Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SATURDAY, November 25, 1995 TAG: 9511270013
SECTION: BUSINESS PAGE: A8 EDITION: METRO
SOURCE: ASSOCIATED PRESS
DATELINE: HOUSTON LENGTH: Medium
Rick's Cabaret, the posh Houston topless bar that considers itself a pioneer of its industry, now is publicly traded on the Nasdaq Small Cap Market.
Club owner Robert Watters achieved his dream of taking Rick's public Oct. 13. After an initial rejection, the stock opened at $3 a share, and proceeds of the offering totaled $5.6 million. The stock - trading under the symbol RICK - closed at $4 Friday.
The man behind the innovation seems to belie his profession. The dapper 44-year-old Canadian has two law degrees, including one specializing in securities, and a master's degree from the London School of Economics.
But as he recently enjoyed a late lunch from his own buffet while one of the club's 425 or so dancers worked a few feet away, Watters admitted he loves his job.
``Why would I want to be stuck in an office somewhere else when I can do something I enjoy so much?'' he asked.
Nasdaq at first denied Watters' request to be traded, but he appealed and won the chance to put his company's name on the exchange.
``We took a long, hard look at Rick's because of the nature of the business,'' Nasdaq spokesman Mark Beauchamp said. ``We concluded it was a legitimate, licensed business that met listing requirements.''
``We have companies from every industry ... not just high-tech stocks,'' he said. ``If anything, Rick's proves that.''
But he added that other such businesses aren't flocking to Nasdaq's door: ``Rick's does not a trend make.''
Until Rick's joined them, South Pointe Enterprises was the only sexually oriented business listed on the Nasdaq, but the adult movie producer's issue has foundered recently.
Mustang Ranch, a legal bordello in Nevada, tried to list with Nasdaq five years ago but couldn't trade in many states. It abandoned its attempt.
While the Rick's listing is unusual, it's not new for restaurants and bars to go public, said Lynne Collier, restaurant analyst for Rauscher Pierce Refsnes Inc. in Dallas. The Dallas-based Dave & Buster's chain of entertainment complexes, for instance, recently held a secondary offering.
``The actual size of the companies is getting smaller and smaller,'' Collier said.
The money flowing into Rick's coffers will go toward expansion of Watters' nightlife interests. He plans more discotheque-style dance clubs, like his Tantra across the street from Rick's, and topless bars.
Intense competition in Houston, which has become a sort of capital of large-scale topless establishments, has caused him to look to places such as Atlanta, New Orleans and Phoenix for new horizons.
``New York has seven [comparable clubs], Los Angeles has three or four, and Chicago has just one,'' Watters said. ``Houston has 12.''
Watters also went public to give managers ownership opportunities and to put his securities expertise to practical use.
The club began as the city's oil-based economy was collapsing in 1983. Houstonian Dallas Fontenot teamed with oil trader Salah Izzedin to transform a defunct disco into a lavish topless bar, furnished with chandeliers and other swank accoutrements.
Some Houston city council members once were outraged when they discovered a city official was wining and dining businessmen there with public funds. In 1992, Rick's issued fancy invitations to attendees to the Republican National Convention.
The club also has been a target of Houston vice squad officers, but Watters said the police have pretty much left him alone since a highly publicized raid three years ago.
``They arrested 43 dancers for public lewdness,'' said Watters, who added that two were convicted of the misdemeanor. ``Lewdness is in the eye of the beholder.''
by CNB