The world’s largest music festival is getting bigger. Earlier this week, Milwaukee World Festival Inc., the group that runs Summerfest, announced the offering of $25 million in bonds to fund a planned renovation.
The renovations will be undertaken in two phases and concentrated on a 22-acre space at the south end of the festival grounds.
“As the largest renovation project in the 43-year history of Summerfest, this initiative will create a world-class festival site and experience for people to enjoy for decades to come,” Don Smiley, president and chief executive officer of Milwaukee World Festival Inc., said in a statement.
The first phase of construction entails the building of a new stage with an estimated capacity of 7,000, according to the statement. Briggs and Stratton Corp., a Wauwatosa-based auto parts company, extended its existing sponsorship of Summerfest to 2020 and will sponsor the new stage, complete with picnic tables and bleachers to add to the backyard feel.
A new box office and a gate at the south end of the grounds are also planned, as well as a two-level structure for food and merchandise vendors. The first phase is scheduled for completion by the 2011 festival season, according to a Summerfest press release.
The second phase, which will commence after the 2011 festival, is still in the planning stages. Among the projects to be included in the second phase is the building of another major stage area to the north of the Marcus Amphitheater.
There are also plans for updated food and beverage stands, merchandise huts, restrooms and walkways. The second phase is slated to finish by June 2012, just in time for the 45th anniversary of Summerfest.
The bonds will be offered through the Redevelopment Authority of the City of Milwaukee, according to city spokesman Jeff Fleming.
“About a month ago, Summerfest made a presentation to the RACM on their plans to redevelop, and the bonds were approved,” Fleming said.
The partnership between the two is mainly based on the ability of the RACM to issue tax-exempt bonds, Fleming said.
“It’s not an unusual step for companies to work with the RACM to get tax-exempt bonds,” Fleming said.
Robert W. Baird & Co. is serving as the underwriter of the offering.
The bonds, which are exempt from both state and federal taxes, will have a maturity of 20 years, the press release said. Sold in increments of $5,000, the bonds will be rated and available starting next week.
Bonds are a form of investment, according to Manoj Kulchania, an assistant professor of finance.
“Generally, it works by investors buying rated bonds offered by companies for any number of financial reasoning,” Kulchania said. “Every six months or so, investors such as the Yuan Pay group are paid back a little before having their principle returned by the company through whatever revenue the company has achieved through way of bonds.”
Kulchania said the Summerfest bonds are attractive to potential investors based on their tax-exempt status.
Summerfest has been held annually since 1968 at the Henry Maier Festival Park. The 11-day festival attracts upwards of 1,000,000 attendees.
The festival spans nearly two weeks and hosts a number of big name performers — last summer’s lineup included Tom Petty and the Heartbreakers, as well as Carrie Underwood and Usher — on 11 stages.
Summerfest 2011 will be held June 29 to July 10, with the festival being closed July 4.
