Big Delay in Downtown Concert Halls

FPC Live Deer District Concert Venues. Rendering by Eppstein Uhen Architects.

Everything was coming up roses for FPC Live, the Madison-based subsidiary of Live Nation which had proposed to build a $50 million two-concert hall complex in the Deer District, in cooperation with the Milwaukee Bucks.

On November 1 the Common Council unanimously approved a zoning change needed to build the complex. It seemed a happy ending to a nearly year-long process that saw FPC first propose to build the complex in the Historic Third Ward on land owned by Summerfest, only to run into controversy.

“We’re excited to continue the process moving forward,” declared Joel Plant, CEO of FPC Live’s parent company, Frank Productions. He predicted the company could break ground as early as December and that the hall would be open before the Republican National Convention in July 2024. That was enough to convince the Biz Times to name FPC the “Corporation of the Year.”

But there was no groundbreaking in December or in the next several months. In early April, Plant told reporter Piet Levy the project had been delayed by skyrocketing construction costs which has “dramatically” increased the estimated $50 million cost.

Yet Plant claimed that a groundbreaking would happen before fall, and most likely this spring. Clearly there will be no spring groundbreaking. Urban Milwaukee contacted FPC for an update yesterday and Lee Christensen, the company’ Director of Development, admitted that no date for groundbreaking has been set. “Project costs continue to be challenging,” he added, “everyone is experiencing increased costs and interest rates.”

All of which means the completion of the complex will be pushed past the Republican National Convention in July 2024. “We decided in January that we wouldn’t be able to complete the project before the convention,” Christenson revealed.

Meanwhile, sources close to the city say the Bucks have told FPC Live that the vacant land at Fiserv Forum will be used and closed off for the convention and a construction project therefore cannot go on during that time, meaning that any building project couldn’t start until August 2024. That would mean the concert complex wouldn’t open until late 2025 at the earliest. Christensen said this was not true, but the Milwaukee Bucks would neither confirm nor deny this story when contacted by Urban Milwaukee.

Downtown Alderman Bob Bauman said he hadn’t heard this, but could understand the concern: “It would be kind of a mess. The construction would be smack dab in the middle of the convention.”

In April Plant claimed a commercial loan commitment had been secured by FPC, but he declined to name the bank, nor the amount it would finance. But if FPC had secured financing, why didn’t it break ground? Every month of delay would increase the costs of construction and the interest rates charged for financing.

One glitch was admitted by Christensen, that FPC had yet to sign a lease with the Bucks — seven months after the city approved the project. Which suggests the team wants more money for use of the land than FPC is willing to pay. And without the lease, it won’t be possible to get financing.

Even without that obstacle, industry observers express strong doubts that FPC Live has or will be able to secure financing. “It’s not going to happen,” says one source. “Banks are steering clear even of lower risk projects. Financing is drying up.”

They pointed to the Pabst Theater Group‘s decision to drop its plan to partner with the music industry’s second-largest player in the nation, AEG, on a 3,500-capacity, music venue that would be part of the proposed Iron District MKE. The project probably couldn’t get financing, the observers say. Gary Witt, the Pabst Group’s executive director, did not respond to requests for comment.

But the FPC project, a 108,000-to-110,000-square-foot complex with two concert spaces —one with a capacity of 4,000 people, the other with 800 — is more ambitious. Plant’s comments on a dramatic increase in costs suggest the price tag may have risen to as high as $55-$60 million.

You might think Live Nation, which owns 51% of FPC, would provide some financing, but Plant has never suggested this is a possibility. Even if FPC could afford to pay a 30% to 35% down payment, that would leave $36 to $39 million to raise, which at an estimated 8% interest would leave the company paying several million dollars per year in principal and interest costs.

That’s a lot of money for a challenging industry like live music venues. “In general, music venues have relatively low profit margins, with most falling in the 5-10% range,” as one analysis noted.

The collateral for the loan would be the concert complex, which the bank could foreclose, but that would have a low resale value, as one real expert told Urban Milwaukee. “The FPC building does not include the land,” the source noted, “as the Bucks own that property and are doing a ground lease. There’s also no parking lot, which hurts resale value. It would be difficult to resell this building for $20 million if it included the land, which it doesn’t. I can’t see any lender financing more than the collateral is worth. Nobody wants to get stuck holding the bag.”

But Christensen insists the complex will still be built: “We are full steam ahead on our project and look forward to opening our doors to Milwaukee.”

Renderings

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