The Wile E. Coyote of stadium consulting takes on Brewers’ stadium, gets crushed by anvil

I (and you, if you read this site regularly) didn’t have to go much beyond the headline on this Milwaukee Business Journal story — “Miller Park has delivered $2.5 billion impact to Wisconsin, study shows” — to figure that it’s probably nonsense, for all the usual reasons: economic “impact” doesn’t really mean anything, most sports spending is just cannibalized from other local entertainment spending, and most economic impact reports are garbage. But you will be glad if you do, as I was, because then you will discover who wrote the report that was responsible for the rose-colored headline:

An independent study released by the Metropolitan Milwaukee Association of Commerce Monday shows Miller Park has generated $2.5 billion in economic output since 1999. It officially opened in 2001.

Miller Park and the Brewers delivered valuable exposure to the city during the 20-year period, according to the study performed by Conventions, Sports & Leisure International, including $131.8 million in media value. It also brought in out-of-state dollars, which include visiting teams and fans, and fans from across Wisconsin who do not live in Milwaukee or Milwaukee County.

Oh hell yeah, it’s everybody’s favorite incompetent cartoon supervillains, CSL! In this case, they were hired by the local chamber of commerce — surely a disinterested body if ever anyone has seen one, even if the Brewers are a member — to show how the people of Wisconsin’s gift of $310 million to one Bud Selig for a new stadium was totally worth it.

The chamber allows for downloading the full study by clicking on the “Download the Full Sudy” (sic) button on its website, so let’s see what the report has to offer:

  • “Cumulative net new impacts to the State … “totaled approximately $2.5 billion in total output, $1.6 billion in direct spending, $263 million in new taxes, 1,835 total annual jobs, and $1.2 billion in personal earnings.”
  • 86% of Brewers game attendees were from the state of Wisconsin. Of the others, 95% said their main reason for going to Milwaukee was to see a Brewers game.
  • That $2.5 billion in “total output” over the last 20 years comes from $448.2 million from construction, plus $152.5 million a year from new spending by fans who otherwise wouldn’t be spending in town.
  • The $152.5 million a year, in turn, is an estimate based on a multiplier effect (in essence a calculation of how much spending generates more spending when the places you spend your money then turn around and pay workers who then spend that money, etc.) applied to $99.4 million a year in actual spending.

Let’s do a smell test on that $99.4 million a year. If 14% of Brewers game attendees are from out of town, and they sell maybe 2.7 million tickets a year, that’s 378,000 people. To generate $99.4 million, each and every one of those people has to spend $263 per game, meaning no doubling up on Airbnbs. And, of course, these need to be people who would not have gone to see the Brewers if they were still in their old stadium.

And, of course, that’s just total money changing hands in the state of Wisconsin, not actually money that Wisconsin taxpayers get back in their pockets. To see that, we have to take a look at CSL’s estimates for net new tax revenue:

  • “Over the course of the previous 21 years, it is estimated that the operations of the Team and Ballpark have generated approximately $262.9 million in net new tax revenues to the State, $25.2 million to the County, and $24.3 million to the City.”

Another way of look at this then, is: In exchange for $310 million in cash in 1999 dollars, if you squint and make a lot of optimistic assumptions about out-of-towners and how much they’ll only spend if offered a new stadium to visit, the state of Wisconsin has gotten back $292.4 million in tax revenue, over the course of 21 years, meaning taxpayers have taken a loss on the deal, we’re just not sure how bad of one. That would arguably be more honest, but it also wouldn’t get CSL more chamber of commerce contracts if it made that the headline, so of course it didn’t play that up!

Or we could call up a legit economist, like the Wisconsin politics site The Center Square did, and see what they have to say about the CSL report:

“I refer to [CSL’s] approach as a ‘benefits-only analysis’ because it’s fundamentally one-sided; it never counts the negative economic impact of the taxes needed to fund the subsidy in the first place. And, unsurprisingly, it’s pretty easy to make arguments in favor of an idea if you ignore the cost,” said Dr. Michael Farren, a Research Fellow at the Mercatus Center at George Mason University. “At the end of the day, peer-reviewed academic research consistently finds that subsidies, especially stadium subsidies, don’t work very well to create economic development, and may even reduce it in the long-run.”

Really, Keith Law’s response is probably the best. But if you want the hard, cold numbers to back up your kneejerk derisive laughter, feel free to reference the above.


19 comments on “The Wile E. Coyote of stadium consulting takes on Brewers’ stadium, gets crushed by anvil

  1. The deaths of three men building what amounts to nothing more than a “glorified shopping center” for a professional sports franchise, touted as an economic engine for the city of Milwaukee by the Chamber of Commerce, is a very sad commentary this nation’s throw away society places on the value of human life.

  2. Well, when you consider the fact that the average payroll of the Brewers’ players went from $20 million annually to 70+ million annually after Miller Park, then yes, it’s been a economic bonanza to Milwaukee, providing the players live and spend in Milwaukee, including off season and in retirement. Public financed stadiums: welfare for millionaire athletes.

  3. Milwaukee Brewers opening day payroll in 2019 $108,403,700. Their 2001 payroll in 2019 dollars was $62.3 M. You have dramatically overstated the increase.

    The Marginal Propensity to Consume for households earning over $119K is only .435 (Fed Reserve of Boston data). It is much less for people earning over a million dollars. Economists in general need to understand how much rich people spend because so much money goes increasingly to rich people but I do not know an exact MPC for baseball’s millionaires. I suspect it is likely less than .1.

    So an extra $40M is likely to result in around $4M in increased spending. How much of that is spent locally? Well, extra money can be spent on travel/commuting options so there is a chance extra money decreases money spent locally. Baseball players are decreasingly full time residents in the place they play.

    The city of Milwaukee has no income or sales taxes so they get nothing extra even if there is more spending. The city and county have property taxes so if leaving near a Brewer is a draw than maybe they will catch a few extra bucks. The state of Wisconsin’s max income tax rate is 7.65% so they could collect $306K more money but they are not likely full time residences or pay the max effective rate.

    So, maybe if you spend $310 million dollars you might get a few extra bucks (no pun intended) from players but if decided on spending. If you spend $310 million on just about anything else your return would be much to hugely greater

    • While much of economic theory is open to interpretation (honest or otherwise), one of the few things I consider to be settled is that the single best use of “subsidy” money is directing it to the poorest in any area.

      Subsidizing the wealthy might stimulate the Swiss or Italian economies, but it does little for Pittsburgh, Milwaukee or Wichita Falls. If you distribute the same amount of money among the poorest of these locations practically ALL of that subsidy money will be spent in the home city. The vast majority will be spent within the neighbourhood in which the individual lives (better food, better healthcare, better clothes and improved housing) also.

      That’s the multiplier effect working as it’s supposed to. Using tax dollars to bridge the gap that keeps a millionaire from buying a ‘better’ Ferrari than s/he was going to purchase or allows them to vacation at a better resort in the South Pacific than they would otherwise go to literally does nothing for the economy.

  4. One could reasonably argue that 9 or 10 times a year, they’re getting revenue from Cubs fans who couldn’t get to Wrigley. They could play ball games in a rust bucket like County Stadium and still generate attendance figures AND saved the taxpayers $310 million to help their local community.

    Of all the reprehensible things that Selig did in his tenure as commissioner, robbing a city of millions of dollars ranks way up there.

    • I went to a game at County Stadium in its final season, and it wasn’t rusty at all — it reminded me a lot of Wrigley without the ivy, in fact. Nice catwalks to get to the cantilvered upper deck!

        • There may have been posts, but the front of the upper deck was absolutely cantilevered:

          https://upload.wikimedia.org/wikipedia/commons/1/1e/CountyStadium2000FirstBaseSide.jpg

  5. Well, I sent Neil 25 bucks last year, which is pure economic impact, so we’re all better off. Including me. I feel richer already.

        • Unfortunately, FoS and Mr. DeMause are under the ownership umbrella of BUST-UP Holdings, LLC. If you have any issues with FoS or Mr. DeMause, please contact us at the following snail mail address.

          Brooklyn Understands Stadium Transactions – Unexplained Taxation Holdings, LLC
          1209 North Orange Street
          Wilmington, Delaware 19801-1120

  6. 14 percent are from out of state, not town. You might pretend that people from Ozaukee would come to Milwaukee to see the Public Museum of there were no baseball you should say it. Your analysis is.misleading.

    If you want to suggest Milwaukee is cannibalizing the rest of the state, man up and say it. Indeed, bring it on. But your analysis is as misleading as CSL. Which makes it a waste of time.

    • By “out of town” I didn’t literally mean “outside of Milwaukee” — substitute “out of the state” there if you prefer. In any case, the $99.4 million a year figure put out by CSL is for the state of Wisconsin, and the 14% visitors stat is likewise for the state of Wisconsin, so it’s still apples-to-apples here.

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