If Charlie Chick hadn't gambled on expansion at the Arbor and two other locations, Presidio Enterprises probably wouldn't be around today. Charlie, his brother Dick, and several partners started the company in 1973, paying $170,000 for two United General Theaters Inc. franchisees just before United went belly-up. By 1980, they were making money from their $2.5-million, 12-screen operation, but all the time they were losing ground to larger competitors. Chick found he could no longer afford to bid for the best pictures, as distributors demanded higher and higher guarantees. His partners wondered out loud if it wouldn't be better to dump the theaters and concentrate on real estate, in which they'd begun to dabble, or cable TV.
But Charlie loved the movies. Growing up in Longview, Tex., he had saved his nickels for matinees at the local movie house, an old art deco palace where he could escape from Longview and spend afternoons with the likes of John Wayne and Jimmy Stewart. For him, the movies had always been the magical stuff of which dreams were made, and now that he had built his own small chain of Texas movie houses, he was unwilling to let it go. "We're going to dance with the girl that brought us," he said to his partners, and then embarked on an ambitious plan to build five theaters in five years. Among them was the Arbor.
It was the memory of an enraptured young moviegoer from a small Texas town that dictated the design of the new theaters. "I don't want a lobby," he told architect Girard Kinney, "I want a stage set." So rather than a ceiling at the Arbor there is an evening sky with twinkling stars and puffy clouds. An audio tape of thunder and lightning plays every five minutes. A two-story clock tower rises over the concession stand, decorated with a festive red-and-white candy-striped awning. Antique-style lamp posts mark the way past the prewar British telephone booth and into the auditoriums.
Stretch out: there are 42 inches between rows rather than the standard 39. The seats, imported from France, cost about twice the standard American model. The picture itself plays on either 70- or 35-milimeter prints, on a screen about 50 feet wide. The sound is even better, one of five theaters in America to have been constructed for George Lucas's THX system: 12-inch solid walls with two inches of soft insulation, special air-conditioning and heating systems, plus giant speakers that bathe the audience in dialogue and music. A letter from Lucas on display in the lobby rates the Arbor as the best theater in America to see a movie.
Installing THX wasn't an idea that originated with Chick -- in fact, he and his architect borrowed a number of good ideas while on a tour of some of the nation's best movie houses. He discovered THX in a theater in Dallas, where the sound system was so overpowering that the audience actually applauded it. From a chain in Seattle he took the idea of electronic gadgets that hold open the auditorium doors between features and let them close once the picture has begun. Miami's Fountainbleu Hotel provided the idea for rest room check cards. A chain in Seattle inspired him to put a manager on duty at a desk in the lobby at all times.
In the end, however, Chick's movie palace was a mixture of inspiration and compromise. Trammell Crow Real Estate Investors, the developer of the Arboretum mall in northwest Austin, which had doubts about how well a movie theater would fit into its new upscale shopping center, finally allotted Chick only 22,000 square feet for his four-plex cinema -- not the 35,000 he had counted on. A smaller house would mean smaller profits. And the $2.8-million cost of completing the Arbor was so high that Chick had to turn to limited partners for most of his financing: they have claim to 25% of the net profit a year for the first five years of operation, and a smaller percent thereafter. Under those terms, it wasn't hard for Chick to raise the money -- in just two weeks, he sold $1 million in limited partnership shares each for the Arbor and another theater. But from the beginning, Chick realized that payments to investors would eat up a substantial share of the Arbor's operating profits.
Once the Arbor started selling tickets, however, the compromises hardly seemed to matter. Since opening with Back to the Future and Silverado last summer, Chick's movie palace has been setting national box-office records. Winner of a design award from the American Institute of Architects, the Arbor has been drawing tourists from Dallas and Houston, who come simply to stand in the lobby and experience the thunder and lightning. Legions of regular patrons will drive 45 minutes across Austin to see a movie there rather than drive 10 minutes to see it someplace else. And just as Chick had hoped, the Arbor dominates the market today, the clear choice of distributors who want to showcase their big pictures to large crowds in an atmosphere of comfort and magic.
Making money in the movie business is a more complicated affair than just filling the house. Take the matter of how much to pay to distributors for their movies. In Texas and almost half the other states, theater owners like Chick must bid on movies without ever seeing them, based solely on the reputation of the actors, directors, and producers. This past summer, for example, Presidio guaranteed less for Twentieth-Century Fox Film Corp.'s smash hit Aliens than for Howard the Duck, the Lucasfilm turkey.Blind bidding in the movie business is a lot like playing the slot machine in a casino.
The Arbor has improved Chick's odds. Most often, distributors sell pictures for a guarantee against a percentage of the gross, minus a negotiated allowance for theater operating expenses. Most major pictures open at 90% for the distributor, 10% for the exhibitor, with the distributor's take generally dropping the longer the picture runs. Because of the size of the Arbor auditoriums, Chick does fine at 90/10. But because of the theater's popularity, he can regularly run pictures longer, into weeks where his profit margins are higher. In addition, because of the prestige attached to showing a film at the Arbor, Chick has the leverage to negotiate the highest house allowance in Austin, which is a good thing: he has, far and away, the highest house expenses. Magic doesn't come cheaply.
The old adage, of course, was that theater operators make their money at the popcorn stand. It's still true. On a $2.75 tub of popcorn, Chick's gross markup is 539% (see box on page 104). And while it is more modest, the 65% average markup on soft drinks, candy, hot dogs, Perrier, and pickles at the Arbor is still quite respectable.
