Velocity Grill, the glitzy sports restaurant that was to be a key to downtown Washington's revival, was auctioned off yesterday to satisfy unpaid tax bills.
The cries of the auctioneer standing outside the restaurant at MCI Center ended a troubled history. Even before the restaurant opened, it was deeply in debt, and its financial and operating problems only worsened.
Arena owner Abe Pollin's company, Washington Sports Entertainment L.P., successfully bid $437,500 for the restaurant's ovens, booths, unopened kegs of beer and other equipment. Washington Sports President John Stranix, who made the winning bid, said Pollin hopes to reopen the restaurant soon on a temporary basis and is talking with several potential long-term operators. None of the six other bidders registered for the auction challenged Stranix's bid.
The partnership that owned the restaurant owed the city $539,987.42 in back taxes. That was only one of many debts. The restaurant never paid Pollin rent -- which totaled $738,137.83, according to legal papers. Other liens and civil judgments add up to more than $640,000, plus millions of dollars borrowed at its start-up. Owner Brian Cohen did not return calls seeking comment.
How did a business begun with such high hopes fail so miserably?
It was a mixture of bad financing, bad design and bad operations, according to people involved with the restaurant and industry observers.
Whether the restaurant's location was also at fault is less clear. It's possible for a sports bar to thrive in the neighborhood -- the success of the Rock, a sports bar across the street from the arena on Sixth Street NW, proves that. That and other neighborhood establishments have followed a strategy of regarding MCI Center patrons as a bonus rather than the core of their business. Velocity Grill, however, never built up a separate clientele, and the National Basketball Association's lockout last year didn't help.
The restaurant opened in 1997 as a partnership between Washington real estate developer and financier Brian Cohen, who had no restaurant experience, and local booze-andbilliards entrepreneurs Geoff Dawson and Mark Handberger. As Bedrock Management, Dawson and Handberger successfully run 10 bars here and in other cities, but they had little experience with food service.
In early 1997, when the partnership formed, the idea was that Cohen would be the money guy and Bedrock would provide operating smarts, according to Dawson. "During the whole process, the lines of our jobs got a little fuzzy," he said.
At first, the cost for designing and equipping the three-story, 19,000-square-foot space was estimated at $6 million. Initial funding fell short of that goal: just $5.77 million in equity and loans, according to papers filed with the D.C. government last year as part of an unsuccessful refinancing attempt.
But bills were higher -- nearly $7 million, according to estimates.
For that money, Velocity Grill got a seriously flawed space. For instance, the glass staircase that was to be its signature was too close to the door, blocking traffic flow. Less than two years after opening, the staircase and matching glass floors are crumbling.
The grill rushed construction so that it could open the same day as the arena -- Dec. 2, 1997. The owners were "scrambling," Dawson recalled. "We couldn't focus on the food and restaurant side."
From the beginning, he said, volume fell far below projections. Also, even though it had seating for more than 600, Velocity could not cope when hundreds of people tried to eat before a game.
In May 1998, Cohen and the Bedrock team split. Cohen hired Al Fry, a former Clyde's manager, to run Velocity Grill.
Fry said that since operations started out $1 million in the hole "there was no way that place was ever going to recover." There was no clear identity, he said, and design flaws were "comical."
"It was frustrating for me to go in there, because I'm used to restaurants, and this was more a concession stand," Fry said.
By September 1998, according to papers from the refinancing attempt, the restaurant had a net operating loss of more than $2.2 million. By early this year, according to city estimates, claims against Velocity amounted to about $4.6 million.
By purchasing the restaurant's property at yesterday's tax sale, Pollin now is in position to control the space, even though more legal problems are likely as other claimants jostle for money.
"The intent is to keep it intact to operate on an interim basis until we find a tenant," Stranix said.
"Operationally, I don't think they ever had a chance," Steven Graul, a restaurant consultant with Innovative Concept Associates Inc. of Reston, said of the original Velocity Grill. "The product quality was never there. It never had any real identity."
Fry said any new operator would have to make major changes. "To make it work, I frankly think you have to gut it and start over," he said.
CAPTION: Washington Sports President John Stranix, center, successfully bid $437,500 for Velocity's ovens, booths, unopened kegs of beer and other equipment.