In the face of declining revenues and refusal by administrators to restructure a $650,000 lease plan with the University, owners of the Hideaway are signaling that the campus bar may close its doors at the end of the school year.
The Hideaway's main problem for next year is finding a new group of student owners, without which the bar cannot open. Current owners are worried that this year's financial losses, which they say are due to more stringent carding policies, will continue in the future and dissuade students from becoming owners.
Under the current loan agreement, 10 students are chosen each year for one-year ownership terms. These students invest a certain amount of money in the business and split any profits or losses. Co-owner Greg Blair, a Fuqua student, estimates that the Hideaway currently is recouping only 60 percent of what the owners invested at the beginning of the year. And if business continues at such a slow pace, Blair said other students may be unwilling to put up the approximately $7,000 per owner necessary to open the Hideaway next year.
"We have to go out and recruit new owners who are probably going to lose money on their investment," he said.
Both Hideaway owners and University administrators acknowledge that a September change in the campus bar's carding policy has contributed to the decline in business.
"In the past, the Hideaway has had an awful lot of business," said Fuqua student James Sherrill, also a co-owner. "The social arm of the University and the owners of the Hideaway have been working together to improve the underage drinking aspect, the safety of the bar and to improve the bar's reputation. Obviously, the consequences of that are that we're losing money."
Administrators agree that the Hideaway has been cooperative in attempts to reduce problems like underage drinking. "I've been very pleased with what they have been willing and able to do," said Sue Wasiolek, assistant vice president for student affairs.
The Hideaway owners asked administrators last month to restructure the lease plan that was put in place two years ago. At the time, administrators felt that responsibility for the bar was spread too thinly over a large group of owners, so the University bought all shares of the business for $650,000 and reduced the number of owners to 10. Each owner must purchase his or her shares upfront, then pay additional rent costs through the year. This year, the owners combined to pay the University $57,214 for their shares, and $1,035 a month for rent.
Wasiolek said the decision to reject the Hideaway owners' proposal for a restructuring was made from a financial perspective. "I don't think the University should be viewed as an entity that is going to bail out student business ventures that don't work," she said.
Jeffrey Potter, director of real estate administration, made the call to reject the proposal. "All we said was 'no, we had just negotiated it two years ago.'"
Scott Eichel, Trinity '97 and former owner of the Hideaway, blames the current financial crisis on the 1998 restructuring. "Under my reign... investors were making a 25 percent annual return, and we never had this underage drinking problem before the school took over," he said. "Once you put school officials in charge of anything concerning fun, they're going to mess it up."
Although the Hideaway has established itself as a tradition on campus, Wasiolek doubts if its closing would have a major effect on social life. "From what they've indicated, their business has been so minimal, one wonders if there's going to be any impact."
Potter denied that the rejection of the proposal was tantamount to closing the bar. "As far as I know, no decision has been made to close the Hideaway," he said. "There's no administrator who wants to see this change. It's the students who are getting worried."
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