Star power can't save Groucho Club from falling deeply into debt

The art on its walls may be in the books at more than £300,000 and there may be a two-year waiting list to join its 4,000-strong membership list, but London's trendy Groucho Club is still deeply in the red. According to its latest accounts, the Soho club's losses rose to £2.27m in 2009 from £2m while turnover dropped from £4.8m to £4.4m, partly due to a two-year refurbishment programme which saw a number of bedrooms and function rooms closed off for long periods, and the club itself shut down completely on occasion. Beloved of Lily Allen, Sienna Miller and – almost inevitably – Stephen Fry, the Groucho recently celebrated its 25th anniversary, and believes its celebrity-laden membership list will see it through the financial downturn. The directors said: "The main risks faced by the company are the same as those affecting other leisure business operators, which is the adverse affect the recession is having on consumer and business expenditure. However, the directors believe that the business is well protected from such events by the unique nature and longevity of the membership." After being sold by its original founders to chocolate heir Joel Cadbury and public relations specialist Matthew Freud, the club is now majority-owned by venture capital group Graphite Capital, which put in £2.2m to pay for the latest refurbishment despite the short-term hit on the club's finances.