No building in Milwaukee is as carefully preserved as Miller Park. Should we pay for it?
The good thing about Miller Park is how well-maintained it is; and the bad thing about Miller Park is how well-maintained it is.
Since the stadium opened in 2001, the political entity that owns about two-thirds of it – the Southeast Wisconsin Professional Baseball Park District, created by an act of the state Legislature in 1995 – has acted both as landlord for the Milwaukee Brewers and as taxman. Collecting a 0.1 percent sales tax from Milwaukee, Waukesha, Ozaukee, Racine and Washington counties, the district has taken in some $26 million a year, and as it’s received another $1.2 million in annual rent from the Brewers, it’s been anything but a miserly landlord.
Each year, the district contributes about $1.75 million, and the Brewers pitch in roughly $750,000, toward a “Segregated Reserve Fund” (SRF) used for major capital repairs and improvements – its stated purpose. The actual figures vary slightly under complex terms included in the lease: The district has budgeted almost $1.9 million for its 2014 contribution and expects to get about $610,000 from the Brewers, who own about a third of the stadium. The lease tying together the district, the team and Miller Park until at least 2030 includes enough provisions for necessary and “discretionary” projects to justify just about any SRF-led improvement or repair, efforts rarely exposed to public scrutiny.
Working as close partners, landlord and tenant have spent public dollars, with an admixture of private funding, on such projects as floor insulation for the stadium’s administrative offices (about $39,900), new carpeting on the specially ticketed Club Level ($268,600), an LED “ribbon board” encircling the seating bowl ($3.1 million), a high-definition scoreboard ($5.9 million), new flooring for the dugouts ($84,700), retractable windows on the sweltering Terrace Level ($234,200) and a replacement “matrix board” for a billboard facing Interstate 94 ($484,800).
Meanwhile, citing poor conditions in the bond market, the district has begun setting aside funds to both pay down Miller Park’s remaining construction debt, at some point, and fuel the reserve fund until 2040 – assuming the Brewers stay in Milwaukee and extend their lease for another decade. As of June 30, the outstanding balance in the district’s general fund had grown to about $64.4 million, largely leftovers from the $26 million in sales tax revenue it receives each year. Most of this cash is tied up in mid- and short-term investments, where it’s held separately from the $9.3 million deposited in accounts belonging to the SRF. Other funds earmarked for debt retirement are stored in yet more accounts. The district’s 2013 financial statements list a tranche of $42.2 million set aside for bond payments, meaning that as of Dec. 31, the district controlled a total of $108.9 million.
A “master plan” for the reserve fund pledges separate $6 million contributions for scoreboard improvements in 2020 and 2030, and $2 million for new seating in 2021. The district’s vision also calls for setting aside enough revenue between now and whenever the sales tax sunsets (the latest estimates are between 2017 and 2021) to continue funding the SRF program through 2040, only improving the chances that the Brewers will extend their lease until that year.
Originally projected to end in 2014, once all construction bonds had been paid off, a financial adviser working for the district has calculated that retiring all of the debt will take several years longer due to stagnant sales tax collections. District officials once expected the revenue to grow 5.5 percent each year, but it’s scarcely budged from the annual level of $26 million, much to the frustration of executive director Michael Duckett. As of December 2013, construction debt still totaled $204.9 million, he says.
But what would happen if the district directed resources away from the SRF program and into paying down the stadium’s remaining debt? Could the tax be “sunsetted” earlier? Duckett says this is possible from a “mathematical perspective,” but such a move would violate the lease with the Brewers, which mandates the district’s contribution to the SRF.In recent months, criticism of the stadium district has intensified among residents in its outermost reaches. A pair of state representatives from the Racine area, Cory Mason, a Democrat, and Thomas Weatherston, a freshman Republican, are considering legislation for 2015 that could either opt Racine County out of the 0.1 percent sales tax or heighten scrutiny of its use. “The money was supposed to build the stadium, not be a slush fund to maintain it,” Mason says. “This is not a politically sustainable model.”
Weatherston makes a similar argument. “We’re funding a private business with some very well-paid athletes,” he says, and “there’s no oversight by anyone not involved in professional baseball.” And although Mason says he’s received “overwhelming” bipartisan support on the stadium tax issue in the past, Weatherston holds out less hope. “The rest of the state doesn’t really give a tinker’s damn,” he says, “because they don’t have to pay for it.”
Two engineers and an accountant make up the district’s small staff and occupy a two-room office suite around a corner from the Brewers front office. A civil engineer hired before the stadium’s groundbreaking, Duckett managed its construction and continued on as the stadium district’s director after the facility opened in 2001, a job that’s since become a part-time commitment. There’s no one more familiar with the great structure’s stories-high beams and HVAC systems.
“We would love to defease some more debt,” he says, referring to a financial strategy that the district has utilized before, “but the market is so upside-down right now.” Retiring bonds early would cost a premium, he says. “It would actually hurt the sunset date,” pushing the 0.1 percent sales tax even further into the future.
As for ending the SRF program, Duckett says that would be “bad engineering,” as its maintenance and repair efforts are needed to protect the public’s investment in Miller Park. “We’re trying to make this building last 40 years for Major League Baseball.”
While paying only a minority of the SRF, the Brewers collect all of the revenue generated by the facility – everything but the team’s rent payment, the $1.2 million which Duckett says is the upper limit to what the district can collect under a federal law applying to beneficiaries of municipal bonds. The Brewers, who deferred all comment on this story to the stadium district, sublease to – and collect rent from – the stadium’s concessions vendors, such as Friday’s Front Row Sports Grill, and Delaware North Companies Sportservice, which runs stands like the Double Clutch, where you can order a spaghetti-stuffed meatball. The team also receives all revenue from parking, special events, party suites, conference center bookings, photo rentals, guided tours and sponsorships. Miller Park is big business. In March, a Forbes study of pro baseball clubs estimated the value of the Brewers at $565 million, up from the estimated $220 million current owner Mark Attanasio paid for the team in 2005.
Duckett compares the district’s arrangement for managing Miller Park to that between an apartment tenant and a landlord who’s responsible for repairs. At the stadium, the Brewers pay for “routine maintenance,” defined by the district as regular fixes to anything that fans can touch. The SRF tends to handle one-time repairs and improvements, with a notable exception: the retractable roof. And it’s a big one.
Soon after Miller Park opened in 2001, the district agreed to consider all repairs and maintenance of the roof as part of the SRF wheelhouse, whether necessitated by a major breakdown or normal wear and tear, the sort of thing that could arguably fall to the Brewers. Duckett says the district “thought we were going to argue forever over what’s routine maintenance and a major capital repair,” so the two sides reached a compromise, albeit one that favors the Brewers. In recent years, repairs and maintenance of the robo-roof have ranked among the SRF’s greatest expenditures.
For 2014, the district has budgeted $675,000 for maintenance, repairs and painting of the roof’s apparatus, which requires tradesmen to rappel down its sides. Three times a year, a team of 12-15 engineers inspects the structure’s five 60-foot movable panels, each driven by a pair of tractor-like drive trucks, and produces a detailed list of needed repairs. These add up quickly. Between 2010 and 2012, the district spent $4,400 on “lubricants” for the roof, a $51 million piece of equipment (by Duckett’s figures) that the district first received in malfunctioning condition. A $33 million legal settlement won in 2005 from the roof’s manufacturer, the Japanese company Mitsubishi Heavy Industries, covered about $28 million in repairs and spared the district’s finances. The grinding noise that had once accompanied the roof swinging open was silenced.
But the district withstood another blow to its finances willingly. In the course of numerous changes to the original lease, signed with the Brewers in 1996, is an increase in the district’s yearly SRF contribution from $700,000 to about $1.75 million, a provision agreed upon in 2001, shortly after the ballpark opened. (Later changes cemented the current arrangement.) Duckett says this was done with maintenance of the roof in mind, and the Brewers increased their reserve fund contribution from $300,000 to some $750,000, swelling the yearly total to $2.5 million – enough to both keep the roof in working order and continue with spending on other improvements. Any SRF monies not spent in a given year carry over to the next, further enlarging the district’s already burgeoning reserves.
Ultimate control of the district rests with an unpaid, 13-member board of directors appointed under a complex set of guidelines. Representatives chosen by the governor, the mayor of Milwaukee, and the district’s five county executives serve out two-year, four-year and indefinite terms, and longevity, if not a rule, is commonplace. Three members in the “indefinite” group have been on the board for some 19 years – since 1995, when Gov. Tommy Thompson, Milwaukee Mayor John Norquist, Milwaukee County Executive Tom Ament and Brewers owner Bud Selig signed a memorandum of understanding pledging to raise a replacement for the then-dilapidated County Stadium. One of Gov. Scott Walker’s 2012 appointees, Summerfest CEO Don Smiley, is a former president of the Florida Marlins and now serves as chair of the district’s board. (Smiley didn’t respond to a request for comment.)
According to Duckett, the district exercises veto power over all SRF projects and doesn’t move forward with one unless the Brewers also agree to it. Records of these discussions are dotted with efforts first considered for coverage, or requested by the team, but never agreed upon, such as adding ceiling fans to the Terrace Level concourse, or improving the stadium’s air conditioning.
Other projects got a green light. In 2001, the district spent $121,000 to improve ticket scanning at the stadium and alleviate long lines, and about $56,000 to move an outpost for security guards under the scoreboard, where they could better observe the seating bowl. Other early changes included enlarging the “U-traps” in the bowl’s drains, to stop an unpleasant gray water odor from leaking out under the seats ($41,160) and numerous alterations of the stadium’s sound system that, by 2004, had cost a total of $370,222. The Brewers also discovered early on that their administrative offices, in being cantilevered out over the seating bowl, were poorly insulated for the winter, resulting in frigid flooring. The district budgeted $75,000 for “Thermax plank insulation” but only spent about $39,900, and another $484,800 went to replacing a “matrix board” that the district had salvaged from County Stadium and used in the marquee sign facing I-94. Duckett says this expense was somewhat debatable, since the team sells advertising on the billboard, but it was ultimately approved.
Other design oversights cropped up. Over the years, the district has paid to improve foot traction on wet surfaces, including $77,300 in 2009 to cover multiple levels with an “epoxy traffic coating,” and when an ice-melting system failed a few years ago, sending unwanted water into an elevator bank, repairs cost the SRF a cool $96,000. Other fixes have proven more mundane. Some $6,900 went to painting light poles in 2011, along with $6,000 to replace windows in the outfield ticket offices in 2012. For 2014, the district has budgeted $35,000 for repairs at Helfaer Field (the youth diamond just north of Miller Park), $7,000 for correcting the roof on the Sausage Haus concessions building, and $40,000 for a railing on Yount Drive, the dicey corridor that leads shuttle buses and pedestrians up to the stadium’s home plate entrances.
The Brewers have paid most of the costs associated with adding new upscale party areas and retail stores to the stadium in recent years, including the Gehl Club and the Bernie’s Chalet store. Reserve dollars have occasionally been used to improve disability access to similar areas beyond what federal standards would require, according to Duckett, who says that the district meets with disability advocates once a year to receive a list of their requests. Various painting and carpeting projects within the Club Level, private suites and press box have also fallen to the SRF at times, and in 2007, replacement of the press box’s “kitchen carpet” was listed as having cost $13,205. In the same year, about $36,800 went to replacing carpeting in the 19 Founders Suites, although a repainting of the dugouts was denied.
To date, the SRF’s largest expenses have been a $5.9 million contribution toward the high-definition scoreboard installed in 2011 (the Brewers covered the rest of the $12 million project) and $3.1 million for the LED ribbon board, a 2006 project that also paid to replace the left field out-of-town scoreboard and remove the one in right field. The Brewers requested the ribbon board, which resembles a news ticker, under a provision in the lease that requires the district to keep Miller Park “on a par with … at least 75 percent” of all Major League Baseball stadiums. After a review, the district found that more than three-quarters did have similar displays, mandating the upgrade and making this the first successful, and first-ever, invocation of the 75 percent clause.
Both Weatherston and Mason, the Racine lawmakers, believe that political momentum is building against the stadium district, raising “the possibility of another audit and some pretty tough discussions,” the democrat says. The Legislative Audit Bureau’s 2002 review of the district was one of the most contentious in the agency’s history and found that during Miller Park’s $413.9 million construction, the district had spent $4.9 million on “office furniture and athletic and training equipment” selected by the Brewers, “such as whirlpool baths, ice machines, saunas, and steam rooms, batting and pitching machines, exercise equipment and a video coaching system.”
In a scathing letter of reply, then-board chair Robert Trunzo questioned the legitimacy of the audit and proposed in bold lettering that “legislators should consider whether it is time” to audit the LAB itself. He insisted that “the total cost of the Miller Park project” was $393.2 million, bringing it a hair under budget.
If the lease ever ends, in 2030, or because the Brewers have left town afterward, the document states that the team would then receive 30 percent of any remaining SRF funds, with the rest falling to the district. Then, Duckett says, the money would be divided up among the district’s five member counties, based on how much each had paid into the sales tax.
In the meantime, the stadium district could serve as a model for a new Downtown sports and entertainment complex, a replacement for the BMO Harris Bradley Center sustained by its own pool of reserve funds, like a financial fountain of youth. Miller Park, as Weatherston notes, “is in better condition today than when it opened.”
Matt Hrodey is an associate editor at Milwaukee Magazine. Write to him at email@example.com.