Why Strip Club Deal Fell Apart

Whoops, there’s no deal to allow a strip club to open Downtown.

It looked like there finally was a deal, after years of resistance from the city and years of controversy over the issue of a downtown “gentleman’s club.” At the Tuesday Milwaukee Common Council meeting Ald. Jim Bohl introduced a resolution stipulating that a new license would be granted to PPH Properties I LLC for a tavern and strip club at 730 N. Old World Third St. in exchange for three different parties dropping lawsuits against the city regarding past strip club license applications that were denied.

The lawsuits were by the Silk Group, the Buzdum family and one by John Urban and Roaring 20’s Management, LLC. The Silk Group has already won a lawsuit against the city for nearly a million dollars. Rather than take a chance on losing more money, Bohl and other council members (probably a majority) saw the settlements as a way to prevent any further losses from such lawsuits.

But the proposed location, most recently home to Rusty’s Old 50 tavern, has been rejected as the site for a strip club in the past. And on Monday, at a meeting of the council’s Licenses Committee, Ald. Chantia Lewis had made a motion to hold a new application, allowing the Westown Association business improvement district and others to attempt to find another location. Committee members Khalif Rainey and Milele A. Coggs joined Lewis in voting to hold the matter, while aldermen Jose Perez and Tony Zielinski voted in opposition. This left the Licenses Committee still in control of the application, and that lack of action in turn made it premature for the proposed deal introduced by Bohl to be voted on by the full council. So no deal.

The issue will now go back to the Licenses Committee to somehow find a location that won’t arouse opposition, which won’t be easy. Indeed, however any deal on a strip club is crafted, it is likely to leave some city heavyweights with a bitter taste in their mouth.

The proposed settlements with the three plaintiffs would prevent the city from enacting legislation “that substantially burdens the operation of such a Gentlemen’s Club for a period of six years.” The settlement goes on to note “Examples of legislation that substantially burden the operation of such a Gentlemen’s Club include a regulation that designates a minimum room size in which erotic dances are required to perform; requires erotic dancers to remain at a specific distance from patrons while performing; a regulation that requires erotic dancers to perform only on stage; and/or a regulation that prohibits any touching (other than touching that is already prohibited by state law).”

Meanwhile, the agreement would prevent the plaintiffs from applying to open additional taverns or strip clubs in the city.

The language in this proposed settlement wasn’t agreed to at random, but is derived from a series of yet-to-be introduced bills that would create an “adult entertainment district.” Zielinski, who chairs the Licenses Committee, led those efforts.

Downtown Ald. Robert Bauman opposes the grand bargain, telling the committee “there is an appearance that we are trading a license for money.”

Bauman has allies among his constituents, most notably new Grand Avenue Mall owner Tony Janowiec. Janowiec called the proposed deal “the biggest slap in my face.” Janowiec is leading the redevelopment of the mall into a mixed-use facility and believes the proposed strip club could negatively impact his efforts to secure leases with office tenants.

Joining Jaonwiec in opposition were a number of other downtown leaders including Westown executive director Stacie Callies, Milwaukee Downtown executive director Beth Weirick, St. James Court apartments owner John Hennessy and Mandel Group Chief Operating Officer Robert Monnat. All are unlikely to support any strip club in the downtown area.

About the New Strip Club

The application for the new Old World Third St. club, to be known as the Executive Lounge Gentleman’s Club, lists ownership being divided among three different parties. Scott Krahn of Hartland serves as the agent and sole proprietor, owning 38 percent of the business, Joseph Modl of Germantown is listed as owning 38 percent as well and Radomir Buzdum of Watertown is the smallest partner with 24 percent.

According to the application those three collectively own shares in Silk Exotic Milwaukee, Silk Exotic Madison (Middleton), Silk Exotic Juneau, Dew Drop In (Watertown), Buzdum’s Pub (Germantown), TNT (Watertown), Hideaway Bar & Grill (Okauchee Lake), and Lucky Joe’s Alchemy and Eatery (Wauwatosa).

According to the application, the Executive Lounge would derive 45 percent of its revenue from alcohol sales, 45 percent from entertainment and 10 percent from cover charges. The cover charges are anticipated to be between $10 and $15 per person. The legal capacity of the club would be 216.

Long-time Silk manager Craig Ploetz would manage the club. A plan of operations for the club indicates it would “cater to a more discreet clientele” and would discourage large groups such as bachelor parties. The only exterior signage will be a neon sign of the letters “EL.” All parking would be handled by a third-party valet service.

The club would pay building owner David Weir base rent of $2,500 per month, plus a “prorata share of taxes + CAM.”

Jon Ferraro, who has long been at the center of the issue having applied (and been rejected) for a number downtown licenses, is nowhere to be found on the documents for the new club. In August 2016 the Milwaukee Journal Sentinel reported that Ferraro was indicted in a racketeering case in California with seven other men. Ferraro has previously won a lawsuit against the city for $970,000 regarding a 2013 application for a strip club in the Rusty’s Old 50 space.

Radomir Buzdum’s prior testimony before the Licenses Committee came under fire at the hearing. When previously applying for a license at the location Buzdum referred to the area as “all homeless people” and noted “this would be a perfect gentlemen’s club [location], it’s in the middle of a toilet.” Buzdum apologized for those comments at Monday’s hearing.

Rusty’s Old 50 was operated by siblings Diane, Boro and Radomir Buzdum. A police report from January 2015 notes that Rusty’s was found to have vertical poles for dancing and female dancers wearing just “pasties,” underwear and high heels.

What’s Next?

The proposed settlement with the three plaintiffs stipulates that the deal is contingent on a new club being granted at the N. Old World Third St. location. If Westown suggests a different location, then the parties to the settlement would need to agree to an amended agreement. If they do, there’s a good chance the Licenses Committee would approve the location and and the full council would approve the settlement (with Bauman and perhaps a few other council members objecting). But if no location can be agreed on for a strip club — and that issue has been a sore point for years — then the lawsuits will continue, with the possibility of the cost of a settlement rising ever higher.

Mayor Tom Barrett is monitoring the situation. Spokesperson Jeff Fleming told Urban Milwaukee “this is of ongoing concern to the mayor; clearly the city has to resolve the ongoing potential of liability.”