Don't base your judgment solely on one person's opinion, i.e. that the band was "so-so." Is the person who said this a devoted jazz fan? An experienced critic? Others' opinions might have been different. Maybe the band DID bring in more business by playing for free. Maybe someone with different taste would have felt differently.

How many people USUALLY go to that bar on Monday and then go to your arts center on Tuesday? Not many, I'll bet. If so, then there were not many people to be driven away in the first place.

Word of mouth doesn't work that fast.

I urge you NOT to try to prevent performers from doing what that band did. A little advance publicity will nearly always help you more than hurt you. The band would have to be REALLY AWFUL to drive away more audience members than they attract, and if they're that bad, it's partly your fault for hiring them in the first place.