When Mr. Rubell boasted to New York magazine that “only the mafia does better” than Studio 54, the Internal Revenue Service took the bait, raiding the club in December 1978 and alleging that the owners had skimmed more than $2 million from the profits.
“There was a real backlash against Studio, a groundswell of resentment,” Mr. Schrager said. “We were the poster boy for all that was wrong in the economy, in city life — we got so many people aggravated at us, there was a need to bring it down, a lot of bad karma at the end.”
Mr. Rubell and Mr. Schrager were sentenced to three and a half years, but their time was cut in half after they gave information about the finances of other discos. (Mr. Schrager was granted a pardon last year from President Barack Obama.) In the movie, Mr. Schrager seems more ashamed of this action than of his own crimes, indicating how much it would have disappointed his father — who, we find out, was “Max the Jew,” an associate of the crime kingpin Meyer Lansky.
Mr. Schrager had never spoken about his father before (“That was the biggest shock,” Mr. Rodgers said, “my face dropped when I saw that”), and he is visibly uncomfortable on film discussing this part of his history. It’s indicative of a culture of secrets that Mr. Tyrnauer said characterized the time. He added that Mr. Schrager didn’t even know that Mr. Rubell — with whom he opened the Palladium nightclub and created the boutique hotel category after they got out of jail — was gay until very near his death from complications of AIDS in 1989.
“By today’s standards, you would consider that to be a shocking omission in a close personal relationship,” Mr. Tyrnauer said. “It reminded me that this time is so near and yet so far away.”
Mr. Schrager believes there were two defining events for his generation — Woodstock and Studio 54 — and he invokes Walt Disney and Steve Jobs as kindred creative spirits. “When I went into the hotel world, I knew that you have to create a visceral experience, and I learned that from Studio,” he says. “What distinguishes the product is the magic, the alchemy that happens when you put it together.”
He said, though, that if he were creating Studio 54 again, he would take a different approach to the door policy. “Instead of letting all the celebrities in, I would let the bankers in.”