Selig Plays Hardball on Stadium Deals
Around 4:30 a.m., Ellis, the majority leader, walked back into the chamber to gavel the session closed. Before he could, his assistant majority leader, Margaret Farrow, stopped him. "No, no, don't adjourn," she whispered. "George is going to change his vote."
George Petak, a Republican from Racine, had opposed the stadium bill, in part because his county was the last added to the taxing district. Petak said he believed Racine was not integral to the Milwaukee economy and therefore shouldn't be taxed on the ballpark.
But in what has become a legendary moment in Wisconsin political history, Petak flipped. He said he was promised nothing in return. "I just didn't want to see baseball leave Wisconsin," he said.
Nine months later, Petak lost his job. The citizens of Racine held a special election and made Petak the first Wisconsin politician to be recalled.
Naming a Price
Tucked into the legislation was an unusual side deal Thompson had proposed to Selig. The governor had arranged to have a quasi-public agency, the Wisconsin Housing and Economic Development Authority (WHEDA), lend the Brewers $50 million. The team would use the money as part of its $90 million contribution to the stadium. The $90 million was key: Lawmakers wanted to know Selig, too, was chipping in.
The WHEDA loan was a political solution to a hard reality: The Brewers didn't have the money. The team came up with the remaining $40 million by selling the ballpark's name to the Miller Brewing Co., then using the 20-year, $41.5 million contract as collateral to obtain more debt. In other words, the Brewers' only financial contribution would come from selling the name of a ballpark for which Wisconsin taxpayers had paid.
Selig-Prieb said that the team made a significant financial contribution to the stadium. "Absolutely, the ballclub's money is invested in this project," she said. "If we didn't invest in the ballpark we would have had those assets to sell and utilize for the operation of the ballclub."
Before the stadium vote, the state legislature tried to assess the Brewers' financial condition. "We wanted to know: Where are they going to get their $90 million?" said Ellis. "We demanded to know what their financial condition was. We couldn't get it."
In a review of the team's finances, the Wisconsin Legislative Audit Bureau concluded the Brewers' financial condition was "poor" but said time constraints and "the club's reluctance to share detailed information" had made a complete analysis impossible.
Selig-Prieb and Michael W. Grebe, an attorney and member of the Brewers' board of directors who worked on the deal, said the club provided detailed financial information to both the Thompson administration and state auditors. "Clearly, the state understood the financial condition the club was in," said Selig-Prieb.
The governor had appointed an old banking associate, Fritz Ruf, to head WHEDA. The agency normally promoted low-income housing projects and small-business loans. But Thompson wanted Ruf in charge because of the size and notoriety of the Brewers' loan.
Ruf said he called Selig-Prieb to discuss it. "Look, you just give us the loan that they told you to give us," said Selig-Prieb, according to Ruf.
Selig-Prieb denied making the remark.
Klauser, Thompson's top aide, also said the Seligs were resistant. "They weren't interested in the details. It was just, 'Build us a stadium,' " said Klauser. "They did not like requirements -- no question about that. Their idea was that someone would just write them a check."
But DuPuy said the team already had been "audited to kingdom come by the stadium board and by the state and by WHEDA and by everyone that was involved."
When he obtained access to the Brewers' books, Ruf said he was stunned. "I had lived around here all my life, and I knew that the financial position of the Brewers wasn't going to blow anyone's socks off," he said. "But the more you got into it, the more it became apparent that the only thing the Brewers were going to be able to give us was a hearty handshake. All of their assets, including the franchise, had been pledged to other lenders."
Grebe said Thompson was well aware that the team had no collateral to pledge. Klauser, he said, had arranged to let the Brewers use annual $3.85 million stadium maintenance payments from taxpayers to support the debt service on the uncollateralized loan. Selig and his supporters believe Thompson used the WHEDA loan as an excuse to back out of a deal that was already wreaking havoc on state politics. Thompson "knew that we had a deal," said Selig. "Why did he run from that deal? I don't know."
"The Machiavellian behavior was stunning and, in retrospect, more stunning," said Selig. "And let me underscore the Machiavellian."
Ruf, who had been appointed by Thompson to issue the Brewers' loan, now had to go back to the governor and say that he couldn't.
But where to get the $50 million? Rejected by the state, fully leveraged with the banks, the Brewers turned to the Milwaukee business community. The team negotiated a series of grants and low-interest loans from local foundations.
It came to be known as the $50 Million Club.
© 2004 The Washington Post Company