Austin, Texas' The Parish nightclub was sold at auction to local club owners.
An eBay auction for an underperforming Austin nightclub earned lots of national headlines in November and December, and ended with an Austin club owner and a bicoastal hospitality player partnering for the winning bid.
The final price for The Parish came in at $376,445, with club owners Stephen Sternschein and Alex Saunders coming together to take over the 5,300-square-foot space in the heart of Austin’s Sixth Street bar and nightclub district.
Sternschein already co-owns and operates the Empire Control Room nightclub through his Heard Entertainment company in Austin, and Saunders operates food and beverage businesses in Los Angeles and Boston. The Parish will be the first venture for the new partners, who were introduced after Saunders scouted prospective nightlife opportunities in Austin this summer.
When ATX Brands, the company that had owned the Parish business for close to a decade, put the business up for auction in November, the two joined forces to step in and attempt to revive the live music venue, which had seen its bookings slip to about three events a month over the past year.
“I hit up as many venues as I could this summer, and the biggest thing that stayed with me was the ability for the performers and the audience to interact because you can get up close,” Saunders said of the wood and brick upstairs venue with a capacity of 425 people. “It has a special something that makes it feel gritty and authentic.”
The auction was not for the actual real estate property that contains The Parish, but rather its existing business and bookings, the brand name, its audio and lighting equipment, liquor license and a lease with renewal options that could stretch out 22 years.
Sternschein said he’d been approached by ATX Brands about buying The Parish earlier in 2017 but balked at the $1 million asking price. Records show the business had been bringing in about $200,000 a year after talent and production expenses but had been far more profitable in the handful of years prior.
He said his booking staff and promoters with Live Nation-owned C3 Presents and Austin-based Margin Walker Presents have started adding shows to the schedule for after South By Southwest in March, with plans to have every Thursday through Saturday booked with a combination of road shows, local acts and monthly residencies.
Sterschein said the eBay auction process took away any opportunity to negotiate terms since they were stated ahead of time as a condition of bidding, and made diligence an issue as well.
“I understand on [ATX Brands’] end that it was the right thing to do because you put a lot of money into a place and you might not get back even a fraction of what you’ve put into it over the years,” he said. “The good thing is that with everyone in the country knowing about the sale, you can say that this price is definitely the fair market value.”
Saunders said he’s not sure how effective a tool online auctions will be for transacting large business purchases in the events industry.
“To commit to such a large number on eBay is not for everybody, though as long as you are able to do proper diligence it can work,” he said. “I wouldn’t turn down a good opportunity, but handling these kinds of things off market is the best way to do them.”
Sternschein – along with his three partners in Heard Entertainment – and Saunders used their own cash to pay the entire purchase price at closing, and anticipate turning a profit in two years.
The purchase also represents another chance for Sternschein to deploy the Prism venue management platform he began developing with Austin engineers in 2016. The system is intended to move venues beyond the patched-together combination of Excel and Google Docs that many operators rely on to manage their calendars, track ticket sales, settle payouts and more. Fifteen promotion companies and clubs are using Prism, which has been in operation for six months, with an expansion planned after completion of its second round of fundraising.
“I wanted to build something based on the process of having to book hundreds of events a year, that integrates with ticketing and can handle things like cost tracking and settling payouts,” he said.
Saunders said he’s seen similar technology greatly increase profit and efficiency in the food and beverage industry, and he’s working to help that business expand.
“We know that it’s got legs and will gain its own momentum from the testing that Stephen has done on his own already,” he said. “I’ve been putting out feelers in the tech community and we’re already getting lots of interest from people wanting to be involved.”