In this 2014 file photo, electronic dance music artist Skrillex performs at Empire Control Room at South by Southwest.
Jay Janner/American-Statesman
Empire Garage is no more. The live music venue has canceled shows, shut down its website and is on the cusp of being evicted after Empire Control Room, which occupied the adjoining property, suffered the same fate in April.
The developments are the latest in a civil war over control of the two properties Empire occupied in the Red River Cultural District, the legendary hub of Austin’s live music scene.
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Los Alcos backstage at Empire Control Room during Free Week in January 2022.
Robert Hein/American-Statesman
Peelander-Z performs at Empire Control Room for Hot Summer Nights in 2019.
Robert Hein/American-Statesman
Night Drive performs at Empire Control Room for Free Week in January 2022.
Robert Hein/American-Statesman
THEBROSFRESH perform at Empire Control Room for Free Week in January 2022.
Robert Hein/American-Statesman
Grace Sorenson performs at Empire Control Room for the 4th annual Hot Summer Nights music festival in 2021 in the Red River Cultural District.
Robert Hein/American-Statesman
A fan crowd surfs during Peelander-Z’s Hot Summer Nights set at Empire Control Room in 2019.
Robert Hein/American-Statesman
Peelander-Z performs at Empire Control Room for Hot Summer Nights in July 2019.
Robert Hein/American-Statesman
The crowd in front of the Empire Controll Room stage sing along with Insane Clown Posse during a 2016 show.
Kelly West/American-Statesman
Sip Sip performs in 2016 at Empire Control Room and Garage.
Tamir Kalifa/American-Statesman
The fight, which may be nearing resolution through the courts, is between Steve Sternschein, the venue’s former owner, and Andy Sernovitz, one of its largest investors. The drama has been on stage for more than 18 months, racking up hundreds of thousands of dollars in legal fees and drawing withering local news coverage speculating about what’s at play.
FROM JANUARY: Empire Control Room & Garage layoffs spotlight financial strain, lawsuits
Empire Control Room & Garage, both operated by Sternschein’s Heard Presents, had been a fixture in the Red River Cultural District for 13 years, hosting various genres of music by local and touring acts on its outdoor and indoor stages. The club was often packed during high-profile shows, including its popular Music Tech Mashup during the annual South by Southwest Conference and Festival.
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But the company struggled to turn a profit, especially in the wake of shutdowns during the COVID-19 pandemic.
Seeking stability in 2024, Heard Presents parent Heard Entertainment Texas LLC received a $2.1 million loan from Rally Austin through the city-funded community development corporation’s Iconic Venue Fund. The loan enabled Heard to buy the building at 604 E. Seventh St. — one of two Empire occupied — with the stipulation that it remain a live music venue for 20 years.
It may have marked the beginning of the end for Sternschein’s Empire.
The fight over a ‘failing music venue’
Empire Control Room, a longtime fixture in the Red River Cultural District, is shut down.
Mikala Compton/Austin American-Statesman
For months, Sternschein, who co-founded Heard Entertainment Texas with Dave Machinist in 2012, has been embroiled in a contentious lawsuit against Sernovitz. He alleges a “hostile takeover” of the venues after Sernovitz came on as an investor and independent consultant for Heard Presents in January 2025.
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In his suit filed in state District Court last July, Sternschein alleged the man he brought in to help save his business and consolidate ownership of its real estate instead is making off with the property where it has operated.
“I gave him control of the financial side of the business in order to restructure it, but what happened was he took control of the entire business by ripping the assets, and the opportunity that it had, out for himself,” Sternschein said in an interview.
Sernovitz called the allegations ridiculous. He said Sternschein has not presented evidence of the claims he has made in court documents — claims for which he was sanctioned by a judge. In fact, Sernovitz alleges that he uncovered systemic fraud and financial mismanagement in Sternschein’s business practices.
“I came in to save a failing music venue and I left when it looked beyond repair,” Sernovitz said in an interview. “Now that it is collapsing, we’re trying to find a path to return it as a working live music venue.”
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He said that 606 Holdings LLC, the real estate holding company Sternschein created with other investors to own the two venues, now plans to sell to another live music operator — and has received significant interest.
Though a sale could mean turning a profit on his investment, Sernovitz said he regrets ever investing with Sternschein, who now is a minority partner in 606 Holdings.
Seeking a lifeline
Empire was in bad shape in 2024.
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The venue Heard had operated since 2012 was in desperate need of cash after the COVID-era downturn and declining bar receipts as younger concertgoers replaced older ones who historically drank more.
That’s when Heard Entertainment looked to Rally Austin for help — a $2.1 million loan in September 2024 to purchase one of Empire’s Seventh Street buildings with a plan to consolidate ownership of the properties where the venues operated.
Despite the loan, the club’s financial need was not diminished.
Rumors of money trouble had been swirling for months. Complaints of artists and staff not being paid on time — or at all — emerged. Lawsuits alleging nonpayment were filed in federal court against Sternschein over his AdVentures Agency, which sells advertising for independent venues.
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Visitors to the Red River Cultural District enter Empire Control Room & Garage on East Seventh Street in this August 2019 file photo.
Steve Lewis/American-Statesman
He also was seeking new investors for Empire, court records show.
By the time he met Sernovitz through an angel investor network, Sternschein was looking for quick cash. Sernovitz described himself as a serial entrepreneur with an interest in the Austin music scene.
“The business needs $1M overall to recapitalize from all of the things that happened in 2024,” Sternschein wrote to him in an email disclosed in court records.
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In February 2025, they agreed on Sernovitz making an investment in 606 Holdings. Details on the deal disclosed in court records differ, though, with Sernovitz claiming it was $500,000 for a one-third share and Sternschein stating the investment was $400,000 without an ownership share.
Beyond investing in 606 Holdings, Sernovitz was brought on as an independent consultant for Texas Music Holding Co. Group — the umbrella company for Sternschein’s Heard Entertainment, AdVentures and other enterprises.
Still financially strapped, Sternschein and Heard continued selling off equity in 606 Holdings to other members.
Sternschein, through Heard Presents, began with 10% of the business, briefly had a much larger share for a plan to contribute the property at 604 E. Seventh St. to 606 Holdings, then sold most of that position for cash. When the property transfer did not happen on time, Sernovitz used the failure as the basis for automatic penalties that shrunk Sternschein’s percentage even further.
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Financial fraud
That’s when, Sernovitz said, he discovered financial misrepresentation and fraud.
He alleged his investment and the Rally Austin loan were gained through misrepresented and undisclosed financial shortfalls around taxes and vendor payments. He said Sternschein had pledged the property as collateral for a loan for his other business interests, exposing investors to the unrelated debts of Sternschein’s other companies.
The alleged cross-collateralized loans could not be independently verified.
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Sternschein denied the allegations in court filings, though, attaching emails with a general discussion of the budgetary shortfalls related to paying artists and vendors. He also denied the cross-collateralization.
Prixmo performs at Empire Control Room for Free Week in 2023.
Robert Hein/American-Statesman
Despite due diligence ahead of the investment and Sternschein’s emailed general descriptions about shortfalls, Sernovitz says it was only after gaining access to bank accounts and other financial records that he realized the company was in much worse shape than he was told, and that there was fraud.
“I had access to all the company files, then it was very obvious,” he said in an interview.
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Sernovitz also alleges that Rally Austin was duped on its loan in another way, arguing in court documents that while Sternschein gained the loan through Heard Entertainment Texas he planned to transfer the title to 606 Holdings without disclosing the plan to the lender.
Rally Austin declined to comment and has fought requests for public records regarding the taxpayer-funded money flowing to Heard Entertainment. But emails in court documents show the public-private corporation was told about the plan in February 2025, months after the loan was made.
Sternschein said he discussed the plan with the economic development organization before the loan was finalized.
“I can say that I was completely transparent with (Rally Austin) every step of the way, from my perspective,” he said in an interview.
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Losing control
As the financial and real-estate disputes escalated, Sernovitz began urging 606 Holdings members to replace Sternschein as manager of the company.
Sternschein said losing the manager role meant he couldn’t protect his venue from being evicted. He also claimed the moves by Sernovitz were a bid to push Heard Entertainment into bankruptcy.
Sernovitz’s version is that Sternschein was slow walking the transfer of the 604 E. Seventh St. property purchased with Rally Austin money to the investor group, demanding Empire be protected from eviction by 606 Holdings before he did so. Those were terms to which Sernovitz and other investors would not agree.
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Documents submitted to the court say the property transfer was tied to the sale and the previous owner was issued shares in 606 Holdings. Instead, it took months and a court fight to be resolved.
Sternschein denied he was holding the property hostage.
“At the end of the day, did we have any intention to not transfer the asset? Absolutely not,” he said.
By then at an impasse, Sernovitz terminated his consulting agreement and demanded payment of $40,000 for expenses and, according to court records, began contacting other investors.
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In a memo emailed to 606 Holdings partners, he wrote that having Sternschein as the holding company’s manager would lead them to “risk losing the entire investment to foreclosure.” He encouraged the partners to remove Sternschein on the basis of his now-reduced ownership, mismanagement, making deals without shareholder approval and a conflict of interest stemming from the idea that “the tenant shouldn’t also be the landlord.”
Sternschein said the memo made “untrue and misleading statements,” saying in court records it was simply a step to take control of the property.
“I believe he saw the opportunity to acquire a valuable piece of property for below market value by exploiting the instability that we were experiencing,” Sternschein said.
Sernovitz said his push to remove Sternschein was to protect his investment and warn other partners about the problems he had found. Besides, he said, there are simpler ways to purchase a piece of land.
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“It’s nonsense,” Sernovitz said. “Investing in a nightclub as a minority owner and then trying to secretly take over the company as a scheme to get a piece of real estate — like, it’s just ridiculous. The whole premise is ridiculous.”
A judge later ruled Heard Entertainment was properly removed as manager of 606 Holdings at a September 2025 members meeting. A replacement manager selected by the members continues to control the real estate company.
Lawsuit-palooza
But the back-and-forth war of words continued. It escalated with Sernovitz sending letters in June 2025 demanding payment from his consulting agreement.
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Sternschein then sued Sernovitz and his Global Worldwide International 2 LLC and Global Worldwide International 3 LLC in July 2025.
A month later, Sernovitz countersued.
Sternschein’s suit said the memo Sernovitz wrote to investors warning of mismanagement was business disparagement and a breach of fiduciary duty. Sernovitz argued it was free speech protected by the First Amendment.
Insane Clown Posse perform at Empire Control Room in October 2016.
Kelly West/American-Statesman
A judge agreed, dismissing the claims of business disparagement and breach of fiduciary duty, finding the suit was in retaliation for Sernovitz’s protected speech. Ultimately, state District Judge Jessica Mangrum ruled in December the lawsuit was brought in an attempt to silence Sernovitz through harassment and awarded him $68,000 in attorneys’ fees and another $5,000 in sanctions.
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But the success was short-lived, as Sternschein amended his lawsuit to continue the case.
“And then he filed an amended complaint, which is basically the exact same stuff again … mixed up in a different way,” Sernovitz said.
Since then the case has continued to a third amended petition, with Sternschein alleging that Sernovitz stole company data, accusing him of trade secret misappropriation, theft of property and breach of covenant not to compete.
Sternschein alleges that Sernovitz downloaded internal documents prior to terminating his consulting agreement. The suit points to email confirmations of Google Takeout, a tool for downloading data, being used.
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Finally, saying he could not afford to continue Sternschein dropped nearly every claim in his lawsuit shortly before a summary judgment hearing scheduled for July 2.
“I’ve done everything I can to overcome this honorably, but at the point I’m at, I can’t even pay for an attorney to appear in court for me or for the business,” he said.
Sernovitz said Sternchein simply did not want to go back to court with no proof to back up his claims.
What’s next for Empire?
In July, 606 Holdings got a court order to evict Empire from the property.
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The loan from Rally Austin stipulates the property must remain a live venue for the next 20 years. It doesn’t specify that the business must remain an independent venue but Sernovitz said that’s the outcome 606 Holdings would prefer as it looks to sell.
“We’ve got about a half dozen active conversations. If Live Nation or AEG (Presents) were interested, we’ll talk to them — we are talking to them. But the goal is to find somebody who could buy it and keep it independent,” he said.
Travis Central Appraisal District records list the parcels associated with 606 Holdings with a combined appraised market value of $3.6 million, though appraisal values are used for property-tax purposes and do not necessarily reflect what the properties could sell for, particularly given the venue-use restrictions.