) The turnover didn’t stop there. By mid-summer 2009, A.D/D and Randomland Fridays were no longer on the roster.
“When Peter left, the life force left with him,” says Jukica.
“CiRCA was Peter’s vision, and with him gone it just didn’t work,” agrees Pettigrew, who ended his highly profitable Traffic Saturdays around the same time. “GEM had to move on. The new owners just didn’t get it, so we decided it was best we leave.” (Pettigrew now lives in Los Angeles and is one of the driving forces behind the fast-growing BPM Festival, held each January in Playa del Carmen, Mexico.)
CiRCA’s programming became decidedly mainstream; Top 40, hip-hop, commercial dance music and bikini competitions became common as Arena worked to draw larger crowds and income. Reams of email correspondence between Arena and RioCan paint the picture of a club in trouble.
By August 2009, contributions to monthly rent were paid only after repeated landlord requests. Court documents from Arena’s BIA proceedings include binders full of emails outlining their excuses. Two bounced cheques in September were followed by a low payment in October and zero rent paid in November. On Nov. 5, after repeated notices of default, RioCan demanded full arrears of $789,550.76 by Nov. 12.
On Nov. 11, filing under the Canadian Bankruptcy and Insolvency Act, Arena Entertainment put forward a Notice of Intention with a Proposal to restructure and modify existing arrangements with their more than 150 creditors.
This would have led to some—including Toronto oil executive Robert Salna, a primary investor who reportedly sunk more than $1.8 million into CiRCA—being paid in full over a longer period of time while other creditors would receive only a percentage of what they were owed. Multiple creditors, including RioCan and the Royal Bank of Canada, immediately opposed Arena’s Proposal, resulting in a series of related court hearings.
Many close to the club believe all this should not have been necessary.
“During CiRCA’s first year, we did $14 million of business, which is a lot in Toronto,” says Gatien. (This figure was reiterated by Bristol, although a 2010 Globe and Mail article references court filings that suggest $7 million in revenues was a more likely number.)
“That club made a lot of money,” Gatien asserts. “We actually reduced the debt by a couple of million dollars in the first year.”
Others offer figures that back up Gatien’s claim. Experienced club and restaurant owner/operator Yigal Bensadoun was brought in as CiRCA’s general manager in October 2009 by Arena’s insolvency trustee, Hans Rizarri of Soberman Chartered Accountants.
“The club was a disaster from top to bottom,” writes Bensadoun by email. “I had to hire a whole new team within the first week to rebrand CiRCA and create something exciting in a place that had already been around for two years. It was a huge challenge to make it work again.”
He states that when he started, “Sales at CiRCA were averaging $45,000 a week. The place needed to generate $75,000 per week to stay afloat.”
Bensadoun also offers that, in working with Rizarri, “we were able to bring the sales up to well over $140,000 a weekend, and were able to show profits within the first month of operations.
“What was mind boggling is that sales on Saturday nights reached over $200,000 when the club first opened, and towards the end of CiRCA, those numbers were there again.”
Photo: Lucas Oleniuk/Toronto Star.
What happened to it: Bensadoun, who now manages INK’s This Is London nightclub, describes a damning scenario.
“Money started coming in again, and the partners started to pay close attention to where the monies were going. The owners were not interested in paying down the debt to suppliers, bank loans, and RioCan. I had a deal in place in order to pay the landlords back, but they were more interested in getting back their investments.”
A Notice of Default served by RioCan on March 12, 2010 does state that Arena owed $79,357.52 in rent for the month of March, and that they should pay by the next day or the lease could be terminated.
“At that time, I couldn’t reinvest the money into the club by trying to bring new attractions, artists, and DJs to maintain the popularity that we’d regained,” states Bensadoun. “Things could have gone differently; the club earned enough money, and then some, to keep the place alive.”
The various efforts, arguments, and court cases became irrelevant. On March 24, 2010, CiRCA declared bankruptcy. Almost $9 million was owed to creditors; bankruptcy was declared after the Royal Bank demanded repayment of a $249,000 loan.
Receivers were called in on March 24, 2010, to begin the process of distributing CiRCA’s assets, valued at just $62,004.
Those of us who marveled at the club’s existence and potential are left to wonder what could have been.
“Even though CiRCA was not a financial success, it still left its mark on this city, and raised the bar for creativity, originality and style in a ‘super club,” says Pat Boogie. “It also brought an element of musical and artistic variety not seen on this level in Toronto.”
“CiRCA showed me what the next level of nightlife should be,” adds Bristol. “You always hear people saying that people, things, or products were ahead of their time; CiRCA actually was.”
“I was very proud of CiRCA,” says Gatien. “I was very proud of the staff and what we accomplished under very difficult circumstances. Had CiRCA not had the internal problems that we had, and I had been left to run it the way it was meant to be run, it would still be going gangbusters today.”
These days, Gatien is at work on developing a television series. (“It’s basically an Entourage-slash-Sex and the City period piece set in ’90s New York.”) He also helped finance the 2011 documentary Limelight, which focusses heavily on that club’s rise and fall and the court cases brought against him. I highly recommend a viewing.
Though he’s more likely to open a boutique hotel than he is another nightclub in Toronto, Gatien does still believe that a similarly grand superclub could succeed downtown.
“You need a lot of components to work at the same time, but if the right situation presented itself, Toronto’s market is more than adequate to sustain anything that any other large city can. You’ve got a large creative community, a lot of hip people; it may not have the joie de vivre that Montreal has, but it’s certainly not a one-horse town.”
As for 126 John Street itself, it’s again changing with the neighbourhood. A two-floor Marshalls department store opened there last Thursday.
Photo: Denise Benson/The Grid.
Thank you to Craig Pettigrew, Eve Fiorillo, Jeff Rogers, John Mitchell, Kenny Baird, Mario Jukica, Orin Bristol, Pat Boogie, Peter Gatien, Rolyn Chambers, Steve Ireson, Yigal Bensadoun, and Stuart Berman.
Read the entire Then & Now series exploring Toronto nightlife history here at The Grid. Feedback can also be shared at Denise Benson’s related Facebook page.