The Music Box Supper Club in Cleveland’s Flats is getting a new kind of owner: its own workers. Owner Mike Miller announced Monday (March 9) that the venue is shifting to an employee ownership trust, a move that will place the club’s controlling interest into a trust set up to benefit eligible staff while keeping the brand and day to day management in place. Miller said he will remain chief executive and chair of the trust’s governing board as the transition plays out.
All 34 outside investors in the club have been bought out, and roughly 60 employees are named as potential trust beneficiaries once they meet a two-year minimum service requirement, as reported by Cleveland.com. Miller told the outlet that monthly payments to those former investors are expected to begin in two years and that the buyout was completed without bank loans. He added that some staff were caught off guard by the announcement, but said the plan is built to reward long-term employees over time.
How an employee ownership trust works
An employee ownership trust, or EOT, holds a company’s voting interest on behalf of employees rather than issuing tradable shares to individuals. In Ohio, the Kent State based Ohio Employee Ownership Center helps businesses set up this kind of structure. The group provided technical assistance on the Music Box transition and offers guidance to owners around the state who are weighing employee-centered succession plans.
National experts note that EOTs differ from ESOPs and worker cooperatives in both governance and tax treatment, and that they can be used to keep a business independent while giving staff a direct economic stake in how it performs. The National Center for Employee Ownership points to those distinctions when explaining why some owners opt for a trust instead of more familiar models.
Why the owners chose this route
Miller told Cleveland.com that the idea for a succession plan came into focus after he turned 70 last July and started thinking more seriously about what would happen next for the club. He said he wanted an option that would keep the Music Box locally controlled rather than selling to an outside buyer…