Nightclub Era
When CBS began marketing the building in 1976, various interests in the art and fashion world expressed interest in seeing it converted into a nightclub. Male model Uva Harden tried to get gallery owner Frank Lloyd to finance the club, until Lloyd lost a $9 million lawsuit to the estate of the artist Mark Rothko, the Rothko Case.
In 1977, Studio 54 was transformed into a nightclub by Steve Rubell and Ian Schrager, with Jack Dushey as a financial backer. They operated the company as Broadway Catering Corp. It took only six weeks to transform the theater into a nightclub and cost $400,000.
Rubell and Schrager hired Ron Doud as interior designer and Brian Thompson as lighting designer. Jules Fisher and Paul Marantz, two well-known Broadway theatrical set-designers, helped convert the theater into a dance floor and created moveable, theatrical sets and lights using the original theatrical fly rails, which allowed for a constantly changing environment.
Within a month of opening, the New York State Liquor Authority raided Studio 54 for selling liquor without a license, and closed it. The owners of the nightclub said the incident was a "misunderstanding". The next night the club reopened, serving fruit juice and soda instead of liquor. Prior to the raid, the nightclub had been using daily "caterers' permits", which enabled the nightclub to serve alcohol but were intended for weddings or political events. The State had denied the daily permit for the night and raided the nightclub. The nightclub had been using these permits while waiting for its liquor license to be processed.
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