Fallout from SXSW cancellation forces local businesses, laborers into fight for their futures

For the first time in 34 years, March will come and go without a SXSW. (Christopher Neely/Community Impact Newspaper)
For the first time in 34 years, March will come and go without a SXSW. (Christopher Neely/Community Impact Newspaper)

For the first time in 34 years, March will come and go without a SXSW. (Christopher Neely/Community Impact Newspaper)

South by Southwest Conference & Festivals made national headlines when Austin and Travis County officials canceled the event March 6, one week before the festival was set to begin. But locally, the 10-day stretch of SXSW is more than a celebratory festival—it has proven to be an essential financial asset to the community, now lost in response to the rapid spread of the coronavirus. The Austin area had its first three positive tests for the virus on March 13.

The festival brought $356 million to the local economy in 2019, according to the festival's financial analysis. The city’s March 6 decision to declare a local disaster and shut down SXSW—an unprecedented moment in the event’s 34-year history—sent small businesses and laborers into uncertainty over their futures as they watched critical portions of their annual income disappear.

Community Impact Newspaper spoke to several small businesses and local workers in downtown and beyond who heavily depend on the 10-day festival and are still reeling in the wake of its cancellation. Some small-business operators reported losing anywhere between 20%-50% of their annual revenue. Others said they were facing the reality of having to downsize or even close. Laborers reported personal losses in the thousands of dollars. They said, now, their ability to pay bills in March and April, traditionally a guarantee after SXSW, has been thrown into a state of flux.

As businesses and workers head into a now uncertain spring, the community is trying to help patch the gaping hole left in the economy by a SXSW-less March. Philanthropic campaigns are underway to raise money for those most impacted, and on March 7 city officials urged Austinites to patronize downtown businesses; however, some in the local ecosystem worry the damage is too great.

A local economy bears down

As news about the virus swept headlines in the weeks leading up to the festival’s cancellation, the owners at Panacea Collective, a local production and furniture rental business, watched as most of their 35 SXSW clients began pulling out of their contracts. Co-founders Autumn Rich and Lisa Hickey said SXSW brought the company its first business five years ago and now makes up 30% of their annual revenue.

The company recently hired two new employees and moved into a new office. Rich and Hickey said they are trying to stay positive as they figure out how to proceed with the loss. The biggest challenge, they said, is trying to recoup any unreceived payments they were contractually obligated to. Hickey said they are “absolutely” reconsidering their payment policies and contract terms moving forward in the wake of the unprecedented cancellation.

“We’re trying to work with everyone, be good Samaritans and make it the least painful for our clients and vendors,” Rich said. “We’re trying to just make sure that we’re doing the right thing in a time that everyone is struggling.”

David Knipp, owner of Movemint Bike Cab, has been in the pedicab business for 12 years. He said SXSW is the linchpin of the local pedicab industry. With 423 licensed pedicabs in the city, Knipp said he expected drivers to make at least $5,000 over the course of this year’s festival; however, driver income is only a piece of the business.

A main reason SXSW is such a boon to local pedicab companies, Knipp said, are the major corporate advertising contracts they sign. Leading up to this year’s festival, Movemint was designing custom pedicabs as part of an activation project with one major company. Knipp would not disclose which company, but said it was the most valuable contract in Movemint’s history. However, the deal was terminated upon SXSW’s cancellation, and Knipp’s business received none of the expected payout.

“SXSW is about 50% of our annual revenue, might be even more,” Knipp said. “Some pedicab companies are going to dwindle or possibly die.”

Movemint, like most pedicab companies, according to Knipp, invested into their future business based on the income expected from festival. Now, Knipp is reassessing his business.

For Rebecca Charles, a special events bartender at downtown’s Brazos and Trinity Halls, this would have been her sixth SXSW. Charles’ income relies on events, which are often booked months in advance. SXSW’s cancellation meant she was without work for those 10 days, which she has come to depend on to fund her rent, car payment and health insurance for March and April.

“Most of my friends are just panicking; we didn’t really have a whole lot of time to plan,” Charles said. “If we knew earlier we could have made other arrangements. It’s not just a regular bar, and we won’t have regular customers in the meantime. It’s pretty crushing.”

A community offers support

Jessica Galindo Winters, co-owner of the South First Street food truck Mellizoz Tacos and the Sunset Valley restaurant Cruzteca Mexican Kitchen, said between increased sales at the truck and providing 700 crispy tacos for the annual taco meetup for badgeholders, SXSW typically provides a 50% boost to business. She said she remains optimistic, an outlook she attributes to “having a small business in the small Austin community that keeps supporting us."

The weight of SXSW’s cancellation can be measured in the swift community-driven response that followed. Just hours after Austin Mayor Steve Adler announced the festival’s cancellation, members of the local Red River Merchants Association started Banding Together ATX, a program that aims to rebook any artists who lost shows and fundraise for local small businesses impacted by the SXSW-less March. The organization has raised more than $25,000 toward its $100,000 goal as of March 12.

“The idea is we want to stay alive and survive to provide the cultural benefits to our community,” said Stephen Sternschein, who helps manage the Empire Control Room and Garage as well as the Parish. “We have a chance to prove to everybody that SXSW isn’t about corporate sponsors or products; it’s about discovering new people, new ideas and that stuff will happen regardless of who’s writing the checks.”

The Austin Community Foundation kick-started a parallel fundraising effort a day after Mayor Steve Adler’s announcement, called the Stand with Austin Fund. The program is welcoming donations, which will then be disbursed to local nonprofits aimed at assisting individuals and small businesses most impacted by the festival’s cancellation. Misty Whited, the foundation’s vice president of marketing, said the group hopes to get the funds disbursed in under a year. Whited said as of March 13, the fund has raised more than $275,000, with more pledges coming in.

Adler, Travis County Judge Sarah Eckhardt and state Sen. Kirk Watson, D-Austin, have pushed for the community to make an extra effort to support local downtown restaurants, bars and food trucks to try and mitigate some of the economic loss. Though excruciating, Adler maintains shutting down the festival was the right decision.

“It was a really painful thing to do in so many ways, disruptive in so many ways,” Adler said. “But when you look at what’s happening around the country now, it puts into context what we did. It’s not an outlier at this point, and we need to continue our vigilance to keep the community safe.”

Businesses prepare for coming weeks

Bryan Winslow, co-founder of St. Elmo Brewing Co. in South Austin, said that for his and some other businesses located outside of downtown, SXSW does not bring much foot traffic; however, when it comes to distribution of his beer to bars downtown, he has already noticed depleted demand.

“Normally, today (March 12) would be one of our biggest days of the year for distribution orders,” Winston said. “It's a pretty chill day right now, so they definitely aren't ordering nearly as aggressively as they did in the past."

While local events continue to announce cancellations and school districts make contingency plans for after spring break, most local business will still remain open and be operating. Winslow said he has issued additional sanitization measures so he can stay open. The brewery is still scheduled to host an unofficial SXSW music show next week, he said.

“We're going to be open,” he said. “Our bartenders still need to make money, and the bands still need to make money, so we're keeping that going. People will still drink beer [even without SXSW], so until [the city] closes the bars, I think everything will be alright.”

Ross McLauchlan, the owner of South Austin-based Austin Winery, already canceled a music event the business was planning for later this month due to coronavirus concerns.

“I'm trying to not just think about the short-term financial side of things and think about the big picture for all of our livelihoods and well-beings,” he said. “I think right now we're still in this stage of learning and taking precautions, and I think we're all better served to be cautious than to try and recover a buck."

Austin Winery, however, will remain open in the coming weeks, at least as of now. McLauchlan has also talked to his staff about safe sanitation practices while working.

“We really reupped on soap and have sanitation stations at the front door,” he said.

For Winters’ Sunset Valley restaurant Cruzteca Mexican Kitchen, she is also taking precautions and plans to stay open.

“We’re putting stuff in disposable, nonreusable items like little salsa to go containers, paper products,” she said. “Yes, we’re using a little more of it but just to be on the safer side. All our drinkware is disposable. I think with customers, it makes them feel a little more at ease. Customers will definitely see that we’re taking those measures.”

Christopher Neely - Jack Flagler - Nicholas Cicale


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