State Audit: Long-term Plan Needed for Milwaukee Mile

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wall 2 smOn Friday, January 5th, the Wisconsin Joint Legislative Audit Committee released a long awaited report detailing the operations State Fair Park from mid-2013 through mid-2017.

The report called out the State Fair Park agency for poor record keeping and inconsistent procurement procedures. In addition, the report found that State Fair Park does not have a comprehensive, long-term plan for assessing the condition of its primary grounds and facilities or a formal plan for the future use of the Milwaukee Mile racetrack.

Read the Full Report (PDF)

Track Revenue Down

The Milwaukee Mile, which hasn't hosted a major league race since 2015, continues to generate revenue for State Fair Park through a variety of uses including racing clubs, driving schools, charitable events and other private events. The track generated $286,400 in revenue during the 2016-17 fiscal year. That's down from $487,100 generated during the 2012-13 fiscal year.  The decrease is largely due to the lack of major racing events, which generated an average of $102,000 per event in previous years.

In addition to revenue generated exclusively by on track activities, the Milwaukee Mile is heavily used during Wisconsin State Fair. The grandstand is used for the main stage headliner acts during the fair, and the track itself is used for parking 3,000 cars per day. However, for a variety of reasons, State Fair Park was unable to determine the amount of revenue specifically generated by the track during the fair.

State Fair Park still faces $11.8 million in debt service payments for capital projects completed at the Milwaukee Mile from 1994 through 2005. These projects include the construction of new grandstands, installation of the SAFER barriers and reconfiguration of the infield road course. The debt service payments are scheduled to continue until the 2030-31 fiscal year. If the track would be demolished before that time, payment on the debt would be due immediately.

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Additional Capital Improvements Needed

In addition to the existing debt, it's likely that the track would need additional capital improvements in order for major league racing to return to the Milwaukee Mile. The racing surface, which was last repaved in 1995, is in need of repair and possibly a complete repave. Safety improvements, including installation of additional SAFER barriers along the frontstretch and backstretch walls, would likely be required for any of NASCAR's top series to return. The track's pit and paddock area would also need improvements, including the potential construction of permanent garages to attract top racing series to the track.

Audit Suggests Future Uses for the Milwaukee Mile

The audit report listed a series of options that State Fair Park could pursue for future uses Milwaukee Mile:

attempt to secure major racing events, which it believes would likely require significant capital upgrades;

attempt to increase the extent to which it leases racetrack space for smaller events, which could be done regardless of whether it secures major racing events in the future;

look for opportunities to reduce its ongoing repair and maintenance costs and to generate additional revenue by repurposing a portion of the racetrack property, which is owned by the State of Wisconsin.

Report Due Back June 1st

The audit report made the following recommendations for State Fair Park:

initiate a formal planning process for identifying and analyzing the options available to it regarding the future use of the Milwaukee Mile;

make recommendations to the State Fair Park Board concerning what it believes is the most appropriate use or uses of the Milwaukee Mile;
State Fair Park must report back to the Joint Legislative Audit Committee by June 1, 2018, on the status of these efforts.

Wisconsin State Fair Park CEO/Executive Director Responds

In response to the audit, the following the response was provided by Kathleen O’Leary, CEO/Executive Director of Wisconsin State Fair Park:

While the statement that we do not have plans to host a major racing event in the near future is true, this decision is strategic and fiscally responsible due to the state of the racing industry. Currently, both NASCAR and IndyCar are in a transition period and desperately seeking to recapture viewership. Their TV ratings have plummeted in recent years, and there is less interest in the industry overall by viewers and sponsors.

At this time, it is difficult to tell if this trend will continue, or if there will be a rebound. This has put us in a very precarious position, which is one reason there have been changes in recent years to the way we program the Milwaukee Mile. Races on ovals are becoming a thing of the past, not to mention that promoters are not able to put on major races without investing in sanctioning fees of $1 million or more. Therefore, our staff has worked hard to generate revenue with creative programming initiatives, including music festivals, and track use in conjunction with potential events taking place during the Harley-Davidson anniversary in 2018.

Any reference to selling the Milwaukee Mile (which is state property) needs to be considered in the context of understanding that not only is this State of Wisconsin property, but selling or changing this area could potentially jeopardize the State Fair event - not only from a space standpoint, but also a revenue standpoint - given that the Mile constitutes more than half of the parking spaces during State Fair. Additionally, this would potentially eliminate the Main Stage concert area, which is a pillar of State Fair that drives attendance and generates additional revenue via concert ticket sales, food and beverage sales, and overall per-cap spending.

Read the Full Report (PDF)