Even the people who lost heavily on the Jane Fonda Workouts clothing line -- loss of money, loss of face, loss of composure, loss of job, loss of company -- agree that the evening of November 7, 1983, was one of the magic moments of their lives. On that night, in New York's fabled Sam S. Shubert Theatre, where Michael Bennett's A Chorus Line had just celebrated its tenth anniversary, an elite audience of retail buyers and executives, garment industry nabobs, and assorted media moguls sat through a fashion premiere the likes of which Seventh Avenue had seldom seen.

The show cost $250,000 to produce and had all the trappings of a mini-Broadway musical. Bennett himself directed it; his choreographers choreographed it; his dancers danced in it. Jane Fonda, the Academy Award-winning actress and political activist, was honorary mistress of ceremonies. Theoni V. Aldredge, the Tony Award-winning costume designer, was creative director. But the evening's real headliners, up from wardrobe to take center stage, were the clothes themselves, prancing through the klieg lights in explosions of lilac nylon and pink spandex. It was, said one participant, "the highest of highs, a night to remember."

Probably no one enjoyed himself more that evening than Ron Mester, the 40-year-old president of Capri Beachwear Inc. It was Capri, after all, that was to manufacture the new line under a license from Fonda herself -- and it was the new line, Mester figured, that would rescue his company from its financial doldrums. Not that Capri was in anything like desperate straits; on the contrary, it was one of the largest bathing-suit manufacturers in the country, with $20 million in sales, 500 employees, and a stellar reputation in its industry. But its sales curve had begun to flatten out, and recently a number of buyout offers from would-be suitors had come across the transom. Mester, who had taken over managerial reins from his father, the company founder, saw the Fonda deal as a golden opportunity to put his own mark on Capri and to help the company regain the luster it had once known.

"Like my father, I'm pretty conservative," Mester says today in a voice that still vibrates with the emotion of the moment. "But I love the theater, all the performing arts. What a thrill it was to be standing on that stage!" That night, Jane Fonda introduced him to the cheering crowd as "my new friend and partner who is bringing me into the rag business." She also had his father take a bow from the audience. There was applause. There were standing ovations.

House lights, please.

Eighteen months later, a somber Ron Mester sits in a hotel coffee shop off Exit 46 of the Long Island Expressway and fiddles with the dregs of a Coke. Gone are the dancers, the cameras, and the hoopla. Gone, too, is all the aggravation that went with them -- the bomb threats, the shipping nightmares. Gone -- no, erased -- is Capri Beachwear, the family jewel. Mester pats his briefcase, which holds liquidation papers on a company that was $10 million in debt when it staggered into bankruptcy court on August 3, 1984, the day the music died.

"I remember sitting in a New York coffee shop just like this one with Jane," Mester says quietly, his eyes half closed. "People walked up and told her she'd changed their lives. As a celebrity, Jane has an order of magnitude way beyond anything I've ever been around. People were in awe of Jane Fonda. I was in awe of Jane Fonda. But she's human. She makes mistakes, too."

So did he. "I'm my own best critic," he says several times, kicking himself for "reacting, not acting," then adding, "My worst mistake was running my own company as if I worked for someone else." Yet he bristles at the notion that he was the sole architect of the clothing line's collapse. Asked to comment on his critics' view that Ron Mester had been done in by his own greed, promising too much to too many too fast, he picks up his glass and drains it.

"I used to attribute it to greed," he says. "I don't anymore. When you see something on the horizon that looks that good, is it greed to chase it? I don't think so." He looks out the window at a hard rain that is beginning to convert the hotel parking lot into a swimming pool. "You know," he sighs, "as I think about it, this has been one hell of a year."

Sipping a Perrier in a mid-Manhattan restaurant, Lee Friedman recalls the sequence of events that first led him to connect Fonda with Mester and Capri -- "my Watergate," he calls it now.

"After the success of her books and tapes," says the New York City-based licensing agent, whose other licensees include Alvin & the Chipmunks and the late martial-arts hero Bruce Lee, "I went to Jane's lawyer and begged them to do a clothing line. I mean, it was so logical. I even brought them a package that included Theoni and Bennett. Jane liked the idea, but she wanted to shop around for the right agent. In six months or so, she came back and gave us the go-ahead."

In peddling the license to a succession of major sportswear manufacturers, though, Friedman encountered heavy resistance. Fonda had laid down two ironclad conditions: The manufacturer had to be fully unionized, and every piece of clothing had to be made in the United States. Each time they were on the verge of signing with a Russ Togs Inc. or a Cluett, Peabody & Co., explains Friedman, one issue or the other defeated them. So when a friend mentioned Capri to him, and when he had checked out Capri's offices and plants and had gotten Jane's approval . . . well, why not Capri?

"The weird thing about [the first] meeting," adds Friedman, "is we signed the contract literally without changing a word. Ron said three words: 'I'll take it.' The other contracts [we negotiated] had so many lines and clauses changed you could hardly read 'em."

Mester, in fact, considered the contract to be "perfectly straightforward." It obliged Capri to pay Fonda 7% of the sales for the rights to the line. Fonda also got her choice of designers to work with Theoni Aldredge, who was already on board; approval rights on the number of individual pieces; and veto power over the appointment of a president to head up the Workouts company, which would be a wholly owned subsidiary of Capri.

The appointment issue proved problematic. Both parties realized that Capri lacked experience in the sportswear/fashion world, and that it had no track record in dealing with the big department stores. Of the candidates interviewed for the Workouts job, however, Fonda couldn't find one she felt comfortable with ("Jane was really turned off by the garment-center heavies," says one insider), and Mester couldn't find one he thought he could afford. Finally, he offered himself for the job. After some debate, it was agreed to give him a short at it, a decision many later publicly regretted. Counters Mester, "Once things got rolling, we didn't need someone [who had] clout with the department stores. The mere mention of Jane's name was enough to open any door we wanted to walk through. All we needed was a great sales force, and we had that."

Thus was the stage set for one of the great melodramas in recent retailing history. Filling out the cast were Susan Schneider, late of Capezio Ballet Makers Inc., as design and production coordinator; Judi Roaman, ex-Bloomingdale's buyer and an old crony of Friedman's, first as consultant, then as executive vice-president of merchandising; the Santa Monica, Calif.-based political consulting and advertising agency of Zimmerman, Galanty & Fiman, marketing ally of Fonda's husband, Tom Hayden, in several political campaigns; public relations consultants Roz Rubenstein and Carol Lupo; and sales executives Mel Nathanson and Phil Samuels.

All they needed was money. To bankroll the manufacturing, Mester turned to Century Factors, a longtime associate of Capri's. As collateral, Mester pledged Capri's assets, and some real estate. "We were always on the line for everything," says Mester, "but it really didn't seem like much of a risk at the time."

At the outset, according to Judi Roaman, "There was no negativity at all. We were a nice group of talented, motivated people all pulling in the same direction." Jane was flying to New York at least once a month and impressing the troops with her no-nonsense manner and her ideas on how the clothes should function. Theoni was whipping out fabulous designs, eventually expanding the line to nearly 200 items, from leg warmers and tunic tops to baseball jerseys and wrap-around skirts. "Work out in it, walk out in it" was the theme they gave this coordinated, layered look. When the department stores showed up for the first round of purchasing, the momentum looked down-right unstoppable.

"They were lined up outside our office and banging down the doors," says Mester. "Bloomingdale's locked me in a room and made me promise they could have the line. I mean, it was nuts."

Mester thought he would do around $4 million in sales the first year. He booked $7 million worth of business the first week after the Shubert Theatre premiere. Suddenly, he had visions of a $30-million, $40-million, even $50-million-a-year business. Everybody, it seemed, wanted Jane: Jane's clothes, Jane's look, Jane's charisma, whatever they could get. At a cocktail reception for the top brass of Federated Department Stores, Fonda walked into the room and stopped conversation so completely she might have been shooting an E. F. Hutton commercial. She told the executives, with a touch of irony, that they were "smart" to book the summer collection, even though the spring line hadn't been shipped yet.

"These guys were personally signing million-dollar orders," remembers Susan Schneider. "It was as if they were all in some bizarre contest to see who could spend the most -- with the winner getting Jane herself as the door prize."

By the end of February, with the stores panting for delivery, Mester had $14 million worth of orders on hand and a publicity blitz that wouldn't quit. Two separate road shows were mobilized to make the rounds of participating retailers, one starring Jane, the other her stepmother, Shirlee Fonda. Zimmerman, Galanty & Fiman had filmed three 30-second spots to launch the line's $1-million television campaign. To be sure, there was a leveling off in the bodywear market. No matter: All of them fervently believed that Jane Fonda Workouts was primed to take the industry by storm.

The storm they got was not quite what they were looking for. From that moment on it might as well have been typhoon season.

The first signs of trouble appeared early, when retailers received only bits and pieces of what they had seen at the Shubert. The times they did get came late, when competing stores were already heavily discounting their spring fashions. Behind the delay, the problems stretched from supplier to showroom. Lieda Mills, another old associate of Capri's, was under contract to furnish most of the fabric, but, according to Mester, it was overwhelmed by the size of the order and couldn't deliver on time. At the manufacturing end, Capri had put five of its own plants to work producing about half the line items. But many of the pieces were far trickier to sew than bathing suits, a reality of production life that eluded the inexperienced Mester. The old this-thing-can't-miss mentality was quickly proving infectious -- and lethal. Mester, who was as caught up in it as anybody, found that his contractors were depressingly blase about the delays. "They had their own schedules," he says ruefully, "and they thought this Jane Fonda thing was a bottomless pit. Unfortunately, the whole [collection] had to be coordinated to hit the stores together, and it did not."

Friedman has a rather different take on what was going on.

"Ronnie Mester lied to us," he says flatly. "He couldn't give us a straight answer on anything. It was like a movie without a director. Jane liked Ronnie, she really did, but he had no idea what he was doing. By the time we realized that, it was already too late. You do not promise delivery dates and expect to keep the stores [in line] when they can't be met."

The clothes' steep sticker prices only compounded the line's problems. The union labor Fonda had insisted on was expensive, as were the materials, and even though Mester had set his gross margins low, he ran into consumer resistance. At $40 a sweatshirt -- far more for a complete ensemble -- the garmenets may have been union made, but they strained the wallets of most working women. On the marketing end, department stores were confused about where to put the line. Some designed special Workout boutiques, others stuck individual items in Hosiery, Bodywear, or Sportswear. There, for the most part, they sat.

As inventory backed up, stores began to demand markdown money and allowances on returns, and Capri began to feel the pinch. "There was never any cushion of money," observes Roaman. "We didn't build up our prices so we could discount them later. We got the best available materials and manufactured them under the terms of the agreement, trying to make a decent profit. But one squeeze led to another, and pretty soon we were squeezing all the way down the line."

Nor did it help the stores' moods -- let alone their sales -- when a wave of controversy broke over Jane's promotional tour. Led by a cadre of Vietnam vets still embittered by Fonda's antiwar activities and her much-publicized trip to Hanoi, protesters in several cities picketed stores with signs like "Fonda, 55,000 GIs Martyred in Viet Nam Can't Be Here" and "What A Travesty -- To Buy Clothes From A Turncoat." One man wrote to an Indiana newspaper likening the Workout retailers to "money changers in the Temple." The worst, however, was in South Florida, where a local radio station whipped up anti-Fonda sentiment in a series of broadcasts to the ultra-conservative Cuban community. The Miami department store Burdines promptly called off Fonda's appearances after getting telephoned bomb threats. Determined to exercise her rights to "free speech and free enterprise," Fonda showed up anyway, but by then the columnists were more wrapped up in her politics than they were in her leotards.

Mester, meanwhile, had other headaches. Once the Los Angeles ad people came in, he claims, "We started splitting off into armed camps. Jane cleared everything through Friedman and them, even department store ads. I got a call from her late one night -- she sounded very upset -- saying that Saks was going to run some terrible ad in the papers. Sexist, I presume. I remember thinking to myself, Something's wrong here -- Saks simply does not do things in bad taste. But they were calling the shots. The point is, this [kind of thing] caused weeks of chaos at a point when we hardly needed another distraction. And it happened time and time again."

With the winds of war blowing all around him, Mester clung to the anchor of his personal relationship with Fonda. When she came east, she had dinner at his home with his wife and children, and even spent a day with his father talking about his life. When the went west, he was welcomed to the Hayden/Fonda house in Santa Monica. At L'Hermitage, a fashionable Los Angeles hotel Mester had frequented many times in the course of his travels for Capri, he reveled in his newfound stature as leotard maker to the star. "Let me tell you," he explains, "it's a whole different experience there when Jane Fonda calls your room four times a day and leaves messages. Was I dazzled by it all? Sure."

Summer was down time for the company anyway, so there was no great public concern about the seasonal layoffs that sent most of Capri's work force packing in May 1984. Mester even booked an additional $3 million worth of orders in June -- a final spasm of hope, as it turned out, before the company went into its death throes. Behind the scenes, things looked bleak. Friedman and Fonda were putting as much distance between themselves and Mester as they could without disavowing the campaign entirely, and the prickly Aldredge had come to feel like a pariah in her own showroom. At Capri, those left behind were working double and triple shifts. From vice-presidents to shipping clerks, they rallied around Mester, some because they felt for him personally, others out of longtime loyalty to his father and Capri.

Mester kept trying. He trimmed his sales force, announced price rollbacks for an abbreviated spring '85 line, and discussed options ranging from new bank loans to selling the company outright. He made overtures to such mass merchandisers as Sears, Roebuck & Co. and J.C. Penney Co., which he felt would stand by his product more faithfully than the department stores. To his consternation, Fonda's people nixed that strategy, fearing it would dilute the value of her name on any future clothing line. In July, his moment of reckoning came. Capri was $8 million in the hole to Century Factors and another $2 million or so in unsecured debt to its suppliers. By then, he says, "The trust was gone."

"In fairness to [Century]," Mester notes, "they were not the Chase Manhattan Bank. The debt was there in black and white, and it was my debt. We must have come up with a hundred plans [for rescuing the company], but they weren't interested in any plans that came from me. They pulled the plug, then the creditors filed against us."

It would be another three months or so before the patient breathed its last. As late as last November, a core group of seven or eight executives remained on hand, trying to find the means to salvage Capri. Finally, Ron Mester walked into the office one morning and called them all together. His heart was no longer in this, he said; it was time for him -- for all of them -- to move on to something else. With that, Capri's books, and its doors, were closed for good.

Jane Fonda is reticent about the demise of her exercisewear line and the company that fell with it, except to say that Capri "got swept away by the Fonda name and tried to move too far, too fast. There were a lot of objective factors [in the line's failure] that combined with the inherent weakness within the company itself." Her spokesman, Steven Rivers, says flatly that "Capri couldn't fulfill its obligations" and insists that "the problems weren't with [Fonda's selection] principles, they were with the company." Rivers also points out that Fonda had a limited amount of leverage to begin with: "She didn't control the books or the management," he avers," and that was a frustrating lesson for her to learn."

Lee Friedman, who is looking around for a new Fonda workout-wear licensing deal, bumps into ironies every day. "All the women at my health club love Capri Beachwear," he smiles, "because [Capri] put out great clothes you can get for half price now. They bounce over in their Workout outfits and ask me, 'When's Capri gonna make some more?' I tell 'em we're working on something a little simpler. Maybe just leotards."

Ron Mester also labors at simpler tasks. One may be a book about the Fonda campaign and the lesson that "getting mesmerized by the glamour doesn't make good business sense." For the moment, however, he's pursuing a second career in real estate development. "Right now," he says, "I feel as good about [real estate] as the day I met Jane Fonda."

"This whole thing was never about Jane Fonda in the first place," throws in Judi Roaman, who now runs an East Hampton, Long Island, clothing boutique. "She was a part of it, but it was a line of bodywear, pure and simple."

Well, yes and no. The "whole thing" surely was about Jane Fonda, at least to the extent that it was her name that lit up the stage on which so many other players came to dream. Nobody dreamed bigger -- or lost bigger -- than Ron Mester. Not Friedman, who walked away with $250,000. Not Fonda, who pocketed an amount Mester estimates at several hundred thousand dollars.

Roaman, an old colleague of Friedman's, thinks Mester makes an awfully convenient fall guy for a lot of second-guessers. "If Lee's so smart and Ronnie's so dumb," she asks, "how come Lee picked him? And where was Jane's support when [Capri] was going under? I've been around this business, and Ronnie's not your typical 'garmento.' He's a nice man and a straight shooter. Even when he could have, he never burned me. If Ronnie wanted to go to the beach tomorrow and sell knishes, I'd go with him."

Workout!!!, the shop Roaman owns, was specifically designed for the Jane Fonda clothes. Not much bigger than a broom closet, it is a small specialty store where customers can pick through dozens of coordinates and seek personal advice from a ready sales staff. On a back corner shelf, piled up in no particular order, lie bits and pieces of the bodywear line that once starred at the Shubert. It is, of course, heavily marked down. The rest of the inventory, manufactured abroad, seems to be moving OK.