It all started because Ed Rodriguez loves to laugh. In 1997, when Rodriguez was president of an investment firm on Pleasant Valley Way in West Orange, he often walked across the street to eat at Rascals Comedy Club. Since opening in 1983, Rascals had become New Jersey’s premier showcase for comedy, a destination for the likes of Rosie O’Donnell, Ray Romano, and Jerry Seinfeld. During his visits, Rodriguez frequently chatted about club business with Rascals founder Mark Magnusson. Rodriguez admired many comedians who played Rascals—Kevin James, Chris Rock, Angel Salazar—but he never considered buying into a comedy club.
Then one day at lunch in 1998, for reasons he cannot recall, it suddenly seemed like a wise investment. “Before I knew it,” Rodriguez says, “I was a part-owner.”
Rodriguez believed that Rascals’ most lucrative asset was its hundreds of hours of videotaped performances, a chronicle of fifteen years of stand-up comedy. Known as the “Rascals Comedy Classics Library,” the shows feature Seinfeld, O’Donnell, and Romano, as well as Drew Carey, Tim Allen, Sinbad, Brett Butler, Dennis Leary, Andrew Dice Clay, Jackie Martling, Rich Jeni, Jeff Foxworthy, Joy Behar, Darrell Hammond, Rich Vos, and Wanda Sykes. In the seven years since Rodriguez bought into Rascals, he’s moved to use those shows to help boost the club’s profile—to make Rascals a national brand. In the past year alone, Rodriguez has sealed a bevy of deals that will enable consumers of comedy—or at least those who are hip to the latest advances in entertainment-related technology—to tap into the Rascals archives.
Like any ambitious business plan, this one is not without risk. But Rodriguez, 44, comes from a family accustomed to risk. In 1968 his parents, Hilda and Raimundo, fled Castro’s Cuba, settling in well-to-do Summit a year later. After high school he enrolled at Kean College in Union as a business major, but he left during his sophomore year. “I wanted to make money,” he says, “not learn about it.”
Rodriguez was making good money when he stopped going to classes. He had started out jockeying cars at an Oldsmobile dealership in Summit, and then moved into sales. “I discovered that I had a gift for it,” he says, “and it was important to my career, this confidence that I could close a sale.”
In the summer of 1999, Rodriguez and Magnusson took Rascals public, trading its stock over-the-counter for $3 a share. By then there were three Rascals—another in New Jersey and one in Miami—and the plan was to raise enough capital to buy an additional 25 comedy clubs. Magnusson had regretted not pursuing this course in the 1980s, a remarkably busy and profitable time for live comedy. “Comedy was to the ’80s what disco was to the ’70s,” he told the Star-Ledger a year after Rodriguez became his business partner. “It was the baby boomers’ dating scene.” But even though he and Magnusson missed the peak of live stand-up, Rodriguez was optimistic they could transform Rascals into a comedy brand. “Who doesn’t want to laugh?” Rodriguez says. “Laughter is going to be with us forever.”
By the time Magnusson left the operational side of the business in 2000—“Operating clubs can wear you out,” Rodriguez says—Rascals had made its stash of stand-up routines available on its Web site, rascals.net. Fans could also view the Rascals clips over windowsmedia.com, the Microsoft portal that was logging an estimated 5 million visitors a month. The company also released a trio of DVDs; two were collections from the archives, a sort of Rascals’ greatest hits, and the other featured work by O’Donnell in her salad days at Rascals.
The release of the DVDs had a salutary if temporary effect on the club’s stock value; shares trading at 65 cents moved upward to $1.43. “I had no idea why the price was bouncing around,” Rodriguez says. “A crystal ball would be very helpful in this business.”
Although Rodriguez was cheered by his early entry into the wider world of media, he knew it wasn’t enough to turn Rascals into the kind of brand he wanted it to be. In June 2003, he closed the West Orange club—the building needed loads of costly upgrades—and a year later reopened it in Montclair, along a popular retail stretch of Bloomfield Avenue known as the Montclair Mile.
By this time, Rodriguez had closed the Rascals clubs in Miami and Ocean Township and opened two others, in Cherry Hill and West Nyack, New York. He’d also altered his business plan, forsaking a comedy-only approach in favor of multifaceted entertainment. In 2004 he changed the company’s name to Headliners Entertainment Group and, as chairman of the board and CEO, he acquired five other clubs, from the Red Cheetah in Cincinnati to the Cactus Café in Omaha. “Our strategy has been to diversify beyond comedy,” Rodriguez says. “Headliners wasn’t planning to become only a company of comedy venues. We wanted to get into nightclubs, and these clubs were profitable.”
The strategy impresses Gary Vassalotti, president of an investment firm in Pennsylvania, who has written about Rascals for investrend.com. “I think the company has great potential with the new clubs and management contracts. And the Rascals name is well known and also has terrific potential,” Vassalotti says. “Headliners is a small company, but if their plans work out, I believe their stock will do well.”
The foundation of Rodriguez’s plan always rested on the prestige of the Rascals name. “I knew that Rascals was an important part of the history of American stand-up,” he says. “Just about every famous comic in this country has played at one of our venues. I was hoping to use that name to increase the profile and revenue of Headliners.”
In addition to the Rascals video library, Rodriguez was taping and cataloging hours of new talent as part of what he called “The Rascals Comedy Hour.” He also recognized that technological advances had ushered in an era of increased opportunity. He began working the phones. He even cold-called Microsoft. “That was an experience,” he says, “but I figured I had nothing to lose, and there was an enormous upside. They asked to see some of our video, and they loved it.”
Last March Microsoft introduced its MSN Video Downloads, a service that could send digital videos to a Windows Media Player 10 library; the video also could be synchronized with portable devices, enabling users to take along their favorite videos wherever they went. The videos could include sports, news, music, films—and clips from Rascals Comedy Classics.
A month later, Headliners reached an agreement with Web-based broadcast entertainment channel tvnet.net to provide high-resolution videos of its comedy classics and rising stars. Tvnet.net, in turn, would market the comedy videos over the Web. Headliners would receive a cut of its advertising revenues.
In June, Rodriguez finalized a deal to supply clips from the Rascals archives to SmartVideo Technologies, a six-year-old business that delivers video to hand-held devices such as cell phones and PDAs (personal digital assistants). The SmartVideo lineup already included ABC News Now, MSNBC, CNBC, Fox Sports, E!-Entertainment, IFilm, and the Weather Channel. “Estimates predict that by 2008 there will be 250 million portable devices worldwide that are capable of playing streamed video,” Rodriguez says, “and we plan to be part of it.”
Rodriguez had long planned to put Rascals comedy on the radio, and an emerging medium has given him the chance. In August, Headliners reached a licensing agreement with XM Satellite Radio to broadcast Rascals clips and one live show each week. Of course, satellite radio listeners never move out of range, so they never lose their favorite shows in a crackle of static. Satellite radio has the distinct advantage of providing entertainment without boundaries—exactly what Rodriguez was seeking.
In September, Headliners announced another deal, this one with Audible.com, a sort of digital audio entertainment-and-information clearinghouse with a library of 25,000 digital audiobooks, radio shows, audio versions of magazines and newspapers, and a good deal more. Users can download the audio files to PDAs and computers or burn them onto CDs. This arrangement could enable Rodriguez to spread the club’s name far and wide.
The future of Rascals, a club long identified with the New Jersey comedy scene, is taking root in a universe devoid of a sense of place—the borderless realm of cyberspace—and flourishing among listeners who may or may not be able to pinpoint New Jersey on a map.
For Rodriguez, this is precisely what he had envisioned. “As I travel around the world, I find that so many people know the Rascals name,” he says. “I’m hoping that some day everyone will.”
Peter Golden, a freelance writer originally from Maplewood, is still awaiting his invitation to perform at Rascals.
Article from December, 2005 Issue.