Biergarten battles to stay open for entertainment

INDIANAPOLIS (WISH) - One of Indianapolis' most popular outdoor venues has been ordered to close. Starting July 1, the Rathskeller’s outdoor Biergarten will no longer host bands or entertainment if a deal between the restaurant and the property owner, the Athenaeum Foundation, isn’t reached.

“I think it’s pretty clear what’s happening here,” says Rathskeller owner Dan McMichael. “They want more money.”

The restaurant is located in the basement of the Athenaeum building at the intersection of Michigan Street and Massachusetts Avenue downtown. Established in 1894, The Rathskeller is the city’s oldest restaurant still in operation today. In 1995, McMichael began leasing the restaurant and the outdoor patio from the Athenaeum Foundation and invested more than $200,000 to renovate the restaurant.

“My lease with [Athenaeum Foundation] has been the same for 17 years,” says McMichael. “Now they want to change it.”

The arguments between the two sides began shortly after the Super Bowl, McMichael said.

“In March , we were served a letter which didn't make any sense at all to us that said we were to cease and desist from using the Rathskeller name for anything other than the restaurant itself. We couldn't have advertising, signs, couldn't have a website. It didn't make sense, and it was going to prohibit us from doing any kind of promotion for our business at all,” McMichael said.

The two sides went into court-ordered mediation, but little was solved, McMichael said.

“Then, on June 1, we were served another letter,” he continued. “It said that we were prohibited from having entertainment events in the Biergarten effective July 1. It's absolute hara-kiri. It's suicide for them and for us. This is a lose-lose situation.”

Weddings and other catered events would be allowed under the agreement, but McMichael also fears the order could prevent him from using the Biergarten for regular business.

“The verbage as I read it says we are prohibited from using the Biergarten for entertainment events. That means that our bars are closed and our food service is shut off out here. It's silent and dark,” he said.

McMichael revealed to 24-Hour News 8 that his lease is set up in a way that Athenaeum receives a percentage of gross revenues of food and beverage sales. When the Rathskeller hosts large, raucous parties that maximize alcohol sales, the restaurant and the foundation benefit. But according to a cease and desist order from the foundation’s attorneys, events requiring a cover charge or gate fee are the source of the problem.

“Tenant shall immediately stop charging, directly or indirectly, any cover, gate or other admission fee to enter landlord’s property, including the Biergarten,” reads the letter from attorney David A. Shelton.

The Rathskeller restaurant collects a cover charge to pay for bands and entertainment at the Biergarten. None of the money collected goes to the Athenaeum Foundation. According to McMichael, the foundation wants 50 percent of the money collected through cover charges. McMichael said he offered to split the money, but only after he had used door proceeds to pay the bands. That offer, he said, was rejected.

“This will directly effect the events people have come to love here – like our St. Patrick’s Day Party,” said McMichael.

But in a statement released Friday, Athenaeum Foundation President Cassie Stockamp said the new arrangements are necessary because the Biergarten has "essentially become a concert venue," and that increases maintenance costs.

"The concert activities increase our wear and tear on the building, including costs for us that we bear. This includes $6 million in deferred maintenance of which a quarter of a million is to soundproof the Biergarten wall," Stockamp said in the news release.

The Athenaeum said they have been working with McMichael for two years to find a compromise that would work for both parties.

"We love the Biergarten and don't want to see it go away," Stockamp said.

The Athenaeum Foundation is a nonprofit, Stockamp noted, and donations are used to keep the 117-year-old building open for all patrons and tenants, which also includes the YMCA, Young Actors Theatre and various events and other programs.

The Rathskeller has now filed a petition for an emergency hearing so a judge can intervene in the negotiations.

A " Save the Biergarten " campaign has launched on social media websites. Event planners and employees are attempting to get the community involved in an effort to stop the closure of the Biergarten.

"This is great that we are seeing such support and community conversation about the Biergarten and this historic venue," Stockamp said.

If the cease and desist order remains untouched, starting July 1 the Rathskeller can only operate that outdoor area for catered events and weddings.