The year was 1991. Grunge was hot, and Stephanie Dorgan, a lawyer moonlighting as a music lover, opened a club in then-shabby Belltown known as the Crocodile Cafe. The venue was charmed. Not only did it show a knack for propelling the careers of local bands, but major players came to the small stage almost from the beginning.

In one of many iconic moments, Nirvana played a secret show with Mudhoney at the Croc in 1992. Dorgan met her (now ex-) husband, R.E.M. guitarist Peter Buck, that year, giving an additional boost to the Croc’s already-growing status as a must-stop for tourists and even the most casual of music fans. In the years that followed, it became a launching pad for bands that would one day grace the covers of rock glossies—Modest Mouse and Death Cab for Cutie owe at least some of their success to the Croc.

But if the Crocodile’s initial prominence can be attributed to serendipity, it is now facing a perfect storm of challenges—the kind that sinks businesses.

In the late ’90s, Belltown began evolving into Seattle’s pre-eminent yuppie haven, eventually becoming ground zero for the condo uprising that’s led, in part, to the mayor’s desire to pass a stringent set of nightlife regulations that club operators loathe. Moreover, the number of small and midsized venues in more rock-friendly neighborhoods looking to book the same type of bands as the Croc has grown exponentially. And to top it off, Dorgan and Buck parted ways—their split became official last February—in turn divorcing the venue from one of its key financial backers.

The couple’s divorce file gives a glimpse into the financial woes of a club that couldn’t make it on its own any more. Dorgan, Buck and their twin daughters, now 13, were doing well on his income through R.E.M. They had three homes: one in Seattle, another in Walla Walla, and a third in Kauai. The club wasn’t necessary to maintain their lifestyle—a good thing, because it wasn’t making money, something Dorgan attributes to her family’s time traveling with her husband or between residences.

“All of the time away from the Crocodile Cafe adversely affected its moneymaking ability,” Dorgan wrote in court documents. “Since 2000, the Crocodile Cafe has not been able to pay me any salary at all.”

Reached for comment by phone, Dorgan says the Croc has “always been a labor of love.” “I’ve never done it to make a lot of money,” she adds. “I plan to keep going and make it the best place it can be.”

The year 2000 was about the time that former bar manager Val Kiossovski remembers things hitting a snag. Kiossovski, a Bulgarian transplant, took over the bar in 1997. “We just had about four glorious years,” he says.

But then in 2001, after an economic recession wrought by the World Trade Center attack, people weren’t spending money on luxuries like checking out new bands. And folks who could afford to live in the neighborhood were paying top dollar for high-rise condos with a view of Elliott Bay—not the typical audience for Crocodile shows. Then the happy-hour crowd disappeared.

“I don’t think we were able to adjust ourselves to the new Belltown,” Kiossovski says.

Trendy, well-lit places were popping up that kept tables near the front and put patrons on display, in keeping with the new see-and-be-seen Belltown air. “I was trying really hard to turn things around so we could compete for the day and early evening dollar,” says Kiossovski. But he couldn’t do it: The Croc’s darker digs and back-of-the-house bar just weren’t drawing in the new neighbors. (Bar management at the Croc has been in flux since Kiossovski’s departure.)

Kiossovski took the lessons he learned at the Crocodile to heart when he started his own bar, Solo, on Lower Queen Anne last year. “There’s nowhere to hide,” he says of his new place, a swank art gallery hybrid which typically features turntables and a projection screen instead of live bands.

Kiossovski says he didn’t get involved in the financial affairs of the Crocodile, but suspects the club also felt pressure from a jump in competing venues gunning for the same bands and the same fans. “In the last five years, you’ve seen a plethora of similar venues,” Showbox owner Jeff Steichen says of the Croc’s competition.

Steichen sings the praises of the Crocodile as a historically important venue, but also says more competition demands increased vigilance, especially when it comes to booking. Neumo’s in particular—which Kiossovski describes as “kicking ass”—has hit its stride, and recently started using large curtains to scale the venue back for artists who wouldn’t normally have played the club’s full space.

Eddie Spaghetti and his band, the Supersuckers, started playing the Crocodile in 1992. Spaghetti estimates he’s graced the Croc’s stage at least 30 times since, but it’s been a few years since he’s been back, as he now favors Neumo’s or the Tractor for his more country-tinged shows. “We get treated a little bit better,” he says of the friendlier climes.

Back when the Croc was the spot a band like his needed to get noticed, Spaghetti says, it was a great place to play. Now Neumo’s is attracting crowds and offering the little extras, including an underground greenroom, which make it a more attractive place to play, he says.

“I’m not sure the venue’s really changed all that much,” Spaghetti says of the Croc, “and maybe that’s the issue.”

Pete Greenberg took over booking chores at the Crocodile last year. He and co-booker Eli Anderson say they didn’t know anything about financial problems over the past six years, but getting bands that have a following is one of their foremost priorities. Their biggest success was landing a sold-out Beastie Boys show last May.

Greenberg and Anderson are also trying to get creative with filling the space, which has a posted maximum occupancy of 381. They say a dance contest and a freak-fest featuring a guy who stuffed 14 quarters up his nose were well received. And overall, Anderson says, attendance is up over last year.

But the new ideas don’t always work: One show featuring music and astrology drew an audience of five.

lonstot@seattleweekly.com