The building itself is a sunken tugboat that has been covered with algae and seaweed.
It was turned into a bar after it sunk. Pool and poker tables are available for games. Many fights happen here and many people are injured or killed. There is also a bathroom that has a slightly broken soap tap which SpongeBob and Patrick humorously used.
The Bar: Main room. People play pool, punch each other, eat nail bowls with milk, drink root beer, and beat up fish who are staring at them.
The Bathroom: Secondary room. Patrick had to go there, and SpongeBob makes a bubble party.
Entrance/Exit: The doors.
The Thug Tug has a policy. All bubble-blowing babies will be beaten senseless by every able-bodied patron in the bar.
After walking on foot after having the Patty Wagon stolen from them, SpongeBob and Patrick find it parked in front of the Thug Tug. While inside, SpongeBob has Patrick distract the thugs so he can get the key to the Patty Wagon.
However, Patrick says that he has to go to the bathroom, making SpongeBob's attempt to get the key unsuccessful, while also getting his hands dirty in the process. SpongeBob heads for the bathroom to wash his hands, and when he uses the soap dispenser, it produces bubbles. SpongeBob and Patrick begin having a "bubble party," but one bubble floats over to the leader of the Thug Tug, who reminds the other bar patrons of the policy that all "bubble-blowing babies" will be severely beaten.
The leader goes on a "bubble blowing baby hunt" by ordering the DJ to start playing the "Goofy Goober Theme song," where the first person to start singing is determined to be the culprit. SpongeBob and Patrick struggle not to start singing, after the owner starts singing it to SpongeBob and Patrick, causing SpongeBob's eyes to water and Patrick to start melting, and they are only saved when Siamese twins burst out in song. The other thugs begin beating them, allowing SpongeBob and Patrick to steal the key amid the confusion and depart.
When SpongeBob and Patrick approach the Thug Tug and look into a window to see what happens in the pub, the song "You Better Swim" by the famous heavy metal band Motorhead is heard playing (probably it has been put on by the DJ). This is an alternative exclusive version of the song, made by the vocalist Lemmy Kilmister and his band intentionally for the film.
Despite the Thug Tug being a sunken tugboat, it looks much smaller than a regular tugboat.