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He's wearing bell-bottoms.

Hold it right there.

And he's chewing gum.

I'm not gonna be fake. I come from Venezuela.

-More coming up over there. -Okay.

-Let the black guy in. -I think they should let all of us in.

Exit over there to your right, please.

Yeah, let them in.

I will get inside.

What do you think makes a place hot?

Like 54... What was the phenomenon that it became international?

People flew in from over the world just to go there.

What made it such a...

I don't know. I, uh... You know,

in a club it's all about capturing a moment.

When you walked through those blacked-out doors,

you were in another world.

Anyone that was allowed in,

uh, was totally free inside.

Steve and I had no idea what it would really mean,

or that it would last only 33 months.

Just captured everybody's imagination.

You could be next to Elizabeth Taylor

or, uh, just about anybody,

uh, and feel wonderful and good about yourself.

I love the nightlife,

and I love seeing people have fun nights.

There's nothing that makes me happier

than to see the people having a good time.

Everybody that was there was a star.

Thanks. That makes me feel great.

It does, because so much bad

came out of it, you know, for Ian and I

that it's good to think

some people think of it like that.

The owners of Studio 54, Ian Schrager and Steven Rubell...

Two dozen agents raided the chic disco this morning.

It's up to ten years in prison.

What was your reaction when you learned

that your partner had been arrested?

-I just go? - Uh, yeah, try that.

Well, um,

you know, I was wondering to myself why,

after almost 40 years, you know,

I would finally feel okay to talk about Studio,

'cause I hadn't talked about it, you know, at all.

Now I'm at a point in my life

that it doesn't sting as much

after all this time the way it used to sting.

There's only two people

that could've told this story...

Steve and I.

That's why I'm happy

to finally tell the story as it really happened.

All right.

You haven't seen the book in a few weeks,

so we should look at everything,

and I have to ask you a couple questions.

I never been in a room

with so many celebrities.

It was like numb.

So we need a picture here.

This one.

My friendship with Steve was always very close,

almost from the moment we met.

We met in college.

We both came from Brooklyn,

middle class,

lower middle-class working families.

Everybody upwardly mobile and ambitious,

and everybody wanted their kids

to do better than they did.

Brooklyn made me hungry.

My father was a tennis pro, and I played tennis,

and I'd visit these estates, and I saw how people live.

And you just see this whole other life.

You were very well aware of the difference

between what they had and what you had.

Somehow tennis expanded the universe,

and you saw that there were other possibilities.

We chose, as much as possible,

to try and pursue those avenues of success.

In college, Ian was very studious.

He wanted to become an attorney.

And Stevie was the social butterfly.

If you wanted to meet a certain girl, you saw Steve Rubell.

If you needed to know what courses to take,

you saw Steve Rubell.

He knew everybody at Syracuse University.

Steve was the most public of people,

but he, in fact, was very private.

He was never open about his sexuality

and the fact that he was gay.

It wasn't something we talked about.

You know, it didn't matter.

Steve was an extrovert, and, yeah, I am an introvert,

but inside, value-wise, essence-wise,

you know, we were the same.

After we graduated, I got a job as a lawyer,

and then Steve was working on the steak restaurants.

Steve was very interested in doing steak restaurants

in as many places as fast as he could possibly do it.

He had expanded too quickly, and they weren't doing well.

So I acted as his lawyer

and kept the creditors at bay.

That's when Steve and I became partners.

I was the one that wanted to go into the nightclub business

because I smelled that there was a real, you know, opportunity with it.

That ambition, that drive

really forged a real bond between us.

Steve always felt he had something to prove,

as I did.

From the beginning,

they had this intuitive understanding

that they were getting out

and they were gonna do something big together.

The Vietnam War ended,

and Watergate ended,

and everybody, all of a sudden,

was tired of being concerned about outside forces,

and they said, "I want to have some fun."

They were tired of being serious.

So everybody went out and went wild.

We were going out to clubs in Manhattan all the time,

and trying to figure out

what kind of club we wanted to create.

♪ Makossa ♪

Gay clubs were some of the first clubs

that had disco music.

But disco was black music,

and it came out of black clubs.

♪ Makossa ♪

The beautiful models, the girls would go to the gay clubs

with the gay designers and hairdressers and makeup men,

and then the straight guys would want to meet the models,

so they would go to these clubs,

and it all started blending.

For me, as a New Yorker,

I'm telling you, this was revolutionary.

And it was the first time

that it felt like people were nonjudgmental.

Everybody was fine with everybody else's culture.

At that time, gay clubs were behind closed doors, hidden.

It was a little bit like going to a speakeasy in the '20s, I suppose.

It was subversive,

and there was an incredible energy.

We wanted to tap through the loose,

intense, sweaty, dancing fun that was happening there

and take it up a notch...

to create the ultimate nightclub.

Blow everybody away with it.

Dent the universe. Change the world.

♪ Makossa ♪

Ian and I walked into this old opera house and theater,

and Ian and I both saw it,

and we both went upstairs and signed the lease.

And some people said we were crazy

'cause we were on 8th Avenue

and 5th and 4th when the West Side was nothing.

In those days, it was not.

And Mayor Beame said he's gonna clean up the streets.

We're still waiting. It's very dirty.

I'm living here many years, when I remember

when it was beautiful, and now it stinks.

54th and 8th wasn't Disneyfied yet.

It was really a very sleazy neighborhood.

Perhaps the sleaziest neighborhood in the city...

the West Side and the Theatre District.

If you wanted to get mugged,

that was really a good place to go.

It was amazing that anyone would think of opening up

a discotheque on West 54th Street.

In the '20s, it was built as an opera house.

And then it used to be a CBS television studio.

And there were some really big-time shows that were there.

Time now for everybody's favorite guessing game...

Uh, What's My Line?, Captain Kangaroo,

The $64,000 Question.

I mean, these are big-time television programs.

They had all moved to L.A.,

and it sat empty for a long time.

This is around the 40th anniversary of Studio.

It seems like yesterday to me.

Now there's a sloped floor here for the theater,

like there was when we were here 40 years ago.

But, you know, you can't have a sloped floor and have dancing.

So we had to level it off.

And we didn't have enough time

to get a building permit to do it.

We had to just start working on it immediately.

So we said, "Just go ahead and do it."

We had a guy

on a tall ladder with a paintbrush...

Yeah....that was maybe 30 feet long...

Right. Right....and he was painting the ceiling.

And someone kept moving the ladder.

Yeah, I worked 30 hours straight right up to the opening.

Yeah. And it was that kind of unbridled energy,

you know, that got this whole place built in six weeks.

We were competing against

what probably is the best nightclub people in the world,

and wanted to have the best of those clubs.

First, we went to the usual suspects.

They said they couldn't work with us

'cause they were told not to by our competitors.

So, it was out of that problem

that it went to Jules Fisher and Paul Marantz,

Tony award-winning lighting designers.

The theater part was already there,

and we made as much use of it as possible,

which turned out to be a very good idea.

And the people we hired to help us were mostly coming from the theater,

'cause this was all at the speed of a theater production.

We were hammering and nailing, we were working there,

we were wiring, we were doing everything... I don't know...

with no unions, no nothing, you know?

I remember I was even a little bit afraid,

because we had to have people back here.

They were paid $65.00 a night.

That was a lot of money,

and I was afraid it was gonna impact the margins.

And I didn't want to have anybody back here.

You know, even having a lighting guy.

Up to that point, no nightclub had a lighting guy.

The DJ did the lights.

He played the music, and then he played with the lights.

There was nothing like it. So, we had a DJ, we had a lighting guy,

we had two guys on a fly reel back here.

Like, we had four people in that thing.

♪ Shoot me ♪

There's still some old CBS residual stuff around here too.

CBS left a lot behind that was just lying here for years.

What we tried to do was keep it in the context of a theater.

All the lighting... Everything was designed...

The rawness of it, the seeing of the lights...

It wasn't designed to be just pretty,

it was designed to be a theater.

There was just a tremendous amount of detail

that went into the band floor.

And, of course, all the interior design.

You know, we just... we had to race ahead

and were doing everything instinctive.

Making the club was Ian's job.

Steve did not get involved in this kind of stuff.

But they were both engineering this whole process

of getting the right crowd in the club.

♪ Ooh, ahh ♪

♪ Ooh, ahh ♪

Ian and Steve shared the same office,

and Steve was always laying on the couch.

They were making deals and calling people,

and they were sending limousines,

they were inviting all the important big names.

We were also sending out thousands of invitations.

All those things contributed to the groundswell, the buzz.

♪ Ooh, ahh ♪

♪ Ooh, ahh ♪

In the crush of everything that was going on,

it was impossible to get a liquor license in that period of time.

And matter of fact, we kind of forgot about it.

It got lost in everything.

So we thought we would go up and get a series

of one-day catering permits.

And so we called our company the Broadway Catering Corp.

This is the first article ever written on Studio.

This is Deana Winterpiece.

"'Then we saw this', said Steven Rubell,

"leading a tour around the forgotten theater that is,

even as we write, becoming New York's newest discotheque."

How much did it cost?

400,000. I remember that.

No, it was more, because we... No.

...we owed him money.

-We owed him money. -How much?

Probably another 350,400,000.

Yeah, it was close to 700,000.

-Are you sure, Jack? 'Cause I always remember 400.

-Um, yeah. Yeah...

Who did you owe money to?

To the contractor.

And, you know, that made me nervous because I was on the hook.

You guys weren't. We didn't have anything.

Jack, why did you do this?

Steve and Ian had a club,

Enchanted Gardens, which is where I met them.

We had done a bar mitzvah for him.

And I think at that time, it was the first time

that anybody had actually done a discotheque for a, uh...

-Bar mitzvah. -For a bar mitzvah.

Enchanted Garden was the first nightclub

that Steve and I did.

It was a club for the kids in Queens.

The first night, Steve went to the bar

to hang out with the people,

and I went up in the DJ booth to play with the lights.

It's not over yet.

Our fabulous band from Fiorucci

are gonna give you a couple more treats,

and then we hope you'll join in and dance with them.

It was at the Enchanted Garden

that we started to throw these extravagant parties.

We learned the business

and got our feet wet in Queens.

But we always wanted to do

a nightclub in Manhattan, which was the big leagues.

As of tonight,

the disco-goer becomes the performer.

During the night you'll have sunsets, sunrises,

fog machines, snow machines, wind machines.

There'll be a tornado about 1:30 at night to get the people...

Every night at 1:30, there's gonna be a tornado.

Right. Tonight at 1:30, there'll be a tornado.

Where do you take shelter around here?

Oh, we hide upstairs in the balcony.

You can also retreat to the balcony

if you don't want to become one of the performers down there.

In fact, they encourage you to come up here,

whether you come up here to spectate or not.

They give you these binoculars.

Kristy Fair, Channel 11 Action News,

on the balcony, out of the act, at Studio 54.

We had everything riding on this club.

If it was a failure, it would've been a very, very big failure.

And if it was a success, it would've been a big success.

The opening night, there's a mob scene.

It was almost impossible to get close to the door.

We didn't have the velvet rope all stretched out.

And we didn't have adequate security.

We had to take all the rest of the security that was in the place

and put them out front.

And we were afraid that they might break the door down.

All right, please, everybody back up.

At first, I was hired as security,

but that first night,

Steve put me outside the front door,

and I was out front from day one.

And Marc Benecke became the doorman

only because he was the better-looking

of the rest of the security guys.

I'd never worked at a nightclub before.

I, you know, just had to... I had to just kind of wing it.

It was really beyond crazy.

I remember getting past the doorman,

and there was a carpeted...

Looked like almost a runway.

And it was mirrored.

The coatroom was to the right.

I just remember hearing the music, and I threw my coat.

The coat check was so out of control.

I just started giving people tickets.

We were hanging coats or putting coats...

Then we're just throwing coats on the floor.

Like, hundreds of people must've lost their coats that night.

It was... It was total pandemonium.

Boom, boom, boom.

The sound of the music down the hall.

There was a rush to get to the dance floor. Just a rush.

The full blast of the sound,

you know, just came over you in a big wave.

♪ You make me feel ♪

♪ Mighty real ♪

♪ You make me feel ♪

♪ Mighty real ♪

The amount of drugs was profound.

You know? And they were all uppers.

No one was on a downer that night.

♪ You make me feel ♪

It was carefree. It was hot. It was sexy.

♪ Mighty real ♪

♪ Make me feel mighty real ♪

Something happened from that first night opening party.

The message was sent out.

It was like, poom, this was the spot.

♪ I feel real ♪

They invited the people

that everyone else wanted to be in a room with.

♪ You make me feel ♪

♪ Mighty real ♪

♪ You make me feel ♪

♪ Mighty real ♪

♪ Oh, you make me feel ♪

♪ Mighty real ♪

♪ You make me feel ♪

I was absolutely shell-shocked.

Steve was only 33,

I was 29,

and we had this massive hit.

We were on the front page of the New York Post.

No other place had ever gotten that. None.

It was like a dream for us.

Then it was just a question of, uh, feeding the monster.

Who, me?

I think they wanna get out of the cab.

Get them out of the cab.

Oh, you're not shaved.

There's no way in a million years you're gonna get in.

-Every... -It doesn't matter. You're not shaved.

-Listen, just go home. -Over here!

I'll try as soon as some leave.

-Marc, check that side. -Right over here.

Can you put the lights down a little?

I can't see some of 'em.

This is the scene

outside a New York disco called Studio 54.

This is the place that's in with the disco crowd.

Except that these people are still out.

Of course, Liza Minnelli and her kind of celebrities

sweep right through the protective ranks of doorkeepers.

The ropes came about

because there were prostitutes on 8th and 5th and 4th,

and in order to keep them out, we put the ropes up.

And the ropes became part of the game.

Steve!

Now, you only admit celebrities?

No. No. We admit everybody.

How do you choose?

What are your criteria for admitting someone?

Really fun-loving...

We want people who are just in there to have fun

and not get heavy with each other.

-People come there to relax. -You favor couples versus singles?

We... Couples, gay people, you know?

Going out in those days,

it was all about ego.

This was one's lifestyle.

If you didn't see somebody at Studio 54,

it meant they couldn't get in.

And what did that mean?

Pfft!

Every night, there would be a guest list

that would be for the front door.

There'd be somebody's name on the guest list,

then the next column,

there would be "pay," "comp," or "NFU."

And "NFU" meant "no fuck-up."

That meant that Marc had to let them in.

We had "GN," which really meant "NG,"

which meant "no good," which means if they were no good,

you don't have to let them in. Celebrities...

Some celebrities get special treatment, others don't.

-Do they get in for nothing? -Most of them do, not all.

-Mick Jagger and Keith Richards, of course, would get in.

But some of the other Rolling Stones actually had to pay.

Friday and Saturday night, you know,

the so-called bridge-and-tunnel crowd used to come in.

They didn't get into Studio 54.

They probably did go to New York-New York,

and Infinity, the Ice Palace,

you know, Hurrah's, and other clubs like that.

But they weren't coming to Studio 54.

Steve is the one who came up with that term "bridge-and-tunnel."

You know, it was his way

of explaining that we didn't want people

with the polyester shirts, gold chains.

"Polyester melts under the lights."

That was, uh... That was one we heard a lot.

He would split up couples. He would say to the girl,

"You're really beautiful. You're in,

"but your boyfriend's gotta go home

and change into a cotton shirt."

And would you let yourself in wearing a shirt like that?

This shirt? Yeah, this is a good one to let in...

these Hawaiian shirts. Uh, good one. But, uh,

I don't know if I would've let myself in when the place started.

I doubt it really very much. If somebody else was to...

No, actually, it isn't like that.

The only thing that it's not based on is money.

Has anybody ever offered you sex? Oh, yeah.

-Do you take it? -Depends on the offer.

But they have to be hot enough to get inside first.

Because if they weren't, then that wouldn't be a problem anyway.

-So it doesn't matter.

If you look at the photograph,

it's a more slightly hopeful throng.

You see an occasional waved hand,

a little grin trying to catch the eye of Marc Benecke or Steve.

It's like the damned looking into paradise.

I don't know. Last time I was here, I got in right away.

So I don't know. I guess they either like the way you look, or they don't.

If I knew what their policy was and how they selected

those who are permitted entrance to the inner sanctum,

I might even alter my personality, my dress,

in order to pass inspection.

But they, apparently, keep it a secret.

There was a passion to get in,

and a resentment and a hatred if you didn't.

We didn't care. We just wanted the success.

Ian and Steve were excellent at the PR.

Steve just loved getting on the phone,

and talking to the press and letting them know

who was there, what went on.

And we got more press than anybody else.

Ian called me up and said, "Let's make a deal."

And I would get paid for wrangling the celebrities.

If I generated PR around that person,

I would get $500 for the cover of the Daily News.

If I got them on the cover of the New York Post,

it would be an additional $500.

And then if I got them into "Page Six," it'd be like 150.

So, any celebrity that walked in

pretty much got on the cover of the New York Post or the Daily News.

It was huge news.

Anything that happened there

was on the cover of the newspapers,

was double pages inside.

And there were celebrities there every night.

Everyone felt like they had to be there,

or they were missing out.

There was this paradigm shift

away from reading about crime and and sports heroes,

and people became fascinated with celebrities.

It was the beginning of the age of celebrity.

We were there at the right time,

and we rode it for all that it was worth.

The photographers we let in were those that we could control,

that would play by the rules that we set up.

Here's the Studio 54 box.

Here's some of the pictures that I've taken.

This is a great shot of, uh, Elton John

feeling the boobs of Divine.

I did miss Bianca, but I got Dolly Parton kissing this horse.

In the limousine, I got this great shot

of Liz Taylor in a limousine.

I call it "Fat Liz."

Here we have Truman Capote with his robe.

And he had slippers. I have another shot

with his slippers... with his initials on his slippers.

There's Ian Schrager at the stage door,

looking for an arrival of a celebrity.

I don't know which celebrity he was looking for.

But Ian was very nice.

He was an introvert.

He was rare, actually.

It was a rare time I got that picture.

He didn't like publicity. Like, you see,

here's a braggadocio.

Here's a braggadocio!

Steve Rubell!

Here I am.

Look at me.

He's there with the stars. Big stars, small stars.

He wanted exposure, and he got it.

He got a lot of exposure. He's in the pictures.

What came first,

the photographers or the celebrities?

I think the room, and being an old studio,

an old theater, and the lights, and...

That has a lot to do with it. I mean,

you have to build a nice mousetrap

to attract the mice.

Steve really took care of these celebrities.

He became very friendly with fashion designers like Halston.

The press actually came up with this phrase,

"Halston-Liza-Bianca-Andy,"

with hyphens between the names.

It was like a unit.

They were the core group.

Studio got so much publicity

that it made all of these people

more of household names.

-Hello, Steven. -Hi.

I go out of my way to take care of them, make them feel comfortable,

honestly, 'cause I get off on it myself.

This was really his dream.

His dream was to be the best friends with everyone he saw

in the newspapers and in magazines growing up.

And they were.

Hi, Michael. Come on in. You can come right in. Hi.

-Hi. Hi. -How are you?

-You just walked in? How are you? -Yeah, I did.

-Michael, this is Jane Pauley. Come sit over here.

-Excuse me. Whoops. Can I?

-Hi. Fine. -How do you do, Michael Jackson?

Good to see you. Come here a lot?

Oh, God, yes. Because, well... Why?

I like the atmosphere of Studio 54.

I've been to a lot of discotheques,

and I don't like them, honestly.

What's the difference?

All around the world, I've been...

I don't know. The feeling... I mean,

the excitement of the props coming down, and the balcony...

It's just exciting. Honestly.

People take good care of you here?

-Yes. Steve's very nice. -What's Stevie like?

He's one of my favorite people because he's genuine,

and for real and honest.

And that's what I like in people.

When you hear the name Studio 54, what does that do?

Does it... your pulse quicken, and your feet start moving?

Yeah, I'm ready to have a good time.

It's where you come when you want to escape.

It's really escapism.

That's what I try to make it be, too, is escapism.

In other words, people who have... whatever hassles they have all day,

they come here, and they can forget about them. -That's right.

And they can come here and just be yourself and dance.

When you dance here, you're just free.

You dance with whoever you want to.

You just go... I mean, you just go wild.

There aren't that many times in life

where you're absolutely free.

Everybody felt protected and safe.

You felt like you were in a place where you could relax.

You saw gay men kissing for the first time there.

And celebrities with gay men.

And people didn't judge.

You could be who you are when you were there.

The lighting and everything... I mean, it makes you feel sensuous.

All this going on and drinking

and thump-thump-thump music

and beautiful people everywhere.

It makes you want to feel like that.

I was wearing lingerie and heels,

and I could go to the dance floor,

and I could dance with everybody.

I'd float on the dance floor and dance with...

They were all my friends.

I mean, I didn't know them. They didn't know me.

But they didn't care, and I didn't care.

So that's how we danced at Studio.

We danced with the entire club.

Disco was a haven

for, you know, inclusion and acceptance,

and that the street wasn't.

Out on the street,

homophobia existed much more than even today.

Transgenders took their lives in their hands

walking down the street in New York City.

But as soon as they stepped foot into the disco, they were safe.

And not only they were safe, but they were included,

they were accepted, they were part of the scene.

Do people ever insult you or are rude to you?

-No. -No, they're petrified.

They think we escaped from a Broadway show.

Basically, New York people are very open

and very courteous and kind.

No. No, that's not true. Only at Studio.

-We truly feel at home here. -Yeah. Yes.

We pay rent, sort of. $14.00 is rent, I think, you know?

At Studio 54, gay energy was bigger than life.

The influence filled the room and filled the space.

The mantra at Studio was you were in a fantasy

and you could be anyone you wanted to be

for that moment in time, and people did.

♪ All that love and affection ♪

Thank you, Rollerina. I really needed that.

Rollerina was a Wall Street banker by day,

a fairy godmother by night.

Disco Sally was a lawyer,

and she was about 78 years old.

I was against Disco Sally at the beginning

'cause I thought the whole thing was kind of gimmicky.

And Steve's like, "No, no, you're wrong. You're wrong.

This is good for the club. It's good for the club."

Potassa, who was, like,

the most fabulous drag queen

of that whole era.

She was 5'11" out of shoes,

and 6'6" in shoes.

And you never, ever, ever, ever, ever saw her out of drag.

And she'd hold center stage when she wanted to.

What's really beautiful about the Studio...

the combination of people.

If you put just the beautiful people so close together,

then they... they are used to seeing each other.

They might even get bored of that.

But if you mix them properly,

which was the case of the Studio,

with all the bizarre characters

and the transvestites, and all that,

they like the combination.

I think it was a wonderful cocktail.

That diversity created this combustible energy.

It was tribal almost.

That wild abandonment,

that freedom was all a part of it.

It was like an adult amusement park.

They had a real sense of what people wanted.

You know? Adults wanted.

♪ Ahh, my baby's baby ♪

♪ Oh, my ♪

♪ My baby's baby ♪

In the '70s, there was this kind of window of opportunity

between the invention of the pill

and the advent of AIDS.

So, even if you weren't promiscuous

or sleeping with someone different every night,

you felt like you could.

You know, love was in the air.

Sex was in the air.

♪ Fly, robin, fly ♪

In the balconies, it was dark.

People would make out, and maybe somebody would give somebody a blow job.

♪ Fly, robin, fly ♪

Same thing in the bathrooms.

♪ Up, up to the sky ♪

There were mattresses in the basement.

And I went down there

and slept with a lot of people. A lot.

Gay people had the advantage

because no one was getting pregnant. So, basically,

you could just go out there and have a blast,

and you could have sex as much as you want,

and there was no repercussions.

And why not?

Because you're supposed to now.

It's all about freedom.

You could try anything.

Steve had this huge coat

that he would wear a lot of times,

and in that coat was money and drugs.

And it was like Daddy Warbucks.

Steve was big on Quaaludes, to be quite frank about it.

He loved giving out the Quaaludes. If you said, "Steve,

I don't want a quaalude," he'd say, "Oh, just take a half."

Oh, I don't think you're a priest, are ya?

You're too much of a bad boy.

He always wanted to get the party going to another level.

You can say higher and lower,

and I'll leave that open to interpretation.

Everybody, come on!

You think this happens anywhere else in the world?

-No. -No, I was all over the world.

I'm happy.

The music, the lights,

supple-bodied young waiters dressed in nothing but shorts,

and drinks at one pound fifty a glass.

The formula has made the owner a very rich young man.

He enjoyed every night.

I mean, Steve probably had more fun than anybody.

And the environment we created allowed him

to be comfortable and accept his sexuality,

maybe for the first time in his whole life.

He was in his element.

To me, it was different.

I didn't want to walk through the crowd

and have to be poked, people say hello.

All the time that Studio 54 existed,

you rarely saw pictures of Ian or read anything about Ian.

Ian was behind the scenes.

But he was the brilliant mind

and designing in a way that had never been seen.

People were just obsessed

with what he was gonna do next.

There was a theatrical quality of the place

that I'd never seen before.

It was an experience.

Touching, like, pretty much all of your senses.

It's a visceral business.

You have really no discernible product

except the magic you create.

The moving of lights and sets and changing the environment

from one second to the next...

that had never been done before.

Ian really created a world of fantasy.

It was the transformation of individuals

into this sort of group energy

that absolutely exploded.

Ian really is a genius for creating experiences for people.

We went right up to the edge

in every single aspect of it.

Building code, modalities, taste levels, social morays...

everything, right up to the edge.

It would cost as much as 40,000 or $50,000

just for the one night.

We wanted to break down that barrier

between the audience and the performers

and introduce the idea that anything could happen.

And it did.

Everybody who worked there knew we were cast members.

We were putting on a show,

and everybody had to give an incredible performance

and give an incredible service.

I was addicted to Studio 54,

without any question.

I had to go there every night, and so did a lot of people.

Studio 54 is probably the Mount Olympus of the disco world.

Right now, it is the center of the universe

for those who dance to 125 beats a minute.

Studio 54, the definitive disco here in New York City.

We were so excited, so high on the success,

that I would count the money at night, which I enjoyed.

You know, dump the money out of the bag,

kind of arrange it, and then split it up in...

You know, and I would make three piles,

and bring in a pile for Steve and a pile for Jack.

One thing that I think, if you hung out there,

you did notice was that they changed

the cash register receipt roll in the middle of the night.

That began to get out.

People began to notice that.

It was about the exhilaration

of having this great success, our life's dream.

We had the best crowd in the world.

We had the best press. We had the best club.

We were number 1.

Suddenly on top of the world.

They were living in a dream, practically.

It was becoming so much fun

that they were losing touch with reality.

I was up in my office with a girl,

and I heard the music stop.

Well, I walked downstairs,

and Steve was already over there.

You're encompassed in this little world, and all of a sudden,

the lights went on, and the police are there,

and it was like the reality was in your face,

like holy shit.

And we were both under arrest.

We still didn't have a liquor license,

so we were getting catering permits every night.

But, you know, at a point in time, they're like,

"Okay, why are these guys coming every night for a catering permit?

They're a nightclub, and everybody knows it."

Okay.

Roy Cohn was our lawyer at the time.

I had called him, and, uh... to help us.

Their lawyer was Roy Cohn,

and I knew he was also an attorney for Mob guys

and heavy-duty people in Manhattan.

That kind of made sense to me...

that there's a reason they're not afraid of much.

After a few hours,

we were released.

We were able, you know, to keep the place open

for six months with no liquor.

Then we finally got the license.

I have a picture of me and Steve

holding the liquor license when we got it.

And from that moment on,

we felt like we conquered the world.

They thought they were so important

that they could do anything.

But people started to get angrier and angrier at Steve Rubell

and at Studio 54 because they couldn't get in.

-One day, I'll be a star. -They won't let me in.

You can't have this much popularity

without somebody somewhere

being envious or wanting to take it down.

I mean, it's human nature. It's just the way life is.

The Dan Dorfman article,

Steve said, "Only the Mafia does better,

but don't tell anybody."

Part of Stevie was a braggart, you know?

"Look what I'm doing, I'm having the best time,

and we're making tons of money."

He was very proud about that.

I thought it was the stupidest thing I'd ever seen.

And when I called him, I said,

"You're asking the IRS

to just come knocking at your door."

And he said, "No, no, no one's gonna bother me."

Close to two dozen IRS agents

raided the chic disco this morning,

armed with a warrant to search and seize

any and all records relating to the club's finances.

We got raided on December 14th, 1978.

December 14th... that was just a terrible day.

The Studio 54 case began with an allegation

of a gigantic skimming operation,

that there was cash and drugs hidden

at Studio 54.

One of the cleaning guys called me and said,

"There's some guys here, and they have warrants."

So I called Steve.

Steve said there were some Quaaludes in the safe,

and if I can run over and see if I can get them out.

But I ran into the Feds

while I was in the basement,

and they said, "Are you the manager?"

I said, "Yeah." And they said, "Well, come on, open the safe."

27-42-37, da, da, da.

Two this way, one this way, one this way.

Clink, ploomp, and open.

They said, "Is this everything?"

And that's when I said,

"Well, there's a couple of boxes

up above here too."

First of all, I tried to open the door,

and somebody pulled it back

because they were already in here.

Yeah.

So I put my key in and tried to open it.

Then they pulled it back. And then eventually,

the federal marshal, whatever, just opened it.

This is 9:00 in the morning, by the way.

Federal marshal opened it and said something...

"Do you wanna come in, do you not wanna come in?"

So I came in. I had all my papers with me like I normally have.

I put them down on the floor, then I walked in.

Ian Schrager, one of the owners of Studio 54,

entered the club some time later,

and agents say

that among his records they found cocaine.

It wasn't in my books. It was around my books.

And then they came in. I put my books on the floor.

Maybe it was left from the night before. Who knows?

The field test kit

showed positive presence of cocaine.

Not only was it positive,

the thing was off the charts, pure.

It looked like it had been cut right off the key,

as they say in the narcotics business.

If you're going to walk onto the premises

that are being searched by 50 IRS agents,

with cocaine under your arms,

don't walk in.

-I was arrested, and

my first call was to Roy Cohn's office.

And he came down immediately

and advised us

to overturn all the furniture in the office

and make it look like the agent

turned everything upside down, like a Gestapo.

They even ruined my birthday presents.

And it got everybody

even more pissed off at us

because it wasn't true,

and they said they were very careful

to keep everything very neat.

That kind of started

the litany of mistakes we made in this thing

because that made the front page

of the Daily News.

I don't think we realized

the, uh, the seriousness

of, uh, of what we got ourselves involved with

because we're getting away with everything.

And they were interviewing Ian.

Ian was sitting in a chair with the chair turned around,

leaning on it like this.

Like, defiant.

Kind of like, with, like, "Fuck you."

You think he'd be scared, but he wasn't.

He was... He was pissed.

Seven hours after the raid began,

co-owner Steve Rubell emerged with lawyer Roy Cohn,

-who blasted the IRS. -...publicity stunt...

Well, you tell me one other instance in American history

when 23 Internal Revenue Agents

at the beginning of an investigation,

before they even go to a company's accountants or lawyers,

come in and raid a place,

tear it to pieces, open up everything in sight...

Uh, if that's ever happened before in America, I've never seen it.

But what was it? Was it cocaine?

What does it look like inside right now?

It was not in his briefcase.

They do not allege it was in his briefcase.

I've read the complaint, and I was in court, and you weren't.

-Steve, what does it look like inside? -Wait a minute.

We have to fight to get a lawyer into this place.

I came in through the front door to get in.

-The first time I had trouble getting in.

One piece I billed him.

-That's a piece... -One piece of the bill. Come on...

Steve, what is the reaction...

-What about the cocaine? -I don't know anything about that.

I really don't know anything about that.

Are there any other drugs on the premises?

I don't know anything about any other drugs.

Did you know anything about drugs on the premises this time?

No, I didn't. Absolutely not.

What was your reaction when you heard

that your partner had been arrested for cocaine?

I-I-I'm very fond of Ian.

We went to college together. We met in college.

He's a good guy. And of course I was upset.

Was coke use common at Studio 54?

No, I like... What Roy said...

I don't wanna really comment

on anything to do with that legal case of it,

but, uh, you know...

-What?

-Steve, look this way, please. Thank you.

I feel like the president today.

We had had every great lawyer

working for us.

You know, we had had one of the lawyers

that had represented John Mitchell on Watergate.

We had James Neal,

who had sent Jimmy Hoffa to jail.

We had had Arthur Liman. We had had Mitchell Rogovin,

who was part of Arnold & Porter,

where Abe Fortas came from,

and he was a Supreme Court Justice.

We'd circled the wagon,

and we got ready to fight the government.

There are, incidentally, 37 lawyers

working on behalf of Schrager and Rubell.

When they were raided,

it was real Schadenfreude here in New York City.

They'd finally got what was coming to them, people felt.

They had their loyal friends,

but nobody was running around with their head in their hands.

"Oh, poor Steve Rubell, poor Ian Schrager"...

None of that happened. People kind of liked it.

And now, following up on the Studio 54 story,

is Weekend Update correspondent Laraine Newman

outside Studio 54.

-Laraine? -Thank you, Bill.

Standing next to me is Steve Rubell,

co-owner of the club.

Steve, what was your reaction

when you learned cocaine had been found here?

I was shocked.

It was more of, you know,

taking on the institution, taking on the system,

which was all part of the Studio 54 mystique.

And I think everybody rallied around,

and there was a party after that.

The notoriety was like a moth to a flame.

And everybody came, and it got even bigger.

Which controversy, uh, sometimes does.

A lot of people say,

"Well, Rubell was shooting off his mouth

about don't tell the IRS this

and don't tell the IRS that."

That was not it.

This case came about

strictly because, uh, an informant, who was

very unhappy with his treatment at Studio 54...

and knew where the records were kept.

The basement had a drop ceiling.

And if you remove the ceiling tiles,

that's where we found the manila envelopes

that were, in effect, the second set of books.

Also, up there in garbage bags...

plastic garbage bags... there was cash.

Absolutely never any millions of dollars

in the ceiling of Studio 54.

That's, uh, just folklore.

They took down bags of cash,

which had been particularly described in the search warrant.

It was, like, five combinations, and you had to...

It's like, "Oh, man, this is a pain in the neck.

The guys are all dying for quarters,

so I'll keep the quarters up top."

That's as simple as it was.

That was the "money in the ceiling" story.

There was also cash

in a safe-deposit box that belonged to Steve Rubell

that we got a warrant for.

We drilled the box. We got cash out of there.

There was also cash in his apartment.

There were secret doors behind bookcases.

Steve had 900,000 in cash, 5s and 10s, stacked.

The Feds came, took all of that.

I was driving around

with $400,000 in the trunk of my car.

It could've been stolen. It could've been towed.

I mean, I was parking in garages.

It was ridiculous.

At Studio,

Steve's mother was the bookkeeper.

And Steve always had a budget for recreational drugs.

He would give them for free to certain people.

Steve's mother didn't know anything about the drugs

and what the codes were,

but she knew where every penny was going.

If there was $100 taken out

to get a celebrity a drug or whatever,

it was recorded as a "party favor."

So it had everything in there.

There was one envelope.

On the outside of the envelope were three columns:

"Ian," "Steve" and "Jack."

And then there was a fourth column,

which was the total amount of the take for that night.

And then there was a fifth column

that was labeled "skim,"

"S-K-I-M," or "SK."

So that you had a daily record

of everything that they took in

and what they took out as skim and didn't report.

Who created those books?

I didn't, uh, 'cause I wasn't the bookkeeper

or taking care of the books.

But one of us did. I... I...

Who instructed that those books be created?

You know, I... I... I don't remember...

You sure you're not a prosecutor here?

I, um...

You know, all I know was that I got the benefit of it,

and I was a co-conspirator,

and, you know...

But, you know, the actual, you know, workings and all...

I don't... I don't know who did it.

In the 33 months that they were doing it,

I think there was skim of two and half

or three million dollars...

an astronomical amount to skim,

which was ridiculous.

I mean, if you're gonna skim, you know, skim 10% or twent...

You know, not 80%.

They were really, you know, pigs about it.

Well, this was the Richard Nixon of skims.

We just went way over and way beyond, you know,

anything that was even remotely possible to go unnoticed.

Steve Rubell and Ian Schrager

are totally and completely innocent

of this claim for additional taxes

or any kind of evasion of taxes.

Cohn charges there was only one partner to blame

for the troubles of Studio 54...

that's the man who keeps the books.

His name is Jack Dushey.

He secretly pleaded guilty

to charges last week,

and he now faces

up to five years in prison.

Jack Dushey agreed to cooperate and to testify

against Rubell and Schrager in the grand jury

and at the trial, if one was necessary.

What happened wasn't his fault.

He had a whole family. He would've never done it.

-I never asked him that. -No.

But that's what I've, uh, always felt.

Were you... Jack, were you resentful...

It was very difficult

to put reins on the success, you know?

Who am I? First of all, I was older than them.

And, you know, I didn't need the money.

I wasn't doing it for the money. But, uh,

this was an overwhelming success,

so I wasn't about to try to harness them.

And, you know, you know, we all paid the price.

I mean, but did you know

what was going on in the counting house?

Oh, I was right in the middle of it.

Yeah, I was right in the middle of it.

I was just as culpable as, you know, Steve and Ian.

But you seem so level-headed.

Why do you think you let that happen?

Oh, the success.

-The success went to everybody's head. - Yeah.

I was assigned

to the Organized Crime Strike Force,

which deals mostly with organized crime.

In particular, at that time, the Italian Mafia.

The Studio 54 case...

there was a supposed connection

to organized crime through Ian Schrager,

whose father was Louis Schrager,

also colloquially known as Max the Jew.

I've always heard all these things

about my father in the newspapers,

and I didn't really know anything about it.

I idolized my father.

I knew he was different than other fathers,

you know, with his hours of work,

and I was always concerned

that that would be a problem for me.

I was always very sensitive to that.

Louis Schrager, who had died at the time,

was an old Meyer Lansky associate.

But we never found any evidence

that Studio 54 had a Mafia link.

I definitely think that Ian

didn't want any part of his father's business

or connections or anything.

I mean, his father was successful at what he did.

His father had power.

And I think that Ian wanted power

and success in a different area.

The three owners and the manager of the Studio 54 disco

were indicted today on charges of income tax evasion.

Steve Rubell and Ian Schrager

were slapped with a 12-count indictment...

Now Ian Schrager and Steve Rubell

face up to ten years in prison

and fines up to $20,000.

They had this ball of fire

that nobody in the world had.

They had this... this thing

that was worldwide popular

that had fallen into their laps,

and I don't think they wanted to lose that.

During one of the meetings,

the lawyers kept saying, "Well, you know,

you have to try and trade something."

It was August 25th.

I remember Steve telling me,

"I hope there's a war in Iran."

I said, "What are you talking about?" He said, "I just don't...

"There's a story that's gonna break,

and I just don't want it to be big."

The Justice Department

is investigating an allegation

that White House Chief of Staff Hamilton Jordan used cocaine

during a visit to New York's Studio 54 discotheque last year.

The White House flatly denies the allegations,

saying the people making them have a clear interest

in making false and sensational charges

so they can bargain for lighter sentences.

To accuse the White House Chief of Staff

of asking to buy cocaine

in the basement of Studio 54...

I mean, didn't Steve realize

he now is gonna have the White House against him?

I thought Steve better be really careful.

These people are powerful. He doesn't have any power.

He's a nightlife person. His power is among celebrities,

it's not among the politicos.

He definitely messed with the wrong people.

President Carter's comment about Jordan was

"He will tell the truth,

as my wife would or my children."

While the Justice Department

would not ordinarily pursue a case

involving individual use of the drug,

it's compelled to do so on this case

because of a new law called the Ethics in Government Act.

That law grew out of the Watergate scandals.

It requires an investigation of up to 90 days by the FBI

when criminal allegations are made

against high-ranking government officials.

One of the lawyers, Mitchell Rogovin,

made a really fatal mistake

and hurt us.

He didn't understand

how Watergate changed the law.

It became very public.

The train left the station and took a life of its own.

There was no turning back.

You saw, with your own eyes,

Hamilton Jordan use cocaine?

Yes.

-No question? -No question.

-No mistake? -No.

We didn't realize the magnitude

of what was going on.

We had this thing of, you know,

"We'll get out of it.

"You know, we got Roy there, but, you know,

we'll figure out a way and get a way out of it."

We even went and did a major renovation in the club,

like a signal to everyone... it's gonna be fine.

What do you do

when you're under indictment for tax evasion

and fighting Hamilton Jordan in your spare time?

Well, you can create a new image...

architecturally, at least.

600 workers on round-the-clock shifts

have been laboring since last Wednesday to put it all together,

and when they're finished,

it's expected to cost $1 1/2 million...

three times what it cost

to open Studio 54 three years ago.

♪ More, more, more ♪

♪ How do you like it, how do you like it? ♪

♪ More, more, more ♪

♪ How do you like it, how do you like it? ♪

Ian had all these magical ideas.

He'd seen Sweeney Todd,

and he got this idea to do a bridge.

Tired of fighting your way

through the crowded dance floor?

Well, this moving bridge

ought to be able to solve that problem.

It can carry 25 tons in weight

and will be able to move 250 people

over the heads of the dancers

to the other side of the room

or to the balcony

at the speed of 45 feet a minute.

Of course, the story goes

that they had to cover the balcony

in rubber so they could wash it down more easily.

Were you aware that you were creating a sex pit?

♪...how I really feel? ♪

♪ Just get the cameras rolling... ♪

Yes.

♪ More, more, more ♪

♪ How do you like it, how do you like it? ♪

♪ More, more, more ♪

♪ How do you like it, how do you like it? ♪

I love Studio 54 so much, and I thank you

for making all my evenings a lot more fun.

Ah, what can I say?

Oh, just say "thank you."

Plead guilty to charges of flattery.

I don't plead guilty to any charges.

Two owners

of the trendy Manhattan discotheque Studio 54

pleaded guilty today of defrauding the government

of more than $400,000 in taxes.

Today, Rubell and his partner Ian Schrager

were charged with skimming $2 1/2 million

from the receipts of Studio 54

and lying about it.

12 counts in all.

They admitted to two counts of tax evasion.

The government dropped the rest.

We didn't want to plead guilty to a felony

because you can't have a liquor license

if you're convicted of a felony.

So this whole thing was to protect Studio,

but it just got out of control.

We were out of our league,

and we were forced to plea to a felony.

-Come on down a little bit.

Well, Roy, did anything go wrong

with the plea bargaining?

Listen, when you have about 37 lawyers

involved in anything,

uh, something's always gonna go wrong.

-Steven... -What made you do it?

Was it greed?

-Too much money too fast? -No.

I made a mistake. Did you ever make a mistake?

Why did you make that kind of mistake?

Are you and Schrager still friendly after this?

He's my best friend. I love him dearly.

When we got in trouble,

the press,

you know, turned on us.

It was the first time,

you know, in my life and in Steve's life,

we couldn't talk our way out of it.

It was like we couldn't shake it.

Things seemed to be closing in on us.

When you go through something like that,

uh, it either makes you closer and stronger,

or it tears you apart.

In our case, it made us stronger.

We rose and fell together.

A federal judge today

sentenced Steven Rubell and Ian Schrager,

owners of the New York discotheque Studio 54,

to three and a half years in prison

for evading almost half a million dollars in income taxes.

He also fined each man $20,000.

It didn't hit me. You know?

There was a complete emotional detachment.

I was numb.

Our life was over,

and we didn't even know.

The party, the night before they went to jail,

was probably as exciting

and as much fun as the opening party,

-It may have been more fun.

Andy Warhol as there,

Calvin Klein.

Diana Ross sang.

Liza Minnelli sang, too.

What I distinctly remember, Steve was wearing, like,

a Frank Sinatra hat,

and they played "I Did it My Way."

"My Way"...

What does that mean, "my way"?

When I look back at it now, it is so preposterous.

-What were we thinking? ♪ Don't leave me this way ♪

♪ Ahh ♪

♪ Baby ♪

♪ My heart is full of love and desire for you ♪

♪ Now come on down and do what you gotta do ♪

That night, the music was still intense,

the dancing was still intense,

and it was fabulous.

♪ Come on, satisfy the need in me ♪

Partying that night, I remember

all I wanted to do was dance.

And I was so high on drugs,

I really didn't realize what was going on.

I mean, I didn't think the party was gonna end.

♪ Ohh, baby ♪

That feeling of invincibility

permeated the whole process.

♪ Don't leave me this way ♪

♪ Don't leave me this way, no ♪

♪ Don't leave me this way, no ♪

♪ Don't leave me this way, baby ♪

♪ Don't leave me ♪

♪ Don't leave me this way, baby ♪

It was enormous denial,

you know, from beginning to end.

I'm not sure I would've made a party

to celebrate the fact I'm going to jail the next day.

I don't think they prepared at all,

and I think it was the actual going to jail

was just a terrific shock for them.

Stand right there. Thank you.

The owners of New York's

flashy discotheque Studio 54

surrendered to federal authorities today.

They reported this morning

at the Federal Metropolitan Correctional Center.

Meanwhile, the State Liquor Authority

has filed seven charges against the disco.

What was that first night like

at the Metropolitan House of Corrections

here in New York City?

Well, uh, the doors closed,

and when those doors close,

it's amazing how quickly

you, um, just realize you lost your freedom.

There's nothing worse in the world.

We didn't share a cell.

We were in the same jail.

And that's something that we both wanted, obviously.

We couldn't guarantee that.

I don't know what it would've been if I didn't have the benefit of having Steve there.

We were treated just like everybody else, not unfairly.

-They didn't care that you were with Liza... -No.

...and Bianca and all those stars? -Oh, that's another world.

It's how it is. You just have to learn

to keep your mouth shut and not say a world.

If you say a word, you're, uh... you're dead.

There was a guy that lived across the hall from me

and who had killed somebody with a bowling ball.

Um, and so I right away thought

that was a good guy to get friendly with.

I made a deal with him

that we would give his wife money on the outside

and he would protect us.

You know, it was just a base instinct

to survive in... in there.

After they went to jail,

we had another couple of months.

But it was never the same after, you know...

without Steve and Ian.

And then, when we lost the liquor license,

there wasn't much we could do.

It was in prison

that, uh, you know, we sold Studio 54.

And I was negotiating the contract,

and that kept my sanity.

But selling Studio

was the hardest thing I ever had to do.

The whole thing,

it was like a vortex of, you know...

It was all just going down the tubes,

and everybody just faded back

to where they came from.

You really feel like all these people

are really gonna be your friends for life.

They love you. And then you really find out,

well, that's really not the case

at all, you know?

The phone calls stop coming.

The, you know, the, uh,

the invitations to great parties stop coming.

All those things just stop, and that was, uh,

that was, uh, that was a rude awakening for me.

The disco era was over.

Disco music became a joke.

It was billed as Teen Night at Comiskey Park.

The feature attraction was a disc demolition between games.

Local radio morning man Steve Dahl

is to lead the crowd in song,

and then finish by blowing up a box

full of disco records

which the fans were to bring with them

to the ballpark.

"Disco Sucks" was almost a backlash

against Studio 54, in a way.

You think about the economic situation in America.

It was the worst financial recession

since the Great Depression.

And you think about what Studio 54

and what disco life looked like

to somebody working in the Midwest

who had now lost their job and is never coming back.

You know, you blame it on all these people.

You blame it on gay people,

you blame it on black people, you blame it on women.

There was this ground-swelling resentment.

People, you know,

were pissed off.

We upset the status quo.

We knew Rubell and Schrager could help us

and could give us more income tax evasion cases

against other people that they knew

who were doing the same thing.

So we devised the great Chinese food scenario.

The U.S. Attorney's office is on the border of Chinatown,

and the IRS agents know all the good places to eat, trust me.

So they ordered a slew of different Chinese dishes,

and I had Steve and Ian brought over,

and I had two chairs set out just outside my office

so that the smell was kind of wafting out into the hall.

And they're looking at it, and they're...

you know, they're hungry.

We really tried everything.

We were under all kinds of pressure.

The government had all our records.

It isn't as if, you know, we named names,

but we would've had to perjure ourselves

if we didn't answer questions about the nightclub owners

of Bonds, Infinity,

and New York-New York at the time.

They were, like, kind of our enemies.

You know, we, uh,

always suspected

that those guys were out to hurt us anyways,

so it was a kind of...

easy way to rationalize that, I suppose.

But my father wouldn't have, uh...

have liked this. -Why?

You know, because just, that's not something you do.

You know, um, do your time like a man.

Wouldn't be something that he would, uh,

you know, want... want... want me to do.

-And did that weigh upon you? -Of course.

I had problems. I still have problems,

and I'm still embarrassed about it.

It's one of the things,

uh, I was hoping you wouldn't get into.

But I, you know...

I, um...

It's, uh, just part of the story, I suppose.

We couldn't stay in prison for three and a half years,

so we did what we had to do

and got a reduced sentence.

When we got out of prison in 1981,

it was a whole different world.

Governor Reagan, we just wanted to show you

what the map of the United States looks like

as of 8:00 tonight.

-Hey! -All yours!

You had a different administration in the early '80s,

and suddenly it was all about making money.

It wasn't about abandon, it wasn't about equalization,

it was about massive, obvious success,

and a dollar über alles.

Downtown became more downtown.

The Mudd Club really became dominant

in protest against the yuppies and the Reagan administration.

Getting out of jail,

we were both really, really, really sensitive,

both unsure of ourselves.

You know, that's a devastation that's hard to explain.

You lose everything.

You know, I lost my law license.

I couldn't vote.

Even a driver's license, your credit card...

So I'm disenfranchised.

It's... You know, you don't realize,

till you can't, what it means to you.

And the shame of it. That was the real thing.

One of the things, I guess, that's a little bothersome

is that there is no stigma

attached to the fact that you did jail time.

Oh, but there is a st... There isn't a day that goes by

when I don't think about it.

-Okay. An emotional stigma.

It's emotional. Until about a year ago,

I had dreams that I was on an island and I couldn't get off.

And the nightmares... I would wake up soaked.

-And, uh, it's something you don't get over.

-Fair enough.

Steve was kind of tentative, because he didn't know

the way people were gonna be reacting to him.

Just that they didn't know

if they could trust him

after the Hamilton Jordan and everything.

Yeah, the price of being a success, you know, uh...

you know, is easy.

Price of being a failure is difficult.

I went through both.

That was probably

the most difficult moment of their life,

wondering if they would ever emerge.

In a sense, they had nothing to lose early on.

They had nothing.

Everything was an improvement.

It was fine.

Coming back, that was courage.

Ian's not gonna give up.

Stevie, in his own way, isn't gonna give up.

They both had the same DNA

when they went in and when they got out.

They'll take on any challenge.

-And they did. -I mean, I believe

they were plotting a comeback in prison.

Of course. The day they got in,

they were thinking about what we're gonna do when we get out.

Despite Rubell's plans,

post-prison reality was harsh.

It took three years

before the two could find the capital

to finance their next venture.

A string of luxury hotels that cater

to the same kind of eclectic crowd

that used to hang out at Studio 54.

They immediately began

channeling their efforts

into purchasing prime Manhattan real estate,

becoming part owners in several chic hotels,

including the Royalton

and Morgan's Hotel on Madison Avenue.

We wanted to be in the hotel business.

But we had to prove to the banks

that we could borrow $14 million and pay it back.

So that was the reason

why we opened up Palladium nightclub.

The bald, the brave,

and the beautiful came out tonight

for the opening of the Palladium.

It's an incredible thing that with Steve and Ian

out of the picture for six or seven years,

really nothing's

come along to replace them.

And now they're back

and bigger and better than ever.

I had hesitations about everything I did

because I had made a mistake,

and I had not felt so great about myself

for a while.

I got a second chance,

and you couldn't ask for anything more.

When we did the Palladium,

this was the first press piece we got,

called "The Comeback Kids,"

where I came out from the shadows.

The story was, uh... as much on me

as it was on Steve.

Steve was a little bit upset about it,

and the story disrupted that balance

that existed between Steve and I all those years

in terms of him being out there

getting all... all of the attention

and me being in the background and not getting any.

It was a new dynamic.

I remember it took him a little while

to... to... to get over it.

We should point out, for better or for worse,

Studio 54 is no longer.

Yeah. I read in the paper the other day

it was just closed, but...

-How'd you feel about that? -Um, I...

You know, I'm almost a little...

It's something of the past,

and I so do not want to dwell on the past.

-Sure. -The good or the bad.

I'm always futuristic in what I can do next

and what opportunities we can...

you know, that Ian and I can come up with, and...

You know, life is so exciting.

So how did you find out

that Steve had contracted HIV?

I did a blood test.

Did you suspect that he was becoming ill with that?

He had some symptoms.

Not of HIV, but there were vague symptoms.

And I was the one that told him he had AIDS, yeah.

You have to remember, AIDS, at that time...

it wasn't a disease.

It was a condemnation.

And so he wouldn't let me tell our parents.

He held it together, and...

I'm sure he didn't hold it together after I left,

but he held it together.

Everybody was getting sick.

It was frightening, and...

if I'm still emotionally affected by it,

the loss was profound.

All these young guys were just fading away.

Half the bartenders...

you know, half the people that did the sets...

the kids that painted,

they're not with us anymore.

It was devastating.

The impact that these people had on the community,

on the culture, on New York City...

such an incredible loss.

Culturally, it changed everything.

Steve was the kind of guy that, you know,

if he did something the night before

that might've been a little embarrassing,

you would see him the next morning,

and he would act like nothing happened,

and get away with it, and that would be the end of it,

whereas somebody might come into the room

with their tail between their legs,

terribly embarrassed.

So Steve was always able to get away with it.

This one thing he didn't get away with.

Steve Rubell changed the look, the feel,

and the pace of New York's nightlife

when he opened up Studio 54 some years ago.

Well, Rubell died this morning here in Manhattan

from complications of hepatitis.

Steve Rubell died of complications

resulting from hepatitis and septic shock.

Steve Rubell,

who died yesterday of liver failure...

There were rumors that Rubell succumbed to AIDS,

but the official word is that he died

of hepatitis and septic shock.

He didn't want the press

to put in the obit

that he died of complications of AIDS.

That was kept out.

I wanted to, you know, make sure

everybody came to the funeral

because that's what Steve would've wanted

was, like, a big send-off.

So I was on the phone making calls

to make sure everybody would, you know, would come.

The funeral for that people person

turned out the chic of New York City society.

From Calvin Klein to Bianca Jagger

to his partner Ian Schrager,

who, at times, looked shaken.

Losing Steve was like losing a family member.

So it was a very difficult day,

and a very difficult time. I think it hit...

Every one of our Studio family

who knew him felt the same way.

After the brief service,

some from Rubell's past said they saw his death

as emblematic of the passing of an era.

He gave a magic to the city,

and the city always needs magic.

And it always finds its, uh, marker,

and Steve was it for an awful lot of years.

Steve Rubell dead

at 45.

Ann... Mrs. Rubell... said to me,

"Why didn't Steve ever get married?"

And I realized then that I'm not sure

that she really knew that he was gay.

That was part of that time,

that time of maybe your mother

was the last to know.

Steve's death and his illness

had a huge impact on, um, Ian.

Their love for each other and their bond was so strong,

um, that I think it...

it made an impact for quite some time.

I met Steve... I think I was 18 or 19...

and the friendship blossomed right away,

and I was friendly with him

for all that time right up to 1989.

I'm lucky that I had one of those friendships.

Not many people, you know, do.

Steve and I bought this house in 1985.

Has a lot of history, this house.

It's like a family heirloom.

For that, it's quite beautiful.

How did the death of your partner,

your best friend, affect you?

It was devastating. It was a personal loss.

Steve and I were really like husband and wife.

I'm not sure

which one was the husband and which one was the wife.

We vacationed together.

We shared a house on Long Island together.

We worked together. We...

He was the last person I talked to

when I went to sleep.

And so it was a personal loss,

uh, uh, uh, more than anything else.

On the business end of it, the same passion

that drove me while Steve was alive still drove me.

I had the same hunger.

I still have that same hunger now.

And so we just continued on.

It's not as much fun. It's not as exhilarating.

I don't have someone to share it with.

But we just... you know, you go on.

Did you ever doubt that you could do it?

Of course. I still doubt it. I think that's what drives me.

It's not a surprise to me

that through all these years,

Ian has evolved

and reinvented himself

and taken that core of who he is

to where he is today.

I was trying to capture energy in the hotels

in the same way you might capture energy

on the streets of a city.

You know, there's an energy

that lifts everything,

a high tide that comes in.

That was the same thing with Studio.

Studio just meant everything to us,

what we had gone through together.

Both of us ingrained

with that desire to be successful.

I didn't get it as a lawyer,

and he didn't get it as a steak restaurateur,

but we both got it together with Studio.

What they created,

nobody has come near since then.

You know, there was a brevity to it.

There was a sense of something lost.

Paradise lost.

I don't think they had any idea what it would become,

that it would become this world famous,

that it would be important in our culture

and the history of New York City

and maybe significant in the history

of what was going on all around the world.

Studio wasn't a nightclub.

It was like a kind of social experiment.

And that's why it's never been able to be recreated.

It was fun... holding on to a lightning bolt.

♪ What's the sense in sharing this one and only life ♪

♪ Ending up just another lost and lonely wife ♪

♪ You count up the years ♪

♪ And they will be filled with tears ♪

♪ Love only breaks up to start over again ♪

♪ You'll get the babies, but you won't have your man ♪

♪ While he's busy loving every woman that he can ♪

♪ Uh-huh ♪

♪ Say I'm gonna leave a hundred times a day ♪

♪ It's easier said than done ♪

♪ When you just can't break away ♪

♪ When you just can't break away ♪

♪ Oh, young hearts run free ♪

♪ They'll never be hung up ♪

♪ Hung up like my man and me ♪

♪ My man and me ♪

♪ Ooh, young hearts ♪

♪ To yourself be true ♪

♪ Don't be no fool when love really don't love you ♪

♪ Don't love you ♪

♪ It's high time now, just one crack at life ♪

♪ Who wants to live it in trouble and strife? ♪

♪ My mind must be free ♪

♪ To learn all I can about me ♪

♪ Mm-hmm ♪

♪ I'm gonna love me for the rest of my days ♪

♪ Encourage the babies every time they say ♪

♪ Self-preservation is what's really going on today ♪

♪ Say I'm gonna turn loose a thousand times a day ♪

♪ But how can I turn loose ♪

♪ When I just can't break away? ♪

♪ When I just can't break away ♪

♪ Oh, young hearts run free ♪

♪ They'll never be hung up ♪

♪ Hung up like my man and me ♪

♪ You and me ♪

♪ Ohh ♪

♪ Ooh, young hearts ♪

♪ To yourself be true ♪

♪ Don't be no fool when love really don't love you ♪

♪ Don't love you ♪

♪ Ohh ♪

♪ Young hearts run free ♪

♪ They'll never be hung up ♪

♪ Hung up like my man and me ♪

♪ My man and me ♪

♪ Ohh Ohh, young hearts ♪

♪ To yourself be true ♪

♪ Don't be no fool when love really don't love you ♪

♪ It don't love you ♪

♪ Ohh ♪

♪ Ooh, young hearts run free ♪

♪ They'll never be hung up ♪

♪ Hung up like my man and me ♪

♪ My man and me ♪

♪ Ohh ♪

♪ Oh, young hearts ♪

♪ To yourself be true ♪

♪ Don't be no fool when love really don't love you ♪

♪ Don't love you ♪