Although Nichols would be billed as the lead producer of Annie, he was smart enough to live by Mel Brooks’s rule from The Producers: “Never put your own money in the show.” And so he left it to his agent, Sam Cohn, and his lawyer, Robert Montgomery, of Paul, Weiss, Rifkind, Wharton & Garrison, to raise the $750,000 to bring Annie to Broadway.
Montgomery called Jimmy Nederlander.
“We’ve got a show that looks very good, and we need some money,” he said.
“How much do you need?” Jimmy asked.
“Three hundred thousand dollars.”
“Three hundred thousand dollars! Jeez, that’s a lot of money. What’s the show?”
“Annie, based on the comic strip.”
“I don’t know.”
“Mike Nichols is producing it.”
“Mike Nichols! He’s a talented guy,” Jimmy said. “Let me think about it.”
Jimmy called his friend Roger Stevens, a producer who ran the Kennedy Center, and told him about the offer. They decided to do it together, each putting up $150,000. They had 40 percent of Annie.
The musical opened out of town in Washington to enthusiastic reviews. Nichols took the creators to dinner and said, “You’re going to be here six weeks. You’ve gotten good reviews and you’re going to be a hit here. But if you do nothing and bring the show in as it is, you are going to have one of the biggest flops in history. So get to work.”
“He scared us to death,” said Meehan. The next day, in Nichols’s suite at the Watergate Hotel, the creative team went through the show beat by beat, eliminating every scene, every lyric, every snatch of dialogue that slowed down the narrative.
Annie opened in New York on April 21, 1977—two years after A Chorus Line—at the Alvin Theatre on Fifty-Second Street. It rode into town on the wave of goodwill sweeping the country after the election of folksy, plainspoken Jimmy Carter. As Jack Kroll wrote in Newsweek, Little Orphan Annie is “the mascot of the new age of hope, optimism, and simplicity that’s coming in with President Carter.” John Simon, in New York magazine, understood exactly what Meehan was trying to do. He called the show “Oliver in drag.”
For Jimmy Carter and the country, that wave of “hope, optimism, and simplicity” would be short-lived. Carter lost the 1980 election to Ronald Reagan in the midst of a recession. Annie, however, would endure, racking up 2,377 performances. It would also, despite its creators’ intention to write a musical comedy for grown-ups, become one of Broadway’s first family shows. During the early weeks of the run, the audience comprised the usual Broadway crowd—adults from the Upper East and West Sides. “No kids,” Meehan said. “And then, about six weeks into the run, the same people started coming back with their kids.”
Annie, which opened with hardly any money in the bank, took off. Meehan remembered going to Saks Fifth Avenue to buy a tie a few weeks after the opening. “Tomorrow” was playing in the background. Goddamn it, he thought, this really is a hit. Where are the expensive ties?
For Jimmy Nederlander, Annie was the best bet he’d made up to that point. His $150,000 investment returned a profit of $1 million from Broadway alone. And that was just the beginning. There would be rent for years at the Alvin Theatre, money from three national tours, and a share of the $9.5 million movie sale.
While Tom Meehan went shopping for expensive ties, Jimmy Nederlander went shopping for more theaters. And soon Broadway was divided. By 1980, “You were either a Shubert man or you were a Nederlander man,” said Manny Azenberg.
“The Great Duel,” as the New York Times would call it, was underway.
CHAPTER FIFTEEN
I Love New York, Especially in the Evening
In 1975, the year A Chorus Line opened and Broadway began to regain some of its luster, New York City nearly went bust. “Out of the blue, the richest city in the world suddenly became one of the poorest,” Roger Starr wrote in The Rise and Fall of New York City. Or, as Ernest Hemingway put it in The Sun Also Rises, “How do you go bankrupt? Two ways. Gradually, then suddenly.”
The storm clouds that had been gathering over the city for more than a decade—soaring municipal wages and pensions; the perverse economics of rent control; ever-expanding welfare programs and middle-class subsidies; short-term, sleight-of-hand borrowing to papering over ballooning deficits; and a crippling tax burden that chased businesses away—burst. The crisis began in February when the Urban Development Corporation, a state agency created to develop moderate-income housing, ran out of money. Its failure signaled to the markets that New York State itself was in trouble, which in turn highlighted New York City’s financial plight. Later that month, lawyers for a group of powerful banks about to buy more city bonds demanded to examine the municipal books. They discovered a short-term deficit of $3.4 billion. “They professed shock at the irregularities and shortfalls they discovered, even though the banks they represented had overlooked such accounting practices in happier days,” George J. Lankevich wrote in New York City: A Short History. But now the music had stopped. When their report was made public, the city was frozen out of the credit markets. Bonds that had already been issued lost two-thirds of their face value. Standard & Poor’s “acted with indecent speed and suspended [the city’s] comically high A credit rating for the city,” Lankevich wrote.
For the rest of the year the city lurched from crisis to crisis, requiring bailouts totaling hundreds of millions of dollars from the state. Abe Beame, elected in 1973 because he “knows the buck,” lost credibility. He’d papered over budget shortfalls in the past, declaring the city solvent and warnings of impending fiscal doom overblown. Now, with the crisis in full tilt, nobody believed anything he said. Hugh Carey, the newly elected governor, spoke up for the city and seized power from the mayor. But there wasn’t enough money in Albany to cover the city’s financial obligations. Carey pressed Beame to wield the ax. Daily life became a struggle as transit fares went up, city payrolls were cut, and city services, such as garbage collection, reduced. Fearing pay cuts and loss of jobs, sanitation workers staged a wildcat strike, leaving fifty-eight thousand tons of garbage on the streets. Firefighters struck back with a “sick-in.” Police officers distributed pamphlets in Times Square warning people to stay off the streets after 6:00 p.m. “At such times it seemed as if the city was only one step from anarchy or madness,” Lankevich wrote in New York City.
The storm unleashed its full ferocity on October 17. The city needed $477 million to cover its obligations but had just $34 million on hand. Beame announced, “I have been advised by the comptroller that the City of New York has insufficient cash on hand to meet debt obligations due today. This constitutes the default we have struggled to avoid.” Carey, along with such key city leaders as Richard Ravitch and former mayor Robert Wagner, convinced the New York City teacher’s union to invest $150 million from its pension fund in city securities to stave off bankruptcy. But such emergency measures could not go on forever. Carey turned to the federal government for help. He cabled President Gerald Ford begging that he recognize New York “as part of the country.”1
A few days later, at a National Press Club luncheon, Ford gave his answer. He would veto any attempt by Congress to bail out New York City. He then took the city to task for its inept hospital system, its swelling welfare rolls, its crumbling educational system, and its high wages and pension funds for city workers. The next day the New York Daily News summed up Ford’s response to New York’s fiscal crisis with the headline: FORD TO CITY: DROP DEAD.
• • •
For Broadway, the fiscal crisis meant the complete collapse of its neighborhood, Times Square. If the city seemed on the verge of “anarchy or madness,”2 the situation was, as is everything about New York, amplified in Times Square. The streets were strewn with garbage. Prostitutes and drug dealers did their business with little interference from the police. Crime escalated. Schoenfeld and Jacobs were fighting to save the Shubert Organization and now, just as they had A Chorus Line up and running, their customers
were being told by the police to get off the streets by 6:00 p.m. From the start of their reign, Schoenfeld and Jacobs made cleaning up Times Square a priority. As Schoenfeld often said, “Corporations can leave the city. But the theater industry can’t move.”I When they divvied up responsibilities, government relations fell to Schoenfeld. He was gregarious where Jacobs was dour and taciturn. “Jerry could talk you to death,” said Harvey Sabinson, a press agent and Shubert confidant. “Bernie would scowl you to death. People thought Jerry was a windbag, but he was a feisty advocate for the theater industry.”
A veteran Broadway producer said, “Honestly, I don’t think Bernie cared much about Times Square. He’d step over a homeless person to get to a show. But for Jerry, cleaning up Times Square became a crusade.”
Not long before Schoenfeld became chairman of the Shubert Organization, he met with Donald Manes, a powerful member of the New York City Council, and pressed the case for a sustained effort to reduce the smut and crime in Times Square. Manes told him, “Jerry, forget it. Your business is going down the tubes.” Manes, who became Queens borough president in 1971, opposed any effort to rehabilitate Times Square. He feared the sex industry would decamp to Queens.3
“Jerry never forgot that—he repeated that story over and over,” said Sabinson. “He was furious. And he developed issues. Panhandlers in Times Square drove him crazy. He harassed city officials to do their jobs. He became very close to the top police officers in Midtown South and Midtown North, which cover the theater district. He was a one-man band when nobody thought you could do anything about Times Square.”
In the early seventies the Shubert Organization was not so powerful that it could sway city officials on its own. So Schoenfeld had the idea of presenting the theater industry as a united front. The vehicle he chose was the League of New York Theatres and Producers (today’s Broadway League), a sleepy gentlemen’s club for old producers where they could hang out and play cards. “Jerry perceived that the League could become a political arm of the theater business,” said Sabinson.
Sabinson retired as a Broadway press agent in 1975 and retreated to his house in the Berkshires to write a book. Schoenfeld brought him back into the business with an offer to run the League. “My mandate was to establish a relationship with the government. The League never had anything to do with the government, but Jerry wanted it to become a lobbying organization.” The Shuberts expanded the League’s budget, and Sabinson hired economists and statisticians. Schoenfeld wanted studies of Broadway’s economic impact on New York City, so he could make the case that the theater business was essential to the city’s financial health. He could then argue that the city should pay attention to Broadway’s needs, chiefly making the neighborhood safe for its customers.
Schoenfeld, who was close to Beame, pressed the mayor to form a group of Times Square businessmen, residents, and religious leaders to address the deterioration of the neighborhood. Since the Shuberts had supported Beame’s election in 1973, the mayor could not ignore Schoenfeld. And so on January 16, 1976, Beame announced the creation of the Mayor’s Midtown Citizens Committee, which would “provide policy guidance and assist in monitoring and evaluating the performance of city agencies in the cleanup of the Midtown area,” the New York Times reported. Schoenfeld became the chairman, and the Shubert Organization agreed to cover many of the committee’s expenses.4 Other members included Vincent Sardi, owner of the eponymous restaurant; the Rev. Robert Rappleyea of Holy Cross Church; Barry McCarthy, an executive with the New York Times; and Seymour Durst, a real estate mogul who owned swaths of Times Square. Part of their job was to raise private funds to repair potholes, remove graffiti, install litter baskets, and pay for garbage pickup. It was a measure of how desperate the city’s finances were in 1976 that private money had to be found to install litter baskets in Times Square. Producer Alex Cohen, never one to miss an opportunity to place a good quote in the paper, told the Times, “We’re going to buy a thousand brooms to have artists and technicians help with the street cleaning. We’re going to keep our own cages clean!”5
The city received a grant of $432,000 from the federal government to create the Midtown Enforcement Project. Its mandate was to investigate porno houses, dirty bookstores, and massage parlors with the goal of shutting them down if illegal activity was uncovered. The Midtown Enforcement Project would work with the Midtown Citizens Committee to clean up Times Square.
Schoenfeld took up his chairmanship with gusto. “I think Beame thought he’d form that committee to keep Jerry quiet,” said Phil Smith. “You know, make him chairman of something, and he’ll be happy. But Jerry turned it into a bully pulpit. He had a megaphone, and he was relentless.”
Schoenfeld found an ally in Sidney J. Baumgarten, whom Beame appointed to run the Midtown Enforcement Project. Baumgarten “brought a ferocity to smut-busting not seen since the heyday of Fiorella La Guardia.”6 A graduate of Brown University and New York University Law School, Baumgarten was a tough, no-nonsense ex-army officer. “I became Eliot Ness,” he said, “because the only person I had to report to was the Mayor.”
Reporters were skeptical of yet another effort to clean up Times Square. After all, Mayor Lindsay had created a law enforcement task force in the early seventies to go after the pimps, prostitutes, and drug dealers, with negligible results. As Baumgarten noted, “We identified, in 1976, four hundred and fifty illicit establishments from Fifty-Ninth Street to the Battery. And that included prostitution, pornography, and drug dens. And many of them were multiple uses. Lindsay’s efforts didn’t have any real bite.”
The New York Times cast doubt on Beame’s new committees. “The Mayor was reminded that crackdowns on urban vice date to Sodom and Gomorrah, at least, and he was asked why the public should place greater faith in this one . . . . The attempt to stop prostitution is perennially controversial, touching on the rights of streetwalkers, their patrons and the public.”
Keenly aware that civil libertarians were scrutinizing his every move, Baumgarten, with the help of two other lawyers, including a Fordham law professor, outfoxed them by crafting the Nuisance Abatement Law. It stipulated that if a sex shop had racked up at least two convictions for prostitution or five for drugs and gambling or had more than three zoning violations, Baumgarten could go to a judge and get an ex parte order to shut the place down—“ex parte” meaning the judge could issue the order without notifying the owners of the sex shop. Due process was guaranteed, however, as the law stipulated the defendants had a right to a public hearing within seventy-two hours of the ruling. The City Council passed the law in 1977. “It was challenged several times, but was always upheld and is still in use today,” said Baumgarten.
Baumgarten used other, less public, strategies as well, some fiendishly clever. Most of the establishments he targeted were involved in some sort of illegal activity—drugs, gambling, prostitution. Once he had a conviction in hand, he would go to the bank that held the mortgage and point out that every mortgage forbids the running of an illegal operation in a building. “Foreclose!” he’d say. “Here’s the evidence!”
“We put a lot of pressure on the banks,” he said.
Most of the sex shops were run by people for whom criminal activity was a way of life. Many eliminated Con Edison charges by tapping into electrical services from adjoining buildings. Baumgarten flooded the sex shops with Con Ed inspectors. If they found wires had been jumped, they shut off the electricity. The next day the owners would put out candles—and Baumgarten would have the fire department investigate them for having open flames without an open flame permit. The fire department would order the store shut.
Dirty bookstores were more difficult to close, since they were protected by the First Amendment. So Baumgarten sent undercover men in to browse around and make a note of the volume of sales. An undercover man would buy a bunch of books, and then Baumgarten’s office would check sales tax records to see if the stores were reporting sales tax. Since much of the sex industry was run by th
e Mafia as a way of avoiding taxes, the bookstores fell into Baumgarten’s trap. He hit them with tax violations.
Baumgarten’s tactics were controversial, and he was opposed, at times, by the police department itself. “One of the major problems we saw right away was that there was an enormous amount of corruption in connection with the vice business,” he said. “We had an informant who estimated that at least $10 million a year was going into NYPD pockets, some of it going to fairly high echelons of the police department.”
Police officers assigned to a block might go into three massage parlors and make arrests, but leave another three free to do business. “I’d call up the men and say, ‘How come you don’t ever go into that place?’ And a big tough cop would say, ‘Well, they have a big dog and I’m afraid of dogs.’ The excuses were bizarre.”
To steer clear of pervasive corruption, Beame allowed Baumgarten to handpick his own force—police officers as well as building, fire, health, and consumer affairs inspectors. His second-in-command was a retired three-star police chief named Fred Kowsky. “He had the greatest reputation in the police department,” said Baumgarten. “This guy would arrest his own grandmother if she committed a crime. I told him, ‘Fred, we’ve got to pick the right people for this job because if there’s any hint of corruption, we’ve had it.’ ”
The NYPD wasn’t the only law enforcement agency unhappy about this special force beholden only to Baumgarten and Kowsky. The district attorney’s office had doubts about using law enforcement to rid Times Square of the sex industry. Prosecuting sex offenders created a revolving door, Manhattan DA Robert M. Morgenthau told the Midtown Citizens Committee. Pimps and prostitutes would be arrested, fined (about a hundred dollars), and let go. Even those who did jail time were out on the streets in little more than a week. The whole business, Morgenthau said, was a waste of time.7
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