While the facility's popularity has waned since it was the key venue for famed actors such as John Wayne and Fred Astaire, former members of its Lambs Club talked about the renovations planned for 2007, the New York Post reported.
"It really is heartbreaking," club historian Lewis Hardee said of the change. "It's such a historic place."
Since being founded in the 1800s, the New York theater grew from its Lambs Club roots, and peaked during the careers of actors Spencer Tracy and Gene Autry into the featured venue of the Lambs Theater Company.
The newspaper said the 350-seat theater will undergo a massive transformation and eventually become the site for a 99-room boutique hotel.
2014: The Year in Music [PHOTOS]