ALLY'S STAFF, ACCOUNTS DWINDLE AS SHOP STILL FACES DEEP DEBT

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The doors are still open at Ally & Gargano, but just barely.

Fewer than 10 people, some of them temps, are working in the agency's Manhattan offices, say former employees. And Ally's last major client-Aamco Transmissions-is now off the roster, along with earlier departed BMW Tristate, the automaker's New York metro area dealers association.

And with the sale of AdDirect, Ally's direct marketing unit, all three of the struggling agency's subsidiaries have been disposed of.

Proceeds from those transactions will go toward Ally's debts, and Chairman-CEO Bill Luceno said he still hopes to go forward as a small, retail agency. But he now acknowledges that may not happen. "I can't say for certain whether it's going to work or not," Mr. Luceno said.

Ally just completed a major national campaign for Aamco. The six TV and six radio spots starring actor James Brolin began running this month. Aamco says it will spend $60 million on media for the campaign over the next three years.

But Ally won't see any of that money. The work was performed on a creative-only, project basis, and the project is now finished, said Robyn Axner, director of public relations for Aamco's PR agency Hayes Group, Dresher, Pa.

BMW Tristate put its account, estimated at $5 million, in review two weeks ago.

"We terminated the relationship because we don't feel they have the resources to service our account," said Chairman Ron Napoli.

The dealer group was the latest in a string of disastrous losses for Ally since the start of the year, totaling about $100 million in lost billings (AA, July 31).

That leaves two clients on Ally's roster: the World Gold Council and Cushman & Wakefield, a real estate company, each under $5 million.

Ally is also left with some big debts. Media executives and former staffers say Ally owes several million dollars to media outlets.

The agency fell behind on about $2 million in Dunkin' Donuts bills before the chain began paying bills directly in early July, said an executive close to the marketer.

And Ally's owners, Mr. Luceno and Vestar Capital, still owe the bulk of nearly $28 million they borrowed to buy the shop in 1988, said Abe Jones, whose investment banking company, Ad Media, worked on the disposition of Ally's subsidiaries.

Ally should be able to pay some of its bills out of proceeds from the disposition of its three subsidiaries. It sold healthcare agency Dugan/Farley Communications, Upper Saddle River, N.J., to Bozell, Jacobs, Kenyon & Eckhardt, New York, on Aug. 7 and AdDirect, Norwalk, Conn., to North Castle Partners, Stamford, Conn., on Aug. 11.

Ally's other subsidiary, Media Partners, Norwalk, Conn., was absorbed by Western International Media in a non-cash transaction in July.

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