King of Clubs
Charles Khabouth already rules the city’s nightlife. But running seven clubs, a restaurant and a bar isn’t enough. He’s itching to expand his empire
A middle-aged male, naked from the waist up, is lying on a cot in the back of one of Charles Khabouth’s nightclubs. With coarse brown hair on his abdomen, pectorals and back, he’s the sort of guy, in gay slang, who’s known as a “bear.” Alternately panting and moaning, he writhes about while club staff debate whether his overdose was caused by ecstasy, GHB or ketamine. Khabouth doesn’t panic. In the tone of someone imparting tomorrow’s humidex rating, he suggests calling an ambulance. One is already on its way. Apart from the man on the cot, no one exhibits any reaction but casual boredom. It’s the Saturday night of Gay Pride weekend, and twitching 45-year-olds are par for the course.
A trim, dark-haired man, Khabouth has a calm stillness about him even though he’s in constant motion. The situation well in hand, he continues on a five-hour inspection of the Guvernment, his 61,000-square-foot entertainment complex, ensuring that no light bulb is burned out, that the temperature is appropriately cool and that the sleek lounge chairs are arranged just so. He is so fastidious that in a back hallway, where none of his customers will ever go, he stops abruptly to scrape a sticker from the wall.
At around 3 a.m., he finally breaks for a slice of pizza in a back room. As he observes the bar staff counting fistfuls of $20 and $50 bills, a manager informs him that the twitching drug casualty jumped up and melted into the event as soon as he saw the ambulance attendants. Khabouth nods and continues to supervise the club’s closing. In fact, he doesn’t pull into his Forest Hill driveway until 8:30 a.m.
His work ethic is legendary: 70 hours is a light week; on weekends, he’ll stay at his club for 20 hours straight. In addition to the Guvernment, he’s majority owner of Ultra Supper Club, is an investor in the Pantages Hotel, owns Hugo, a men’s store in Yorkville, and is on the verge of opening a new disco in the Niagara Fallsview Casino. He’s developing a condo project on Bloor, across from the ROM, and has inked a multimillion-dollar deal that could expand his club empire stateside. Khabouth is at the centre of Toronto’s taste-making design, restaurant and fashion circles. And when you are the most powerful figure in this city’s club culture, you don’t sleep.
Khabouth’s introduction to the hospitality industry’s punishing workload came early. His father, Antoine Khabouth, managed one of the largest outdoor cafés in Beirut, while his mother, Margaret, managed the home. They had a good life, their household staffed with servants. Charles and his older brother and sister attended a French Catholic private school. But everything changed in 1970, when Antoine opened his own café. The business collapsed after only six months.
Antoine had to return to his old job, but on his first day back he had a heart attack and died. He was 45, just a year older than Charles is today. The following year, Margaret married William Nader, a successful Beirut accountant and close family friend. When Lebanon’s civil war intensified and a military draft seemed likely, Nader decided to immigrate to a city that would be safer for his stepchildren. In August 1976, 15-year-old Khabouth arrived in Toronto with his family.
They settled in East York, where Charles attended Overlea High School. Margaret wept when her youngest son accepted a job at McDonald’s—the position symbolized how far their fortunes had fallen. “I remember everyone laughing at me because the manager asked me to mop the floor and I asked him how to do it.” He shrugs. Soon he was living on his own, working three jobs (he also cleaned carpets and stocked shelves at IGA). But he knew he didn’t want to do odd jobs for a living.
Out at a club one night shortly after graduating from high school, he took in the music, the girls, the fashion. He recalls saying, “I want to do this.” He started saving, and when he was 22, he found a space for sale at 11A St. Joseph Street, north of Wellesley between Bay and Yonge, that had been a gay nightspot. Using his Audi as collateral, he secured a bank loan. With that, a few thousand in savings and money borrowed from Nader, he was able to cobble together $31,000. He bought the club for $15,000, earmarking the rest for the decor.
Khabouth renamed the place Club Z and set about trying to attract a straight clientele. “The first six months were very, very hard,” he says. “I can remember sitting on the curb at midnight on a Saturday, nobody in the club, and my head in my hands, wondering what I was going to do.” Before long, he was five months behind in his rent. His landlord sensed he had potential—he saw him as a kind of Lebanese version of Duddy Kravitz—and showed extreme patience. Desperate for some way to lure crowds over the Halloween weekend, Khabouth contacted a club promoter he knew who owned a tiger and installed the jungle cat in Club Z’s office, where it paced behind the front window. Passersby came in to check out the big game, and that night Khabouth went to bed figuring that he had at least covered his daily expenses.
But the next morning, he returned to the club to find the police had blocked off the street at both ends. Tactical officers were pointing sniper rifles at Club Z’s front window. The Humane Society was there, as were the media. In the early morning, the tiger had become restless and had broken a window. Khabouth had constructed a metal grille to keep the tiger in the office, even if the glass broke, but the police weren’t taking any chances. They tranquillized the animal with their dart guns and loaded it into a white van. Khabouth thought his short-lived career was over, but, in fact, it was just beginning. Media coverage of the incident lured people to the club that night. Then the following day, the Toronto Star ran a picture of the borrowed feline on its front page, with the headline “How Much Is That Tiger in the Window?” The attention was enough to turn things around. Six months later, Khabouth celebrated with a birthday party at the club. At 23 years old, he’d achieved the first part of his dream—he was the owner of a successful nightclub.
Club owners tend to be either suave hosts or brilliant marketers. Khabouth is skilled at both, but his real gift is creating ambience, as he proved with his second club, Stilife. The 6,000-square-foot space, at the corner of Richmond and Duncan, epitomized Toronto in the mid-’80s. If you ask the old regulars (real estate barons, Rosedale debutantes, Bay Street junk-bond moguls and leveraged-buyout specialists), they’ll fondly recall how Stilife was Toronto’s first club to have an exclusive door policy. They’ll say that with its polished concrete, chrome pillars, brushed steel sinks and chain-link curtains, it was the first place to import world-class design. And they’ll wax rhapsodic how, even back in 1987, when Stilife opened, Khabouth foresaw the transformation of a wasteland of warehouses and printing shops into the now-teeming entertainment district.
Thanks to the real estate boom, the influx of capital and people fleeing Montreal’s unstable politics, Toronto was emerging as Canada’s power centre. Stilife provided this ego-driven city with an exclusive place to celebrate, casting Khabouth in the Gatsby-like role of presiding over the party.
The early ’90s were less kind to Khabouth. Next door to Stilife, he opened a restaurant called Oceans. It went through five different chefs in less than a year. Greg Couillard didn’t last long; Susur Lee’s stay was even shorter, his resignation tendered after one of Khabouth’s partners suggested he make the food spicier so the restaurant could sell more wine.
Recognizing he didn’t know enough about operating a restaurant, he began a partnership with Franco Prevedello, one of the city’s top restaurateurs. After long delays and $1.4 million in renovations, Acrobat opened north of Bay and Bloor in June 1992, at the lowest point of the recession. It was supposed to have been a restaurant-nightclub hybrid—a gambit to extend the amount of time the space generated revenue. But the format had serious flaws. One of the kinder reviews described the vibe as “burying an expensive 100-seat restaurant in the bowels of a noisy bar.” Prevedello expected the young impresario to manage the club to his specifications. Meanwhile, Khabouth wanted the music louder, the lights dimmer—he wanted it to be a nightclub with food. “We were both strong-minded people,” Prevedello says. Two years later, the partnership dissolved, with Prevedello buying out Khabouth’s shares.
Khabouth continued to attempt variations on Acrobat. But with the subsequent closings of a string of places—including Boa, Scorpio and the Ivory Supper Club—the word was that he couldn’t do restaurants. As the ’90s wore on, he successfully developed the Guvernment complex into a sort of Swiss Army knife for event planners. With the Orange Room’s modish decor, the Skybar’s view of the cityscape, the Guvernment nightclub’s killer sound system and the Kool Haus concert hall’s cavernous interior, the seven-club complex is able to accommodate events both intimate (Mick Jagger’s 60th birthday party) and massive (a Coldplay concert). But a successful restaurant eluded him until two years ago.
In early 2003, he took a call from an agent looking to lease the old Bamboo space on Queen West. Close to the financial district and the mega-clubs on Richmond, it was an ideal location to create a spot that would cater to the city’s monied tastemakers—the same crew he had targeted with Stilife.
After a $3-million reno, Ultra Supper Club opened in December 2003. With its coolly romantic decor and the French modern cooking of chef Paul Boehmer (who has since moved on to the Spoke Club), it was an instant hit. Last summer, its rooftop patio was one of the city’s most crowded. “In a couple of nights at Ultra, I’ll see maybe 200 people I haven’t seen for years,” Khabouth says. “So yeah, you could call it a comeback.”
He talks sometimes about leaving the business. He’s not in it for the money, and at times his work schedule does not go over well with his wife of seven years, Libby, or his two children, six-year-old Charlie and two-year-old Maya. “It’s been hard,” Libby admits. We’re sitting on the Miami Beach– inspired back patio of their four-bedroom Forest Hill home, and she looks for a moment toward the pool. “Particularly lately. He used to only work evenings. Now he’s also working full days.” She leans back in her chair and hugs a knee to her chest. “Part of the problem is, he’s made himself so available to everyone. With his phone going off all the time, it’s hard for him to relax.”
“To be honest with you, I don’t know why I do it,” Khabouth says one day in his office. “I’ve never been the kind of guy who can’t wait to get home to watch TV, put his feet up. I’m a workaholic, and it’s bad—it’s as bad as being an alcoholic or a druggie. Perfect example: yesterday I get home at 4:15 a.m., my wife sort of moves in bed and says, ‘Just so you know, your kids asked about you today, about 10 times.’ It kills you. It’s like someone is stabbing you. Then this morning, my wife is barely talking to me. I want to spend time with my kids. But I don’t know how to stop.”
One of the things that drives him is the desire to expand into the United States. He’s watched Yabu Pushelberg (the design firm that did Stilife) become world renowned for its work in New York. He’s seen Jeffrey Jah, who worked for him at Club Z, gain international attention for his clubs in Manhattan’s trendy Meatpacking District. Regardless of how well he does in Toronto, Khabouth has come to realize that none of his operations are likely to attract the sort of celebrity-dense mob required to become a fixture in, say, Us Weekly. And that’s something he craves.
Khabouth believes he already would have made an international name for himself if he’d engineered the Guvernment complex’s long-term success in a larger city. “There’s not a club in New York or L.A. that compares to what Charles has done with the Guvernment,” says Jerry Sprackman, who runs The Docks, a sprawling entertainment complex near the Port Lands. Asked whether Khabouth would be able to compete in those cities, Sprackman snorts. “Compete?” he shouts. “I think he could kick the shit out of them.”
With the success of Ultra and the Guvernment, Khabouth’s profile, at least in Toronto, had never been higher. But then, early last year, he started to hear rumours about an opening that could pose a threat to his reign. Dubbed Lucid and located at Richmond and John—in the heart of the club district—this new spot was supposed to be 53,000 square feet, rivalling the Guvernment in size. Its Markham-based owner, Lucid Entertainment Inc., was listed on the Toronto Stock Exchange with a book value of approximately $50 million. Through the grapevine, Khabouth heard their renovation had cost $8 million. Lucid Entertainment already operated a club by the same name in Manchester and had plans to open several other locations around the world.
A towering four-storey, black-lit space, Lucid Toronto opened in June 2004. The Guvernment’s nightly door count fell between five and eight per cent. But most worrying to Khabouth was that Lucid’s management understood something many club owners don’t. They recognized that the real profits in the nightclub industry lay in creating a space that is not only attractive to the cocktail crowd but also to corporate clients, who pay hefty rental fees for a fresh setting for meetings and events. This is Khabouth’s specialty, and such happenings account for half his complex’s annual revenues of between $10 million and $15 million. He launched a marketing war against this new competitor, sending flyer-wielding hipsters to club lineups and Queen West boutiques.
The Guvernment’s foe, however, was not as fierce as expected. By last spring, Lucid Entertainment had collapsed, having spent itself into bankruptcy. Some big-gun investment bankers and New York’s Laurus Family of Funds stepped in to try to salvage what it could, enlisting Khabouth for his management skills. Deals and counter deals were floated throughout the summer, but Khabouth and Laurus ultimately decided the company could not be saved. From the ruins (the corporation was so broke, it lacked the assets to fund bankruptcy proceedings), an elegant new plan emerged. Khabouth and his partners sold the majority stake in the Guvernment and Ultra to the Laurus Group, which consolidated those operations with the last two of Lucid Entertainment’s viable clubstails, inside sources say the deal involves Laurus and other investors providing cash, shares and deferred performance bonuses worth between $8 million and $10 million for the Guvernment complex, of which Khabouth controls two-thirds, plus as much as $4 million for Ultra, in which he has a 50 per cent stake. He will become the new corporation’s president, chief operating officer and single largest shareholder. These four venues will be placed under the management of an umbrella corporation called Ultra Entertainment, which Laurus will take public early in 2006. It all sets the stage for what Khabouth has been after since Club Z: a footprint in the U.S.
“The reason I’m doing this deal isn’t to sell my business,” he says. “I’m doing it to grow. It’s like a wedding—you get married so you can have children and grandchildren. This deal is for the future.”
One blustery afternoon in September, I meet Khabouth at the Guvernment to go for lunch. As we climb into his Range Rover, we talk about the Laurus deal. He looks thin and admits he’s been working too hard to eat regularly. It’s a measure of the pressure he’s under that he’s allowed his wife to talk him into a two-day trip to Ste. Anne’s Spa. We’ve driven several blocks before it occurs to me to ask where we’re headed. “Loft, on King Street,” he says. Casually, he adds, “I bought it yesterday.”
In fact, he visited the year-and-a-half-old lounge for the first time only the night before, for a quick meeting where he met the manager and some staff. As we sit down, several more staff members come by to introduce themselves. Khabouth orders a half-dozen dishes to sample some of the food. When I suggest perhaps he should have covered that before he bought the place, he grins a little sheepishly. (In fact, he bought only a portion of the club and will act as its operating partner.)
The food arrives—ribs, chicken wings, a bocconcini and tomato salad, a Cajun chicken sandwich and a pasta dish, all of which he tastes. “Hey,” he exclaims, sounding relieved as he wipes rib sauce from his thumb. “This is pretty good.” Between bites, he recounts how his wife found out about the deal only that morning, when the bank called the house while he was still asleep, to confirm his signature. “Do you really need another one, Charles?” asked Libby when she woke him, handing over the cordless phone. The answer, of course, was yes. And it will continue to be yes, until Toronto’s king of clubs opens big in the United States.