Welcome to the March 24 Monday Business Briefing.
This is your private business intelligence briefing with Insider Louisville staff and contributors vetting tips collected during the past few days, hours and minutes before we post.
A reminder: This afternoon, Insiders Meetup is making its first foray into the suburbs. We debuted March 10 at Z’s Oyster Bar and Steakhouse downtown with Craig Greenberg, founding partner of 21c Museum Hotels. Today, Dave Adkisson, president and CEO of the Kentucky Chamber of Commerce, will be our guest at Z’s East End location, 101 Whittington Pkwy., off Shelbyville Road.
As always, the event is free and you can get your tickets here.
We’re dubbing this the “It’s about danged time” edition of Monday Business Briefing, with more than one big project about to get started.
• Another week, another scoop. The effort to redevelop Whiskey Row started back – way back – in May 2011, just after Greg Fischer became mayor. Finally, insiders are saying Louisville-based global spirits company Brown-Forman is taking the first steps toward developing plans for an urban bourbon distillery on Whiskey Row. We’re hearing it will be an effort similar to some of the other more-recent downtown installations, such as Evan Williams Bourbon Experience at Fifth and Main. We went to Brown-Forman’s Phil Lynch for comment, but Lynch is overseas.
We told you in the Feb. 3 MBB how sources started assuring us a Brown-Forman downtown bourbon tourism facility was coming. But many of those sources added there were complications. Complex alcoholic beverage sales regulations allow Heaven Hill to sell their bourbons and only their bourbons at the Evan Williams Bourbon Experience tourist attraction/micro-distillery because they have no restaurant/hotel bar alcoholic beverage licenses.
Whiskey Row investors Laura Lee Brown and Steve Wilson, on the other hand, have retail liquor licenses at 21c Museum Hotel for the bar and the Proof on Main restaurant, which complicates things, because Brown-Forman executives are going to want the Whiskey Row bourbon facility to be dedicated to their BF brand or brands.
Now, those issues apparently are resolved.
We’ve been asked by sources to keep details to a minimum in order to reduce blow back. But we’re being told there is finally a formal plan coming together, though it’s likely not to be public for months. But at least it’s a start.
For three years, the vague plan has been for Main Street Revitalization LLC, a group of investors led by Brown-Forman heiress Brown and her entrepreneur husband Wilson to invest about $40 million in the block of Main Street just east of Doc Crow’s. The group owns five buildings east to the empty facades behind which Todd Blue is planning his surface parking lot. But Wilson told the Wall Street Journal in 2011 the plans had never moved past the “let’s do something bourbon related.”
The complication factor, of course, is that Brown and Wilson also are busy as the main force driving 21c Museum Hotels, one of America’s most unique boutique hotel chains.
Craig Greenberg, who is both a 21c partner and the attorney for the Whiskey Row partners, told the Metro Council in January the group has stabilized the buildings and plan a mixed-use development “with some entertainment/food and beverage focus.” Sources won’t tell us what the theme will be, but MBB sees the Brown-Forman operation going one of two ways — either as an Evan Williams-style distillery/visitors center promoting Louisville brand Old Forrester, or as a history-and-heritage showcase for all things BF.
Bear in mind, Brown-Forman has to walk the fine line of capturing Louisville’s growing tourism market while not damping down traffic to its elaborate Woodford Reserve distillery outside Lexington. There, they use the bucolic setting to attract busloads of tourists, visitors who spend buckets of money on souvenirs, seasonal brunches and other activities.
Whatever the final decision – it goes without saying Brown-Forman is one of the greatest marketing innovators in history – it would bring the count to at least five urban bourbon tourist destinations existing or planned, including the Evan Williams Bourbon Experience, Michter’s, Angel’s Envy, and Copper and Kings brandy distillery. And most importantly, it could be the start of filling half a block of empty, blighted Main Street buildings just one block east of KFC Yum! Center … a dead zone emblematic of the glacial speed of downtown redevelopment.
• Speaking of Brown-Forman, the little giant has picked a fight with London-based Diageo, the world’s largest spirits company. The battle is over regulations defining the rules for how “Tennessee whiskey” is made. We didn’t get this until we found a post on the industry site Just-Drinks.com. In it, Brown-Forman VP Phil Lynch is surprisingly vocal about Diageo backing a change that would mean Tennessee whiskey no longer must be aged in expensive new white oak barrels.
Brown-Forman’s position is that reusing barrels could lessen the global image of Tennessee whiskey as a premium spirit, impacting money-pump brand Jack Daniel’s Tennessee Whiskey, which accounts for a huge percentage of BF total revenue.
Lynch claims the move by Diageo is meant to torpedo the growth of premium American whiskeys, which are starting to erode sales of Diageo’s Scotch whisky portfolio.
From the post:
Diageo and some smaller distillers in Tennessee want state legislators to allow reused barrels whereas the current regulations stipulate only new oak coopers can be used to age the whiskey. They claim loosening the regulations would bring more “flexibility” to the category and be beneficial to smaller distillers.
However, Lynch today said Diageo has “hid behind craft distillers” and is using its corporate might to shape the argument in its favour.
“Diageo has deep pockets,” he said. “They are funding their lobbyists well and their lobbyists are all over the the Tennessee legislature doing whatever they can to do Diageo’s bidding.”
The vote on the bill in the Tennessee legislature is tomorrow. One more point … clearly, we can cross Diageo off the list of Brown-Forman suitors.
• The worst kept retail secret in Louisville goes public this morning. As we told you back in September 2012, a big box store – most likely a Walmart – was in the works at 18th and Broadway on the former Phillip Morris property. IL got an email from Mayor Greg Fischer’s media people yesterday at 1:30 p.m. stating today at 10 a.m., the mayor will have a big economic development announcement.
We’re guessing they’re set to bow to the big big box in a deal by
The Mardian Group New Bridge Crossings. Eighteen months ago, we weren’t all that excited about this because of one reality a lot of people in the eastern suburbs don’t get — Broadway is chock-a-bloc with retail from 18th to 26th including local, regional and national brands, restaurants, banks, drugstores … you name it.
This is yet another project that dates back to the grim Great Recession days of 2008, when Mardian had a tentative deal with WalMart, a deal that fell through. Apparently the Bull Market trickles down to the West End.
• CafePress has not had what you would call a great couple of years, with shares falling from an IPO high of $19 per share on March 30, 2012, to about $5.85 per share as of Friday. Last month, the Louisville-based e-commerce company missed analysts estimates, issuing a downgraded guidance. Then, the CFO resigned.
Now, there is a legal question about whether Cafe Press’s customers can legally do what they’ve been doing … downloading images and logos for custom T-shirts and mugs. The issue revolves, of course, around copyrights. Last month, in Gardner v. Cafe Press, a judge ruled Cafe Press is not protected as a service provider under Section 512 of the Digital Millennium Copyright Act.
CafePress, unlike, say, Amazon, doesn’t sell goods someone else created. Instead, it allows customers to add art from other sources.
Here, while CafePress is an e-vendor similar to Amazon, eBay, and Photobucket, CafePress’s business varies somewhat from these other entities. The largest difference is that CafePress goes beyond facilitating the sale of products between internet users by directly selling products to online shoppers through the CafePress Marketplace. Indeed, CafePress’s policy of determining retail prices for products sold through the Marketplace and paying users only a royalty or commission for the sale of their products highlights the fact that CafePress has gone beyond operating a service that merely facilitates the exchange of information between internet users. As such, the Court cannot say, as a matter of law, that CafePress is a “service provider.”
This is at least the second time CafePress has been on the wrong end of a challenge to user-generated content websites. In the latest case, the photographer whose work was used without his consent never copyrighted the image. So, it’s something of a moot point. But the case makes it clear settled law on copyright infringement is never truly settled.
• An insider alerted us last week that the Chariot Hotel at 1902 Embassy Square Blvd. off South Hursbourne Parkway, was defunct. A contractor was razing the hotel shell this weekend. Our sources says it’s going to be an expansion of neighboring Swope Automotive Group’s Volvo dealership. Swope employees there said they hadn’t been told what’s in the works. But we checked the Jefferson County Property Valuation Administrator website, and the property now belongs to Swope.
• Speaking of hotels, last week we broke down the details in the Letter of Intent between the city, Omni Hotels and Cordish Cos., an agreement that could lead to a $261 million hotel, apartment and retail complex on Third Street. One detail in the document that caught our attention:
LeCentre LLC must agree to participate in the tax increment financing district created for the project. LeCentre appears to be the operating entity for hotelier Mary Moseley’s $80 million reconfiguration of the Stewart’s Dry Goods building at Fourth Street and Muhammad Ali Boulevard into an Embassy Suites Hotel. Executive’s at Moseley’s Al J. Schneider Co. did not return calls and emails for comment.
So we called Schneider Co. again, and we called city officials to try and verify if Moseley was on board with the Omni deal. Silence. Which, we have to say, started MBB worrying more than a little bit. Finally, on Friday, Ashley Brauer, Moseley’s spokeswoman, confirmed Louisville’s No. 1 hotelier is in: “We support it because the expansion of the convention center will be good for everyone.”
• Speaking of the Omni, we’re hearing worrying hints Lexington is trying to attach the Rupp Arena project to the expansion of the Kentucky International Convention Center, trying to reach into the same funding sources. Moseley and other potential Omni competitors are supporting the Omni plan because they believe it will convince the Kentucky General Assembly to fund the $175 million KICC expansion. However, Rep. Jesse Crenshaw, D-Lexington, filed House Bill 544 on Tuesday. In addition to raising Lexington’s transient room tax from 6 percent to 8.5 percent, House Bill 544 would set aside money toward retiring debt for the redesigned Rupp Arena and Lexington convention center. “The remaining money would promote tourism and economic development projects,” according to the Lexington Herald-Leader. Where would that leave Louisville?
• We couldn’t have a complete round-up without mentioning the University of Louisville’s academic issues. In conversations with multiple entrepreneurs, attorneys and econ-dev types, the theme that kept coming to the fore was, “Well, U of L’s medical school isn’t as critical as J. B. Speed School of Engineering.”
As we all know, U of L’s medical school is on probation after the Washington, D.C. Liaison Committee on Medical Eduction, which oversees medical school accreditation, put the medical school on probation. U of L is one of only three medical schools on probation, according to the LCME website.
Yes, medical schools are supposed to pump research dollars into communities. But our entrepreneur sources say great engineering schools such as MIT are far more important to economic development because businesses snap up great engineers, then get their innovations into the marketplace much faster than medical researchers.
So, where is Speed School? Nowhere near great. U.S. News & World Report’s latest 2014 rankings have them at No. 124, far behind their Top 10, which includes MIT, Stanford, Purdue, the University of Illinois and Georgia Tech. But, hey, where is MIT in the NCAA tourney brackets? That’s what defines a great school, right?
• IL broke the news last week that EnterpriseCorp Executive Director Tendai Charasika was leaving for the private sector. Tendai wasn’t the only defection from Greater Louisville Inc. GLI’s Jeremy Jarvy, director of Investments and Sponsorships, also resigned last week. Their exits follow GLI CEO Richard’s official resignation last month after only 14 months on the job. So, we have the top GLI executive, the top EnterpriseCorp executive and GLI’s development director all leaving within about six weeks. The topper in all this is that the GLI board of directors missed the cutoff date by one day to get a refund for Richard from the corporate recruiter who found him. It just gets better ….
Monday Business Briefing briefs:
• We got this in our digital tip jar: Henry|McGalliard Landscape Design Studio and Gardens to be open to the public in early April. The Henry|McGalliard Gardens, also referred to as The Gardens, will be in the historic Paristowne Point on Brent Street, next to Louisville Stoneware and across from The Cafe. “In addition to offering unique plant selections not found in typical nurseries, The Gardens will also give us the flexibility to better control the quality throughout all aspects of our larger design projects and installations. We’re also very excited about helping to revitalize this historic corner of Louisville,” according to co-owner Scott McGalliard. More in a post this week ….
• Dr. Rocky Reston, a board-certified anesthesiologist and clinical informaticist, has joined University of Louisville Physicians as chief medical information officer.
An Air Force colonel who retired from active duty this year, Dr. Reston, who also holds a Ph.D. in electrical engineering, came to U of L Physicians from the U.S. Department of Defense, according to a news release. At the DOD, he was chief of Clinical Informatics Research in the Department of Defense/Department of Veterans Affairs joint EHR (electronic health record) program.
• Rumors are Paula Weyler George and Mo McKnight Howe are moving Revelry Boutique Gallery to NuLu from the Original Highlands, taking the current Scout interior furnishings space.
• The Bellarmine University’s Women’s Council needs a house donated for its annual Show House event in September. BUWC has raised about $1.6 million for the school’s scholarship and student aid fund in the 40 years they’ve been doing this. A core part of Louisville life and culture.