A bid for an injunction to prevent Dudley Hippodrome's demolition has failed.
Secretary of State for Levelling Up, Housing and Communities Michael Gove decided against intervening in Dudley Metropolitan Borough Council's £25m plan to redevelop it into a campus for health education.
The Theatres Trust says it is appealing to Historic England to save the 1930s variety theatre, which once hosted the likes of Bing Croshy and Laurel Hardy.
"This is a wasted opportunity to provide the type of live performance space that Dudley is lacking, which could be a catalyst for growth in the town."
But Councillor Simon Phipps said demolishing the mothballed venue was the next step towards creating jobs and boosting the local economy.
"This has been a long, drawn-out process but we owe it to the people of Dudley and students of the future to get this done."