Marcus Performing Arts Center Struggling Financially

Marcus Performing Arts Center. Photo by Jeramey Jannene.

The Marcus Performing Arts Center is not ready to sever its relationship with Milwaukee County taxpayers.

MPAC, the 55-year-old, downtown art center, is reporting that it has spent the last few years spending down its cash reserves as it struggles to bring in revenue. It was supposed to cut financial ties with the county in 2026, but it’s unlikely the organization will be ready to do so.

MPAC wants to extend its funding agreement with the county. Unfortunately for MPAC, the organization’s plea comes at a time that county policymakers are looking to cut spending on arts and culture.

Milwaukee County owns the building at 929 N. Water, which is operated by MPAC. The privately-built center opened in 1969 and was deeded to the county, to be held in trust for the public and to support the performing arts.

In 2015, a plan to transfer ownership of the building from the county to the Wisconsin Center District was added to state legislation financing the new Milwaukee Bucks arena. A year later, the county board finalized a funding agreement with MPAC that stated the county would stop providing funding if ownership was transferred to the district.

In light of this agreement, MPAC and the county successfully sought a repeal of the state legislation authorizing the ownership transfer.

The long term plan was for the county to provide MPAC with the assistance it needs to sustainably run the center on its own, assuming greater and greater responsibility for financing operations and maintenance. Under the 2016 funding agreement, MPAC will receive its final payment from the county in 2025.

However, MPAC won’t be ready to end its financial relationship with the county at the end of 2025, according to a June letter from MPAC CEO Kevin Giglinto to the county board.

An MPAC representative could not be reached for comment prior to publishing.

“The current operating agreement will expire at the end of 2025, and it is imperative that we establish a new agreement to ensure the continuity of our operations,” Giglinto wrote. “The County’s investment in our physical infrastructure has been substantial, but the reduction in operating contributions since 2016 has been a further strain on our finances.”

Per the funding agreement, county has been steadily reducing its annual operating support for the center since, going from $950,000 in 2016 to $550,000 this year.

Revenue for the center has been impacted by several unforseen occurrences since the 2016 agreement was signed. The center closed for 18 months during the COVID-19 pandemic and attendance has not returned to pre-pandemic levels. Ticket sales account for approximately 60% of the center’s annual revenue.

In 2021, the Milwaukee Symphony Orchestra left the performing arts center, which has cost MPAC approximately $1 million in annual revenue since, Giglinto said.

The planned redevelopment of the parking structure site at 1001 N. Water St., which MPAC leases from the city, will impact the organization’s revenue by an additional $650,000 annually.

“While we believe that the current operating agreement was signed with the best intentions of putting MPAC on a financially sustainable path, the subsequent events have undercut the original assumptions of where we would be as an organization ten years later,” Giglinto wrote. “To ensure MPAC can continue to serve as a cultural anchor, we will be requesting the County’s continued financial support to help bridge the funding gap and support our transition to a more sustainable model.”

The county has financed approximately $14 million in infrastructure improvements at the center over the past two decades, and since the 2016 funding agreement, the county has provided approximately $5.9 million in operating support.

However, the center has been relying on cash reserves to maintain operations in recent years. “Without significant action and continued support, we project a negative cash position by 2026,” Giglinto wrote.

The center is already projecting a $2 million budget deficit for 2024 by the end of the year.

MPAC has “significantly ramped up” fundraising, leading to a 257% increase in donors. The organization is also expanding community outreach and trying to diversify its audience and programming, refinancing debt, investing in new technology for ticketing and fundraising that should improve revenue and maintaining “stringent cost-control measures,” Giglinto said.

“While our new business model shows promise with fundraising growth supporting diverse programming and community activities, it will require time to transition fully,” Giglinto wrote. “During this period, we will continue to experience financial strain as we work to increase our fundraising capacity and diversify our revenue streams.”