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What’s the big deal? Bars close in Austin all the time, right? Hell, the paint wasn’t even dry on the awnings at Club Med when it turned over. This story, however, is a little more interesting than just another tale of a failed business attempt, because one could easily argue that Cedar Street, more than any other bar this decade, changed the face of nightlife in Austin.
There were establishments in that area – the Warehouse District, or the West End, or whatever you want to call the region south of Fifth Street and west of Congress – long before Cedar Street opened in March, 1995. For years, Oilcan Harry’s and 404, etc. anchored a strip that was one of Austin’s biggest de facto gay night spots. For the nightlife crowd in general, Waterloo Brewing Company, the Bitter End, and Lavaca Street Bar were up and running just fine. Thing is, Lavaca Street Bar never had a line out front at 1am. Cedar Street was the right bar at the right time. With the economic and tech-culture growth in Austin at the time of Cedar Street’s gala opening, suddenly there were a lot more people in town who were not exactly young-ish, yet not quite old-ish, and with a lot more disposable income to throw around. Cedar Street, almost exclusively, catered to that higher-end market. And the club was right on the leading edge of the martini and cigar trend, perfectly perched to cash in on the mass cultural domestication of vice.
Trend or not, though, Cedar Street also gave some local jazz musicians the chance to make good money for a change. People who were previously stuck playing to small handfuls of aficionados at the Elephant Room now had the chance to play for actual crowds and get paid accordingly.
Naturally then, in the wake of Cedar Street’s success, other establishments moved into the area to take advantage of the nouveaux riche scene that had suddenly sprung up; most notably there was Fad�, the Irish pub next door, and the Speakeasy, which spent large sums remodeling their building. Across town, the Caucus Club on Red River began catering to the same clientele. Ringside at Sullivan’s, West Side, B-Side (notice a trend here?) all opened their doors and set up their shakers around this time as well. Once upon a time, one could actually park in this part of Austin’s downtown. No more.
So, if Cedar Street was such a prosperous pioneer into the warehouse district, why did it close? Well, from a purely descriptive standpoint that’s a pretty easy question to answer: It closed because Black changed the locks and refused to issue new keys to Burke and Potter until they made good on some back rent they owed.
Getting explanations that are a little more compelling, though, is tough – tough largely because the principles involved won’t talk in any detail. In fact, Black didn’t even want to talk in vague or general terms. When asked to explain the reason behind the December closure of the bar and the split with his former partners, Black said plainly, “I’m not going to talk about this. There’s no percentage in it. It’s all history. It’s all gone.”
Whereas Black might want to minimize the extent to which he has to deal with the past, it’s not entirely true to say that “it’s all history.” Quite the contrary, the issue is a pressing one since Burke and Potter, on behalf of their company Drink Investments, filed suit against Black on December 12, 1997 for usury.
Usury? Turns out, Black wasn’t just Burke and Potter’s landlord, he was also their partner. The three entered into a limited liability company, Drink Investments, whose sole purpose was to open and operate Cedar Street, with Black as a 40% shareholder, and Burke and Potter as 30% shareholders each; because he contributed the capital for the venture while Burke and Potter managed the day-to-day operations of the club, Black was naturally in for the largest cut. In addition, Black also owned the building and the adjacent courtyard that Cedar Street was to occupy, so Burke and Potter were paying rent to him as well.
With the addition of in-door space to the west side of the courtyard, rent payments for Cedar Street eventually came to $9,975 a month. A provision in the lease assessed late charges of 5% if rent was not paid within five days of its being due. Interestingly enough, however, the lease didn’t specify when rent was due.
Okay, so the bar opens in March 1995 and it’s phenomenally successful. How successful? We’ll get to that in a bit. By January of 1996, though, Potter and Burke were unable to make their rent payment. In fact, they were unable to make rent payments from January until May of that year (they did make a partial payment in March). During that time, Cedar Street continued to do very good business.
In February of 1997, per the terms of the lease, Black began charging a late fee on the still-unpaid balance of rent. A few months later, at the end of May, Black notified Potter and Burke that he was terminating the lease – unpaid rent, still unpaid. But the parties then agreed to a month-to-month tenancy, which could be terminated by either party on 30 days notice. The bar stayed open.
Court documents filed on behalf of Burke and Potter assert that as of October 1, 1997, the unpaid balance of the rent and utilities came to $64,635.57. Yet on that very day, October 1, Black gave Burke and Potter a bill for the rent and utilities to the tune of $92,383.42. Not having received said sum, Black, on December 9, locked his partners/tenants out of the building.
If there was any writing on the wall indicating that the popular night spot was about to close, the musicians who played Cedar Street regularly should have been the first ones to read it. Sure enough, as October rolled around, management took a new approach toward dealing with the club’s talent. The first visible fissure in the fa�ade was the split between Cedar Street management and Cedar Street fixture and regular performer Jon Blondell.
“I was told that the off nights were losing money,” said Blondell. “Well, I could see where some of the off nights were losing money – and I didn’t see Shannon or Tommy down there anymore. But on Tuesday nights, my night that I’ve had since the place opened, my average was way high. I had a draw. I had a scene.”
By Blondell’s figuring it was a $3,600-a-night scene, or at least that’s what he claims the Tuesday average was at the bar while he was playing. Burke, for his part, agrees that Blondell had a scene – “had” being the operative word. By the fall of last year, according to Burke, that scene was definitely past tense.
“He used to have a great draw on Tuesday,” Burke affirmed. “He used to do $4,000 on a Tuesday, $5,000 on a Tuesday. That’s when I was happy with him and he was happy with me. I loved him to death. But when it dropped down from $5,000 on a Tuesday to $1,000 on a Tuesday, that’s when we needed to make a change. In the last year – and I can show you the revenues from every single day, every single Tuesday for the last three years. I have them all in a little book that I keep my numbers in. Blondell’s average for the last 12 months is without a doubt about $1,260.”
So let’s blame El Ni�o. It’s the cause of everything else; Cedar Street is an outdoor venue as much as anything else and business naturally takes a hit when the weather is crappy. For what it’s worth, 1997 was the eighth wettest on record for Austin.
El Ni�o aside, the rollover of the calendar into ’97 found business at Cedar Street down. Competition for the high-end dollar around the west end had come in: the Speakeasy, Ringside at Sullivan’s, Fad�, and West Side had moved in on Cedar Street’s lucrative market. Moreover, the rage of the martini-lounge thing was waning a bit, and the bar numbers reflect that. Business was well off what it had been just one year previously. Alcohol sales for March of ’97 were about 65% of what they were for March 1996. By fall of last year, then, things had fallen even a little further. The changes that Burke alluded to had come.
Changes came at the expense of bands and they came at the expense of personal relationships. Blondell, who became a close friend of Burke’s, explained.
“They were saying that they’re losing money on me,” says Blondell, “and were reducing my salary by more than half. I ain’t going for that. It wasn’t even presented to me. It was in two conversations of Shannon yelling and screaming at me – `This is what’s going to happen.’ I could scarcely get a word in edgewise. And I felt pretty damn bad about it. `Fuck the money,’ I thought. `This is my brother. Why am I getting screamed at? Why is this happening? Something’s really wrong here and I don’t want to be a part of it anymore.'”
As much as it destroyed the friendship between Burke and Blondell, pay cuts at Cedar Street were not just a personal thing. Elias Haslanger, who had been holding down the resident Monday night musical slot at Cedar Street also got notice in October that his pay was going to be reduced by about half.
“I called Shannon back a couple of days later,” remembers Haslanger, “and said, `We’d rather just call it quits and part amicably with no hard feelings.’ He said, `Well, okay. Is there any particular reason?’ I said, `It’s just a business decision.'”
Perhaps attributable to the same reasoning, a business decision, Black did change interest on the back rents. But according to the lawsuit filed by Burke and Potter, those charges came up in excess of $27,000, or an interest rate of 69.69% – over three times the legal maximum interest rate (18%) for these kinds of accounts, hence the claim of usury against Black. Incidentally, the state of Texas doesn’t take very kindly to usurers. Should things shake out in judgment against him, Black could lose all rights to collect both the principal and the interest in question. It gets worse. Black could also end up paying a statutory penalty of three times the allegedly usurious interest he charged. Filed in district court, Black’s third party claims (roughly the equivalent of a countersuit) don’t deal much with the usury issue. He does stipulate the back rent of $55,000 plus late fees and taxes is owed to him, but doesn’t delineate the exact amount of those fees and taxes. Instead, the third party claims cover two main items, the first of which is the claimed mismanagement of the club.
By just about any reasonable standards, Cedar Street did good business. The bar opened in March of 1995 and over the next six months averaged just under $150,000 per month in gross alcohol sales ($149,779.17 to be exact). That, however, doesn’t include money from $10 see-gars or cover charges collected from the hundreds of patrons who poured into the courtyard nightly. To give you some sort of comparison, Maggie Mae’s, one of the oldest and perpetually successful bars on Sixth Street, averaged roughly $120,000 for that same time period.
Why then, shortly thereafter in January 1996, were Burke and Potter unable to make rent payments? Well, the excitement of the place had worn off, competing clubs started opening up and business, predictably, started sagging. Live by the trend, die by the trend, right?
Wrong. First, the new kids at the Caucus Club didn’t open until the end of ’96 while the Speakeasy wasn’t officially christened until February ’97 – both after the time in question. So much for the competition theory. Moreover, during the period in which Burke and Potter began missing rent payments, Cedar Street’s bar revenues went up! – to an average of over $180,000 per month! In fact, in one month during that span, the bar cleared $200,000. How good is that kind of coin? Said Steamboat owner Danny Crooks, “If I made that kind of money in one month, I’d take a vacation for the next two.”
Who the hell is making $200,000 and can’t make their $9,000 rent payment? While not a rhetorical question, it’s also one that, unfortunately, nobody will answer, because that’s part of what the litigation covers.
There may be some prima facie validity to the mismanagement charges, however, which get a little more compelling when you take into consideration that, with all of the cash that has poured into Cedar Street, Black, the 40% shareholder, claims to have only received $14,000 in profits. Moreover, even with business off what it once was, it wasn’t like Cedar Street had nose-dived into nothing. For most of ’97, in any given month they were doing about $10,000 on either side of what the Speakeasy brought in. For instance, in September of ’97, Cedar Street did $115,360 in gross alcohol receipts while the Speakeasy brought in $117,080 – numbers good enough for Speakeasy manager Chet Baker to claim, “We’re doing great.” And by this time, there was a Cedar Street in Dallas up and running, pulling down from $100,000 to better than $150,000 in any given month. (Note: Burke and Potter sold the Dallas operation in the summer of 1997.)
The other main point of contention has to do with the name Cedar Street itself. Black claims to have been using the name “Cedar Street Courtyard” for the building since 1979 and therefore has a common law trademark on it. He also avers to have granted Burke and Potter an “oral license” to use the name for the nightclub. Not so, according to Burke, who contends that the “Cedar Street” name belongs to him and Potter.
“Here’s the deal,” says Burke. “Sinclair claims that he’s been calling that building Cedar Street. He used it on a tax document in ’79 or some bullshit like that…. And it really doesn’t mean shit. You and I could go into business today, and say we want to open a muffler shop – want to call it McDonald’s Mufflers. There would be no problem with us selling mufflers and welding tailpipes all fucking day. But the minute we sell a Chicken McNugget out of there, we’re fucked. It’s the same process. Sinclair had a piece of property he called Cedar Street. It was the name of a building. But the name Cedar Street as it pertains to a nightclub or a bar or a place that serves liquor is very plainly owned by myself, Tommy Potter, and the company Drink Investments.”
In one final little wrinkle, it turns out the definitive action to throw Burke and Potter out began before Burke and Potter were actually thrown out. A new liquor license was filed with the Texas Alcoholic Beverage Commission (TABC) over a week prior to Black’s changing of the locks. That means things were in the works well before that as the Austin fire department, health department, police department, and the comptroller’s office all have to sign off before a license can be approved by the TABC.
In an attempt to protect the name he believes is his, Burke contested the liquor license. Despite his efforts the new license was granted and on January 17, Cedar Street re-opened with Buckner Hightower and Greg Schnurr from Bertram’s as the new principle owners. Black is still the landlord. When asked if Black had any stake in the ownership now, Hightower responded, “I’m not authorized to speak for Sinclair.”
“The Good Ol’ Boy network prevailed here,” countered Burke. “Greg Schnurr, Sinclair, and Buckner Hightower got together and called all of their Senator friends – Senator Barrientos was one person they called. They made the phone call, then Barrientos called the TABC. They could give a fuck what my protest said at that point. If Barrientos made the call, then, boy they were issuing that liquor license whether it was right or not. We have proof we own the name.”
Bruce Hupp from Senator Barrientos’ office confirms that he did indeed place a call to the TABC, but added that it was what he called an “inquiry” as he was merely asking “what was the status” of the license.
It’s been granted, but that’s not the end of things. Burke plans to open a bar with a very familiar name: You guessed it, Cedar Street.
This article appears in January 30 • 1998 and January 30 • 1998 (Cover).