April 17, 2014

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Financial woes lead to club’s closure

CLEVELAND — Stung by sagging membership, financial problems and a mammoth construction project at its front door, the Cleveland Athletic Club will not celebrate its 100th year but instead will close. The club founded in 1908 planned to close on Monday — New Year’s Eve — and begin liquidating its assets soon after. The club’s board of directors in July recommended it file for bankruptcy protection.

A “calamity of errors” robbed the private athletic, social and business club of its financial solvency in the last few years, President Harry McDonald said last week.

Those include dwindling catering revenue and fallout from the Euclid Corridor Project, which started in fall 2004. The $168 million project will upgrade the city’s main link between downtown and its eastern suburbs.

The athletic club had grown with Cleveland since the turn of the 20th century. During World War I, the club sold $3 million in Liberty Bonds to support the Allies and provide scholarships to high school graduates.

In 1922, Olympic swimmer Johnny Weissmuller set a world record for the 150-yard backstroke in the club’s pool. Weissmuller later played the movie character Tarzan.

Like the city itself, the club recently has faced the challenges of companies and residents leaving Cleveland for its suburbs. Some expansions left the club with debt that member assessments couldn’t pay off, said Tony Viola, president of Realty Corp. of America, which is a tenant in the Cleveland Athletic Club building.

The assessments also caused some members to leave, Viola said. The club now has fewer than 300 dues-paying members, McDonald said, down from 750 in January.

“It’s quite sad,” said Viola, a club member and leasing agent for the club’s 15-floor building until it was acquired by a developer in September.

The club’s financial troubles began long ago, culminating in $750,000 in debts, mostly accrued before members took over management in November 2006.

After the July board meeting, the club announced that it would discontinue its food service until later this year to save money. The staff has been cut from 40 to 12, McDonald said.

McDonald blamed the Euclid Avenue reconstruction for depleting the club’s catering business, once its biggest moneymaker.

During the last two weeks, McDonald, who has been the club’s president for six months, and his directors have tried to raise money to enable the club to continue operating as it reorganized in bankruptcy court.

“With less than half of the goal reached by Thursday, and with less than half the membership agreeing to lend funds, it is apparent that it is time to end the legacy of the CAC,” McDonald wrote in a letter e-mailed to club members on Friday.

“While we have made a valiant effort to resurrect our club, there are just too many obstacles to tackle and overcome,” McDonald said.

The club planned to remain open over the weekend and close Monday.

McDonald said he has been working with lawyers on a Chapter 7 bankruptcy liquidation filing but does not know when it will be filed.

“It’s just a shame a 100-year-old institution could not rebound,” he said.