Bruce Murphy
Back in the News

Don Smiley’s Ever-Higher Salary

His salary rose by $114,000, to more than $886,000, and the explanations keep getting thinner.

By - May 20th, 2013 01:19 pm
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In today’s Milwaukee Journal Sentinel, Dan Bice reports that Summerfest just released data showing its CEO Don Smiley got a $114,000 increase in compensation in 2012, hiking his salary to $886,185.

That is more than three times higher than the compensation Smiley earned in his first year as Summerfest boss, in 2005. Smiley earns about $1 for every ticket sold to Summerfest, Bice noted.

Bice offered a “balanced” assessment of the salary controversy, writing that “Many at City Hall consider Summerfest a joint public-private venture, with the Summerfest staff acting as managers of a valuable piece of city real estate. Summerfest honchos, by contrast, see themselves as running a private nonprofit business.”  Former Summerfest board chairman Dan Minahan told Bice that “The goal was to have Don fairly compensated. Just like other businesses.”

But it’s not a business. As I’ve previously reported, Summerfest is a tax-exempt, city subsidized non-profit that also gets millions of dollars in charitable donations. It was founded and created by the City of Milwaukee, it doesn’t pay a market rate for the 78 acres of prime lakefront land owned by the city that it uses, its facilities (estimated value of $88 million) were mostly financed by the city’s taxpayers, with additional funding coming from charitable donations. And it has used the city’s bonding authority to issue $25 million in tax-exempt revenue bonds.

None of this was addressed in a letter Kellner wrote to board members of Summerfest in response to the Smiley controversy. He writes that Smiley’s compensation was based on “national compensation studies and research,” but has refused to share this information with the press. He says the organization has been transparent, but doesn’t address the fact the publicly appointed members of the board were never consulted about the raises given to Smiley.

As I’ve also reported, Mayor Tom Barrett and his chief of staff Pat Curley had a meeting where they expressed their concerns to Kellner, Minahan and Summerfest board member H. Carl Mueller. According to Curley, Kellner and company agreed that future decisions on Smiley’s compensation must be shared with public appointees to the board and also agreed that the city comptroller could examine the books of Summerfest.

City officials also intend to revisit Summerfest’s lease with the city, and may ask for a greater contribution.They may also revisit a provision in the lease which requires requires Summerfest to “develop and/or promote free or lower admission cost community events” on the Summerfest grounds.

Some members of the city’s Harbor Commission feel little of this has been done by Summerfest, Bice reported. But then, if you think you’re running a business, rather than a tax-exempt, city-subsidized charitable enterprise, why would it be necessary to serve the community with low-cost events?

What continues to amaze in the statements of Kellner, Minahan and Smiley is how tone deaf they seem. If they don’t wake up to the fact that the festival depends on the support of the community, its taxpayers and charitable donors, they might begin to see an erosion of that support.

Categories: Back in the News

6 thoughts on “Back in the News: Don Smiley’s Ever-Higher Salary”

  1. CJ says:

    67.8% increase in revenue from 2005-2012 compared to 1997-2004. He earns his paycheck and fulfills his contract obligations. Its more inflated this year because of bonuses from 2 years being combined, and cashing in on 7.5 years of vacation time. These are all things basically earned in previous years. This is why it is always problematic when salaries get reported to the press who runs away with any number that seems too high to them. The details are usually complicated and money is often deferred from other years. The median chief executive officer salary for a $40+ million operation from multiple online sources is around $750,000.

  2. Bleeding Heart says:

    The extent to which Smiley, et. al. are tone deaf is, actually, not clear cut. One could posit that Summerfest’s “charitable donations” are really marketing dollars provided through some of the area’s largest businesses (and whose Chairmen/CEOs are more highly paid than Smiley). This is the money, (largely unrestricted, unlike bonds) that really keeps Summerfest afloat, and Smiley is likely more concerned about keeping that money flowing rather than fretting about the feelings of a weak mayor and a group of political professionals who are 0 for 3 in statewide elections.

    Indeed, there’s much to be outraged about Smiley’s arrangement. But no one really has the leverage to do anything about it.

  3. Mike says:

    I think a helpful thing would be to look at how Smiley is paid in comparison to other non-profits. Does the amount he’s paid fall in line with the percentages that are paid to other non-profits? Is Summerfest performing better financially than other non-profits. We can all look at what he makes and without that context say, “Wow, that’s a huge salary”, but I think we need that context to truly evaluate it. I know Michael Horne though the guy who runs the Pabst should be an appropriate comparison, but the numbers he posted showed Smiley performed better in just about every financial metric one can think of.

    Given that the good folks at Urban Milwaukee are really concerned with what people make and what house they live in, will they be pointing their investigative skills at organizations they approve of like Art Milwaukee and Newaukee?

  4. bruce murphy says:

    Hey Mike, speaking as the reporter here, I like Summerfest and have often attended it. This has nothing to do with approving or not approving of an organization. I think ALL non-protits,being tax-exempt, deserve scrutiny. As for Newaukee, I believe it’s a for-profit company.

  5. Mike Demet says:

    As a city taxpayer and Summerfest attendee, I think the guy is fairly compensated. The fest itself is amazing. The buildings and grounds are well kept. The new BMO Harris stage is great. The acts are at least as good if not better than ever. The last thing we need is a weak leader and declining festival. If a group of local board members think he deserves this comp, he probably does.

  6. Chris Jacobs says:

    We all know that the IRS seems to be preferentially scrutinizing Tea Party non-profit and tax-exempt organizations, but it seems not Summerfest.

    Technically, the Obama support rally in September at BMO Harris Pavillion could be considered a violation of Summerfest’s 501(c) non-political, tax-exempt, non-profit status.

    Organizations described in section 501(c)(3) are absolutely prohibited from conducting political campaign activities to intervene in elections to public office.

    Don Smiley actually made a comment in JS “that he was not sure whether standing room-only spaces would be made available”. It is interesting how Summerfest got away with hosting this without much scrutiny.

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