Strip Club Report Boom in Revenue--Forbes magazine

[AkashaM]

"Hustler publisher Larry Flynt and "Girls Gone Wild" king Joe Francis facetiously asked Washington for a $5 billion stimulus package for the porn industry in early January. "Americans can do without cars," said Flynt. "They cannot do without sex."

Or at least a reasonable substitute. Strip clubs and other adult businesses are booming as the rest of the economy craters. Rick's Cabaret International (nasdaq: RICK (http://finapps.forbes.com/finapps/jsp/finance/compinfo/CIAtAGlance.jsp?tkr=RICK) - news (http://search.forbes.com/search/CompanyNewsSearch?ticker=RICK)- people (http://people.forbes.com/search?ticker=RICK)), a nationwide chain of jiggle joints, reported that for fiscal 2008, revenue is up 87% to $60 million.
Rick's attracts 70,000 customers a month to its 19 clubs. At its New York spot alone Rick's posted just over $1 million in revenue in December. "The stimulus package has been very, very good to us," cracks Allan Priaulx, Rick's head of investor relations.

Francis Koenig, the goateed, 32-year-old chief executive of AdultVest, the first hedge fund for porn, reported a 50% rise in its returns last year, though he won't say how much or which ones delivered.
Koenig's funds, called Bacchus and Priapus, invest in gentlemen's clubs and companies that acquire them in the U.S. and Canada. AdultVest purchased strip club chain VCG Holding (nasdaq: VCGH (http://finapps.forbes.com/finapps/jsp/finance/compinfo/CIAtAGlance.jsp?tkr=VCGH) - news (http://search.forbes.com/search/CompanyNewsSearch?ticker=VCGH)- people (http://people.forbes.com/search?ticker=VCGH)) last May and recently bought iPorn.com, a site that hosts online dating and live video.

Amid all this froth, AdultFriendFinder, which owns Penthouse magazine and other adult brands, floated a $400 million IPO in December, though the ticker is not trading yet..."

Read the whole article, "Strippernomics"
http://www.forbes.com/media/2009/01/21/economy-pornography-recession-biz-media-cx_ds_0121porn.html?partner=media_newsletter

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This is probably because dancers are getting fined for every little thing. I read Rick's prospectus and annual report and they don't mention that the dancers pay house fees and fines.

But I digress.

Why arent we seeing this "boom?"

[cinammonkisses]

Oooh what an excellent article. Now I want some adult hedge funds lol

[short skirts]

Maybe the dancers aren't seeing this "boom" because the clubs take all the money from both us and the customers and hoard it to themselves.

Just my thought, I could be wrong!

[miabella]

also, i note the hedge fund didn't mention what its returns were to begin with. going from 2% to 3% can be considered a "50% rise in returns".

[mysteryman]

Ricks is in trouble. Everything is being based off 4Q earnings which reflects July/Aug/Sept.
You will see major changes in 1Q Oct/Nov/Dec and 2Q Jan/Feb/Mar.

Ricks clubs are sinking fast. Just go take a look at a few of its latest purchases. $21 million Las Vegas Ricks sinking like a rock, business off by 70% since purchase. $9.5 million Dallas Ricks location has not made a dime and has since been converted to a BYOB to become XTC.
Ricks Philly Location within months after being purchased was converted to a Onyx.

This is all mis-management and bad business purchases.

What is holding this company up right now is Miami Tootsies, NYC Ricks, and Houston Ricks locations. Eventually all this dead weight will crush this company. Last conference call with Eric the CEO he stated "will close 3-5 clubs if things do not turn around. It will be a one time hit on the books. Were looking to close Austin, one in Houston, San Antonio and more"

Back to the numbers, up 87%. Ok that sounds great but thats not a fair statement. Its made on the fact that more clubs were added, which in turn adds more income. Now compare it to the amount of stores last year vs same amount of stores and the number is a flat line. Meaning they are equal to last years numbers store for store. So if you had 12 stores last year and you add 7 stores now of course your numbers go up.

It looks impressive on paper but reality is the numbers are going into the toliet. Just watch and wait.

[glambman]

Forbes also has a decent article about how big porn really is. It's not the high numbers everyone wants to attribute to it.

[mysteryman]

Yes Glambman I agree. Porn is a dieing industry. Look at all the magazine sales, down, dvd sales, down. Why? Simple free porn on the internet. Eventually porn will die as a big business.
This is probably the first time that mom and pop operations have crushed big business, because its mom and pop independent porn film makers that have done the damage.

[glambman]

It was before that. It dealt with the 'porn is bigger than all sports combined' and negated that view with circumstantial evidence. However, it clearly showed the industries figures were way off, and the study that got the industry its figures were bogus. The organization that allegedly did the study was found to be non existent.

But yeah, you are right. There are so many niches, and the big producers are more interested in selling you want they want you to have.

[britneyireland]

Interesting MSN reported the OPPOSITE findings a week later
http://articles.moneycentral.msn.com/Investing/CompanyFocus/tough-times-for-porn-booze-sellers.aspx

[glambman]

MSN went deeper.

[Kylea2]

Britney posted exactly what I was going to report. Has anyone actually looked at the financial reports?

It looks like VCGH might be doing good in 2009, as well as the top branded clubs... which MSN said could survive the recession. It's the small independent clubs that will probably be having problems.

http://vcgh.client.shareholder.com/releasedetail.cfm?ReleaseID=358673

[TravelandStrip]

Just came across this article on the best and worst cities for recession recovery: http://www.forbes.com/2009/06/09/recession-economy-cities-business-beltway-recovery-cities.html

I wonder how much this relates to our industry? Any girls working in these areas?

[Melonie]

^^^ there are a lot of other variables that go into 'dancer earnings potential' besides a general uptrend in a particular area's local economy.

- the prevailing percentage 'take' of dancer's private dance / VIP money kept by the club
- the amount of house / stage fee charged by the club
- the effect of local anti-strip club ordinances / busts
- the effect of local social attitudes on customers' propensity to patronize strip clubs