Wiseacre team vets Mid-South Coliseum as expansion site

Two thirtysomething brothers and a 62-year-old investment innovator are the people behind the brewery that's looking at expanding in the Mid-South Coliseum.

Wiseacre Brewing owners Kellan Bartosch, 35, Davin Bartosch, 37, and Frank B. Smith III, their financial guru, are two months into a potential six-month vetting of the Mid-South Coliseum's suitability for a brewery.

With Smith serving as front man, Wiseacre in August secured a City Council commitment to lease the vacant former arena for up to 40 years.

The council vote Aug. 23 set in motion a four- to six-month exploratory period to determine if a brewery project in the publicly owned arena next to the Liberty Bowl is a go.

Earlier plans to include the Coliseum in a long-discussed renovation of the Fairgrounds drew heavy interest of Memphis residents and fans of the old arena. But the Fairgrounds project has been on hold and the entrepreneurs behind the brewery idea are saying little in public about a possible venture in the Coliseum.

Kellan Bartosch said the brothers were reluctant to talk because  their brand had been overexposed in the news media during the Council discussions of the Coliseum, even though a takeover is far from a done deal. He indicated other sites were still in play.

In Memphis city government, chief operating officer Doug McGowen said there was nothing new on the Coliseum. "They are still in due diligence period...too early to tell," he said in an email Friday.

Despite excitement about a Coliseum redevelopment centering on Wiseacre, Smith has been clear about the challenge.

"We might discover it's not possible by the time we get into it," Smith told the City Council. "We're a young business. We don't have a lot of extra money. We're bootstrapping this thing as best we can. It's going to take hundreds of thousands of dollars in architects and engineering and inspecting and asbestos remediation."

Wiseacre's beer permit says the Bartosch brothers and Smith each own a third of the company. Kellan Bartosch is president; Davin Bartosch, vice president and brewmaster;  and Smith, treasurer.

Davin graduated second in his class from the World Brewing Academy, a collaboration of the Siebel Institute of Technology in Chicago and Doemens Academy in Munich, according to wiseacre.com. He worked for Rock Bottom Brewery, winning Great American Beer Festival medals and other awards.

Kellan learned the marketing and distribution side working for a beer distributor and Sierra Nevada Brewing Co. He's certified as a cicerone, brewing's equivalent of a wine sommelier.

Smith is a 1976 Vanderbilt University business and economics graduate who was a managing director of Morgan Keegan and Equitable Securities.

A founder of Strategic Financial Solutions LLC in the mid 1990s, Smith co-created PerTrac, a personal computer platform designed to help investors choose investment fund managers.

Earlier this week, Smith was out front again as one of the developers of Clayborn Temple, a revered site in Memphis church and civil rights history. Smith is involved as a member of the Downtown Church, which would be a prime tenant if the revitalization comes together.

Earl Blankenship, president of Sun Capital, said of Smith: "He's a real fine, fine gentleman and businessman. He's just always taken a low profile. Obviously he felt like he had to get out front on the coliseum."

Ryan Guess, a blogger, radio show host and observer of the Memphis craft brewing scene, said, "He's a top-notch guy, extremely well versed. I really feel like he has a Midas touch. Pretty much anything he puts his hands into, he makes it successful."

Wiseacre leased a 13,000-square-foot building at 2783 Broad Ave. in early 2013, choosing the district because "we wanted to go somewhere where there was some buzz," Smith said. The opening was the culmination of the Bartosch brothers' longtime dream to run their own brewery.

Nonprofit community development organization Community LIFT's River City Capital affiliate made a startup loan to Wiseacre. Community LIFT president Eric Robertson called Wiseacre "one of our shining star loans. It's done the best of the loans we made."

"We saw them as an opportunity," Robertson said. "We had done a lot of research on breweries as economic development generators in distressed neighborhood."

The owners thought the building would be suitable for 10 years, but after four expansions, it's hitting peak capacity of 22,000 barrels a year. Wiseacre distributes across Tennessee, Arkansas and Mississippi and is in Chicago, New Orleans and Philadelphia.

Searching for an expansion site, Smith approached former Memphis Mayor A C Wharton's administration about the Coliseum in early 2015. Wiseacre also scouted locations from the old marine hospital in French Fort to Uptown to the Edge neighborhood east of Downtown, including the closed former Wonder Bread bakery on Monroe Avenue. They zeroed in on the Coliseum because of its cavernous spaces, tall ceilings, history and strong civic interest.

Though the easiest choice would be to expand on Broad Avenue, Smith said Wiseacre owners want to make an impact on the community.

"We just pause a minute and say, 'We've got a bomb to drop somewhere. Is there anywhere else in town where we might be a catalytic event or we might be some seismic motion that would cause a fire in some other part of town?" Smith said.

After Memphis Mayor Jim Strickland's election, Smith resumed discussions with city officials including McGowen, who served on the Mayor's Innovation Delivery Team for Wharton.

Smith told council members Wiseacre's future requires a quantum leap to 100,000 barrels, because craft breweries don't grow 10,000 barrels at a time.

"In the world of brewing production you can't just go from 20,000 to 30,000 (barrels) because the equipment for small scale production, we're just maxing it out," Smith said.

He added, "We reckon in the neighborhood of a $12 million kind of investment that we're going to be making somewhere. We'll be going from about 13,000 square feet to 65,000 square feet. We'll be growing from roughly 27 employees today as we move into the next brewery, that will be 80 to 100. That's just the brewing operations, not counting the ancillary."

A letter of terms covering the prospective lease says Wiseacre would pay rent of $25,000 a month for the first five years and rent would increase 5 percent a year after five years. The letter says Wiseacre would receive rent credits capped at $12 million for tenant expenditures necessary to create "a minimally finished interior,"  improvements that a landlord would typically be required to make.

The letter called for a $25,000 good faith deposit that's refundable if Wiseacre exercises its right to back out of the deal during the due diligence period.

Guess, the beer blogger, said Wiseacre is growing so rapidly that expansion is inevitable. "Whether or not the Coliseum is the place, we'll see as they do their due diligence," he said.

"They're being well received in other parts of the U.S. I think they have the ability to go from 22,000 barrels to 50,000 to 75,000 barrels," Guess said.

"It's going to happen. People love their Tiny Bomb and Gotta Get Up to Get Down," Guess said, referring to two of Wiseacre's more popular beers. "I do a lot of beer trading.  I send their beer out all over the country. Every time, people enjoy those two beers. I don't care where they're from."