First of three articles
The soaring brick ballpark on the outskirts of this city took the lives of three ironworkers. It cost a Republican state senator his job and set back taxpayers a sum equal to the Milwaukee County parks budget projected over the next decade. It nearly exhausted the political capital of the former governor, Tommy G. Thompson, who championed the stadium to keep Wisconsin "major league."
But Thompson won't set foot in the place.
Last year, when the ballpark's tenants, the Milwaukee Brewers, invited Thompson to Opening Day, he declined. He did it to protest Brewers owner and Commissioner of Baseball Allan H. "Bud" Selig, who, Thompson said in an interview, provided misleading financial information to get the stadium built, then broke promises to use the increased revenue to make the Brewers competitive.
"There were just so many misleadings and mischaracterizations," said Thompson, now Secretary of Health and Human Services in the Bush administration.
Selig, in turn, accused Thompson of reneging on a promised $50 million loan in what he called a "Machiavellian" reversal by the former governor. Robert A. DuPuy, who is both Selig's personal attorney and Major League Baseball's president and chief operating officer, called the charge that Selig misrepresented the Brewers' true financial picture to the state "a patent lie."
The rift between the commissioner of baseball and the governor who championed his ballpark is a microcosm of the rupture in the private-public partnership that Wisconsin forged to build Miller Park. In many ways, the story of the bedeviled $413.9 million stadium, which came with a leaky 12,000-ton retractable roof and 70 luxury suites, is the story of how modern baseball is played -- not on the field but in the offices and boardrooms where Selig, a former Ford dealer, presides over a $3.5 billion industry that is exempt from the most basic laws of American capitalism.
The story is uniquely relevant to Washington and Northern Virginia, for both are trying to get into the baseball business. They are competing to persuade Selig to move the Montreal Expos to the nation's capital, which infamously lost the Washington Senators to Arlington, Tex., in 1971.
Selig, as commissioner, has singular control over "relocation," as the process is known inside baseball. His hand-picked relocation committee consists of DuPuy; Brewers Chairman Wendy Selig-Prieb, the commissioner's daughter; longtime Selig ally Jerry Reinsdorf, owner of the Chicago White Sox; Texas Rangers owner Tom Hicks; consultants; and MLB staff. Although a 75 percent vote of baseball's 30 teams is required before a team can move, no vote will be taken until Selig knows the outcome, according to baseball officials familiar with the process.
Selig's price in Washington is the same as it was in Milwaukee: a state-of-the-art publicly financed ballpark. No stadium, no team. But to at least one Wisconsin official, Miller Park is a cautionary tale.
"I would be very, very nervous if I was a taxpayer in the Greater Washington, D.C., area," said state Sen. Michael G. Ellis (R), the former majority leader and a Selig critic. "Nobody is better equipped to show people how to fleece the taxpayers into building them a new stadium than Allan H. [Bud] Selig. He could write a textbook on how he committed the taxpayers of Wisconsin to build a stadium at no cost whatsoever to the Seligs."
In exchange for the Expos, D.C. Mayor Anthony A. Williams has offered to build a fully funded ballpark at one of four downtown locations, at a cost ranging from $278 million to $383 million. Northern Virginia has offered a $360 million ballpark as the centerpiece of a 400-acre development project near Dulles International Airport. Portland, Ore.; Monterrey, Mexico; San Juan, Puerto Rico; Norfolk; and Las Vegas also have made bids for the Expos.
In an interview this month, Selig said he planned to make a decision after the July 13 All-Star Game in Houston.
"This thing has taken longer than it should have," he said. "But it's been almost to our advantage in a way. It's given the cities applying a chance to get their houses in order a little more."
This series will examine the relocation process, Selig's role in it, and what they reveal about the insular culture that is Major League Baseball, the official name for the business entity that is the national pastime. The information for these articles was drawn from court documents, lobbying records, congressional testimony and interviews with MLB officials, owners, players' union representatives, club employees and representatives from the seven North American locations vying to land the Expos.
Beyond its romantic history and symmetrical genius, baseball is fundamentally a government-sanctioned cartel -- defined in the dictionary as a group of businesses that maintain a monopoly. It is protected by a 1922 Supreme Court decision that exempts the sport, uniquely, from antitrust laws. It is led by Selig, whose status as both team owner and commissioner would violate conflict-of-interest rules in all the major professional sports leagues -- the National Football League, the National Basketball Association and the National Hockey League.
Selig, who assumed the responsibilities of commissioner in 1992 -- and was elected permanent commissioner in 1998 -- has made construction of ballparks the centerpiece of his business strategy as baseball's chief executive officer. His aggressive personal lobbying, including direct and implied threats, has helped baseball obtain $3.22 billion in public subsidies for 15 new or renovated ballparks -- including his own -- over the past 12 years.
MLB officials say the new stadiums anchor teams to their communities, provide economic and cultural benefits to cities and generate revenue to help teams acquire players and stay competitive. The stadiums, they argue, are like other infrastructure investments, such as airports and highways, that make cities viable. Without the construction of Miller Park in a medium-sized city like Milwaukee, Selig said, there would be no baseball here.
Political commentator George F. Will, one of the Selig's closest advisers, said in a recent speech that baseball's new ballparks are "monuments" that testify to Selig's status as the greatest of the nine commissioners in the sport's history.
"When people ask you, 'When was baseball's golden age?' The answer is: 'You're living in it,' " said Will.
Critics argue that baseball uses its antitrust exemption to carve the nation into protected regional monopolies. They say it is able to divide markets to leverage public money for stadiums that raise franchise values and earn hundreds of millions of dollars in revenue for baseball's owners, eight of whom were named to the 2003 Forbes 400 list of wealthiest Americans.
Without baseball's antitrust exemption, a major league team could move into Washington or Northern Virginia without baseball intervening. With it, the Baltimore Orioles, who have sought to block such a move, enjoy a monopoly over a region encompassing 7.6 million people, the fourth-largest consolidated metropolitan area in the United States after New York, Los Angeles and Chicago.
Without the antitrust exemption, "they'd all be in jail -- it's real simple," said Spencer W. Waller, director of the Institute for Consumer Antitrust Studies at Loyola University in Chicago. "I'm not saying that people in baseball are evil or immoral, but because of antitrust laws they act like any rational monopolist would act in raising price, restricting output and limiting innovation. It's more of what a rational cartel would do than a monopolist."
Selig's role as judge and jury in Washington is freighted with irony. Although he has long fretted about a Washington area team's potential impact on the Orioles, and vice versa, in 1970 he relocated his own franchise from Seattle into what is now baseball's smallest market, 90 miles from two Chicago teams, four years after the Milwaukee Braves moved to Atlanta.
Throughout the 1990s, Selig promoted a new ballpark as the only way to make his team competitive enough to stay in the city -- a message that he and his supporters conveyed via implied threats, the cooptation of Wisconsin's most powerful media and one of the most expensive lobbying campaigns in state history.
Interviews and recent audits of the Brewers' finances suggest that Miller Park was built on a foundation of economic sand. Much of the revenue the new stadium generated went to support a previously hidden spiral of private debt -- $171.3 million in 2001, the year the park opened, according to a report last month by the non-partisan Wisconsin Legislative Audit Bureau.
Among other things, that review of the Brewers' finances showed that annual $3.85 million stadium maintenance payments the team received from taxpayers was used until 2002 to service $50 million in Brewers loans. The loans represented part of the team's contribution to stadium construction.
The debt, along with plunging attendance, forced the Brewers to slash player payroll to a major league-low $27.5 million just three years after Miller Park opened. The Brewers opened this season paying their entire team $10.4 million less than the Boston Red Sox pay outfielder Manny Ramirez and pitcher Pedro Martinez.
On Jan. 16, faced with a public outcry over the reduced payroll and growing questions over how he used the Miller Park money, Selig put the Brewers up for sale.
Selig-Prieb, the Brewers' chairman, said the club's finances were undermined by changes in baseball while the stadium was being built. "The economics of the game changed dramatically during this period," she said. She echoed her father's view that without the new ballpark the Brewers would have been forced to leave Milwaukee.
Change in the Rules
Selig broke his first stadium promise more than a decade before Miller Park was built.
He drove out to Madison, the state capital, to have breakfast with Thompson. "I'm building a new stadium, and I wanted you to know," Selig told the governor, according to Thompson. "Don't worry about it. I'm going to build it myself."
Selig was a local hero, the man who had almost single-handedly saved baseball in Milwaukee. In 1965, at 31, he had fought unsuccessfully to stop the Braves from moving to Atlanta. Selig spent the next five years trying to get another team. In 1970, he led a group of investors who bought the Seattle Pilots out of bankruptcy; Selig's stake was $300,000. The team was diverted to Milwaukee with such haste that Brewers patches had to be sewn over the Pilots' uniforms.
Selig told friends that he wanted to be the first owner to finance his own ballpark since Walter O'Malley built Dodger Stadium for $18 million in 1962. But his promise failed to take into account the momentous economic shifts inside his sport. As baseball gravitated from broadcast to cable television in the late 1980s, teams in large markets began to receive torrents of new revenue that they spent on free agents, driving up player salaries.
The trend buried cities such as Milwaukee, the 27th largest metropolitan area in the nation. Selig in effect was trapped in a perfectly circumscribed market: Chicago was 90 minutes to the south; Minneapolis six hours to the west; and Lake Michigan directly east.
"Life changed," said Selig. "The same rules I was playing by no longer existed."
In comparison to other owners, Selig was not enormously wealthy; the team and his car dealership, which he took over from his father Ben, a Romanian immigrant, were his primary sources of income. So, in what became a nearly continuous search for cash to support his franchise, Selig reversed the equation: Instead of Selig building the stadium for Wisconsin, the state would build it for him.
"The bottom line is the Seligs really couldn't afford to own the team," said John O. Norquist (D), Milwaukee's former mayor. "They were looking for other revenue streams."
Selig had only to look at other owners to see what was possible. In Chicago, Reinsdorf, now chairman of baseball's relocation committee, had threatened to move the White Sox to St. Petersburg, Fla., in 1987. The Illinois legislature approved a $150 million ballpark in 1988 as the clock struck midnight to end the legislative session.
In 1989, George W. Bush invested $606,000 as part of an investment group that purchased the Texas Rangers. Largely because of the construction of a publicly financed stadium -- the Ballpark at Arlington, now known as Ameriquest Field -- the group sold the team to Hicks nine years later for $250 million. Bush's reported share was $14.9 million; the 2,358 percent return on his investment made him financially secure enough to enter politics.
Selig was known in Milwaukee as a kind of everyman, a rumpled creature of habit who regularly ate his lunch at a local custard stand. He was careful never to explicitly threaten to leave. He made the rounds in Milwaukee, impressing upon local politicians, reporters and members of the business community his predicament.
"What he would say is, 'Unless we build a facility we can't economically survive here,' " said James R. Klauser, who served as secretary of administration under Thompson. "He never said, 'If we don't get a stadium we'll leave.'
"It's the same thing, isn't it?" said Klauser.
Selig envisioned a grand ballpark near the Brewers' previous home, Milwaukee County Stadium, three miles west of downtown. At first, when Selig said he was offering to pay for the ballpark, few questioned his right to choose the location. But after he asked for public support, civic leaders began to debate whether the stadium might be better off downtown. They looked at cities such as Baltimore and Cleveland, which had used new stadiums as the centerpieces for urban renewal.
Selig said he initially favored a downtown park but no adequate site was available. Brewers fans were accustomed to tailgating and came from outlying areas, he and his supporters said; they would be resistant to driving all the way into the city.
Gary Grunau, a prominent developer who helped create the Milwaukee Riverwalk System and advocate for a downtown site, believed Selig was more concerned about the revenue he stood to lose.
"I think he wanted a controlled situation where he had the parking, he had the restaurants, and he had everything else," said Grunau.
Selig drew much of his strength from local businessmen. One was Robert Kahlor, then chairman of Journal Communications Inc., which owned the Milwaukee Journal and the Milwaukee Sentinel (the newspapers merged in 1995), as well as WTMJ, which carried the Brewers' games.
Kahlor more than just supported the ballpark. Thompson appointed him to chair a stadium task force. According to records filed with the Wisconsin Ethics Board, Kahlor was also one of four registered lobbyists who worked on the stadium issue for Journal Communications Inc.
Inside the newspapers, reporters and editorial writers felt constrained. "We were totally compromised at that point," said Sue Ryon, deputy editor of the Milwaukee Journal's editorial page, then the lead editorial writer on the stadium issue. "We had no credibility. Anything we said, it was, 'Well, who can believe them? Look at the position they're in?' We felt as a newspaper, as an editorial board, handcuffed, and that was pretty much from the beginning."
Kahlor, who has since retired, declined to comment.
Selig's view of where the stadium should go came to dominate the Wisconsin media. He gained the ear of Charlie Sykes, a conservative radio personality with enormous influence across the state, who played on fears that the Brewers would leave town if the stadium wasn't built. Sykes said he regrets his role. The public, he said, "was basically a spectator in this deal." And the deal he sold on Selig's behalf, he said, "turned out to be not real."
"I used up a lot of my credibility with my audience, and to be a conservative pushing a tax increase is a difficult thing," said Sykes. "I think I made an exception to the principle that you don't raise taxes for corporate welfare."
Thompson and Selig signed a memorandum of understanding to build a $250 million ballpark on the Selig-endorsed site. The Brewers would contribute $90 million. The rest would come from revenue bonds funded by a 0.1-percent local sales tax levied in five counties surrounding the stadium. The tax would have to be approved by the state legislature.
The bill was "arguably the most heavily lobbied issue in the history of Wisconsin," said Jay Heck, executive director of Common Cause in Wisconsin. It represented "a confluence of baseball, politics, money and the major players in the state. I think it really marked in many ways the change of Wisconsin politics, the start of big money in Wisconsin politics. It was a kind of seminal moment."
State records show that at least 48 registered lobbyists worked in support of the stadium bill. They billed a combined 4,900.2 hours for a total cost of $638,930.08 -- most of it spent during the two-month period in September and October 1995, before the bill came to a vote.
After passing the state assembly, the senate debated the stadium bill into the pre-dawn of Oct. 6, 1995. Wisconsin Act 56 lost once, 16-15. The bill's proponents moved for reconsideration. After a brief caucus, the Senate reconvened and the bill lost again, by the same margin.
Selig paced the halls, enraged, until he was finally escorted into the office of the assembly speaker, David Prosser Jr. It was now near 4 a.m. One of Selig's aides approached Norquist, the Milwaukee mayor.
"Bud wants to see you," Norquist was told.
Norquist hoped Selig might be ready to cut a deal on a downtown ballpark to break the logjam. Instead, Selig lit into him.
"You're the one who's going to be held responsible for this!" Selig yelled, according to Norquist. "You killed baseball in Milwaukee!"
"Whatever anyone thinks, you're ripping the people off!" Norquist screamed back.
Selig confirmed the exchange. He said he was angry because he had been told by lawmakers that Norquist had secretly been trying to kill the deal.
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.
Like the aborted WHEDA loan, these loans would be serviced by annual taxpayer-funded maintenance payments.
Opening Day Shutout
An accident that killed three ironworkers set back construction for a year and cost the stadium project nearly $100 million, most of which was covered by insurance. Miller Park finally opened on April 6, 2001. President Bush flew in on Air Force One for the occasion with Thompson, who was by then a member of the Bush cabinet. The occasion called for Selig to throw out the first ball, the president the second. Brewers legend Robin Yount also took the field during introductions.
Thompson seethed through the introductions, waiting for his contribution to be acknowledged. The moment never came.
Selig said it was not the club's intention to shut out the former governor. "That was a night they wanted to honor the fans," he said. "You had Robin Yount, the all-time Brewer favorite, you had me, and you had the president of the United States, and that was enough."
"What's the big issue?" said Selig. "My goodness gracious, the man is the secretary of health and welfare. I'm the commissioner of baseball. I've got more important things to do."
Thompson vowed never to set foot again in the park he helped build as long as Selig owned the Brewers.
The opening obscured the fact that the Brewers' financial picture was grim. The team had raised ticket prices 23 percent in the five years after the stadium legislation was passed; the increase from 2000 to '01 was 39 percent. Brewers attendance rose 79 percent in Miller Park's first season, then plunged by nearly a million fans the following year as the team lost 106 games.
A growing disaffection settled over fans who saw their team remarkably unchanged despite their lavish new surroundings.
Ulice Payne Jr., a lawyer from Wisconsin's biggest firm, was hired to run the team on the assumption that he had the authority to make changes. He quickly came to believe, however, that Selig was still in charge.
At one point, Rick Schlesinger, the Brewers' executive vice president for business operations, told Payne he had spoken with Selig, according to a source familiar with the discussions. The commissioner suggested that Payne put off a planned firing because he was "moving too fast," Payne was told.
On Opening Day of the 2003 season at Miller Park, Payne heard that Selig during the game had referred to the Brewers' operations under Payne as "amateur hour," according to a source close to Payne. Selig, Payne heard, was threatening to install a representative of Major League Baseball to evaluate the franchise, according to a source close to the former Brewers CEO. Payne went to Selig-Prieb and asked for a meeting with her father.
That Sunday, while the Brewers played the San Francisco Giants, Payne, Selig, Selig-Prieb, Schlesinger and John Canning gathered in a conference room overlooking the field to "clear the air," said Canning, chairman of the finance committee on the Brewers' board and one of three limited partners who managed the Selig trust.
Payne aired his opinion that Selig was still trying to run the team, the source said. Selig called the account "fiction." As the end of the season approached, the team began to prepare its operating budget for the 2004 season. The team was trying to attract new investors for the debt-ridden franchise. To make the numbers attractive, the team would have no choice but to slash payroll -- from $41 million to $30 million.
As rumors of the draconian cuts surfaced, the Milwaukee Journal Sentinel asked Payne if it was true. Payne confirmed the cuts as "the effects of a failed plan" and questioned whether they doomed the team to failure. The news exploded across the state. It was as if a single event had set to boiling years of simmering resentment over the construction of Miller Park.
The board, livid, negotiated to buy out the remaining four years of Payne's contract for $2.5 million. "The dispute was not between me and Ulice, it was between Ulice and the board," Selig said. He denied that he was involved with the team's operations.
When Selig announced he was selling the team in January, he said the sale was not tied to the stadium controversy.
He said he wanted to end the perception that his ownership of the Brewers and his position as commissioner of baseball were in conflict. Besides, said Selig, running Major League Baseball more than kept him occupied.
By the time the controversy erupted, Selig was balancing multiple conflicts. Baseball had entered its second year of ownership of the Montreal Expos, having taken over the team in February 2002 after a failed effort to "contract" Montreal and another franchise.
The strategy had grown out of a desire to lop off baseball's weakest teams.
The process had started with a long list of potential victims.
None of them was the Milwaukee Brewers.
Staff researchers Julie Tate and Margot Williams contributed to this report.