Milwaukee magazine spent the holiday weekend diving into the newly passed legislation to give tax money to Brewers owner Mark Attanasio for stadium upgrades, publishing it on the day after Thanksgiving when no one was paying attention to anything. But poor calendar skills aside, what did the magazine find out?
What You Think You Know About The Stadium Deal Is Wrong
Okay, points off for publishing timing, points on, I guess, for clickbaity headlines that forgo conveying information in favor of forcing people to read the whole article to see what’s going on. Do tell, were our initial thoughts wrong because the deal is really worse than we thought, or better? Scroll, scroll, scroll:
Based on information from the nonpartisan Legislative Fiscal Bureau, the stadium legislation will cost the state $624 million in direct costs and lost revenue. The city and county won’t pay anything and will even come out money ahead, along with 67 other Wisconsin counties. The team will only pay $68.8 million toward necessary work and winterization, and all of its share could be offset by stadium naming rights revenue.
Numbers! That’s more like it! $624 million is a lot more than the $365.8 million in state money that was previously reported, and even more than the $435 million I calculated including city and county costs. How did Milwaukee magazine come up with that number?
- The state’s earlier calculations included $32.6 million in rent from the Brewers — but $8.5 million of that was already money Attanasio was on the hook for over the rest of his existing lease, and the rest of it will go toward stadium district operating expenses, not toward renovations.
- Part of Attanasio’s previously reported share will be $50 million for “discretionary” projects like golf simulators for fans, which were not part of the projected costs of actually keeping the stadium operational.
- Of the remaining $68.8 million in team costs, Attanasio was already obligated to pay $2.1 million toward a renovation fund through 2030, so he’s really on the hook for only $66.7 million — which he should be able to recoup by re-upping his $60 million, 15-year naming rights deal with American Family Insurance through the new end of his stadium lease.
The upshot here: Attanasio isn’t putting in much, if anything. What about the public?
- “Officially, the city and county are paying $67.5 million each. But the legislation reduces the administrative fee that the state charges for collecting the county sales tax, which is rising from 0.5% to 0.9%, and the city’s new 2% sales tax. That fee reduction is enough to completely wipe out both local governments’ contributions.” Meaning the state is now covering the city’s and county’s portions, following late tweaks to the funding bill.
- The state cost of reimbursing the city and county via the sales tax fee cut is $250.6 million, plus the state is giving up another $7.6 million by exempting building materials from sales tax. Adding that to the state’s previously reported $365.8 million brings us to $624 million.
- Moreover, notes the magazine, the stadium authority has another $20.8 million coming from a new non-Brewers ticket surcharge, $8.1 million from fees on Brewers-themed state license plates, and $35.2 million left in a renovation fund from the original Brewers stadium deal — if you add all those, the total state outlay comes to $673.6 million.
Except! While Milwaukee magazine has been comprehensive in totaling up all the tax money flying every which way, it has also committed the fiscal sin of mixing nominal value (total dollars over time, no matter when they’re spent) with present-day value (how much all the future money is worth right now). This is, as I’ve noted before, a bit like figuring out the cost of your new house by mixing together your down payment with all the mortgage payments you’re ever going to make, even if some of the latter aren’t due for another 30 years.
Trying to come up with a present-value figure for all of the state’s Brewers costs is a little tricky without seeing a spreadsheet of how much is expected to cost who what when, but let’s visit ye olde present value calculator and see what we can do. The state’s $60.8 million up front, plus $20 million a year for 20 years, comes to $310 million in present value. The $7.6 million in building material sales tax kickbacks would be mostly up front assuming the renovations mostly happen soon, so let’s count that as $7.6 million. The present value of the $250.6 million city and county fee reduction through 2050 depends on whether the fee reduction will cost the state more in subsequent years, but let’s figure somewhere in the $100-130 million range. The $35.2 million in the old stadium renovation fund is real 2023 dollars, while the event surcharge and license plate fees are spread out over time, so let’s call those another $50 million in present value.
That gets us to between $467 million and $497 million in state costs for Brewers stadium upgrades, which is slightly more than the $435 million previously calculated, but still pretty close. If nothing else, it’s a good lesson in how hard it is to come up with a single subsidy number for a development project, because so much depends on how you do the counting.
It’s still fair to say that upgrading the Brewers’ 22-year-old stadium and getting Attanasio to agree to stay in town for another 20 years is costing Wisconsin taxpayers close to half a billion dollars, which isn’t quite as bad as some other stadium renovation deals, but is still more than it cost to build the stadium in the first place — though it’s only about 70% as much if you account for inflation. Maybe let’s all just agree that the Brewers’ old owner, Bud Selig, got a huge pile of money in the late ’90s by threatening to leave town, and the Brewers’ new owner is getting another huge pile of money a little over two decades later by threatening to leave town. And unless things change dramatically in terms of how local U.S. politics work, you can probably pencil in another huge pile of money for the 2040s sometime. When you’ve gotten ahold of a grift that keeps on giving, it’s not worth worrying too much over the exact dollars and cents.
Why is the owner of the milwaukee brewers, get out of paying anything for maintaining American Family Park.? What a cheap ass, just put of good enough team on the field to compete, and that’s all. I will never go to another game there….Dale
Nobody cares Dale.
Trust me, it’s worth it. There are 10 cities lined up to take The Brewers if they were to leave.
“Lined up”
Name ’em…
1. Brockway
2. Ogdenville
3. North Haverbrook
I thought those cities were in the running to be the next home of the Coyotes.
The Brewers DON’T OWN American Family Field. They only LEASE it. The Stadium District Board which was put together by state officials own it. The TAXPAYERS technically oversee the Stadium District Board, which is WHY the TAXPAYERS are STUCK with BILL.
The only reason Attanasio doesn’t own the stadium is because he (well, really Selig) didn’t want to own it, because then he would have to property taxes on it. The Brewers own all the revenues from the stadium — including naming rights for a building that they don’t own — but are sticking taxpayers with the costs.
And then everyone’s complaining about education in Wisconsin….but lets spend $500mil. for a team that spends how much for Wisconsin?
Cheap owner needs to go
The Brewers DON’T OWN American Family Field. American Family Field is technically by the TAXPAYERS.
Also remember that the state is getting back money from taxing players and coaches from each team for every game played in Milwaukee. This is a minimum of 52 players (26 on each team) and coaches over 81 games that will be played in Milwaukee. There are people in the organization making large sums of money that are taxed in WI for their entire salary as well. I don’t have any figures but a would assume this adds up to a pretty penny that the state would be void of if the Brewers weren’t here.
It’s true that the ‘host’ state does generate tax revenue from both visiting and home teams/employees of sports franchises.
However, the calculation is not as simple as it sounds… if the state tax is 8% and the payrolls covered combined are $400m, it’s tempting to think of the money raised as (400m * 0.08)/2, or $16m. But virtually no-one outside of people in the lowest tax brackets pay based on gross income (and even there, there are often minimum exemptions).
When you are dealing with high income individuals like professional athletes and their franchise owners/executives, the calculations become even more woeful for the host states.
There are many shelters and loopholes available to high income individuals that the rest of us can only dream about. Apart from normal tax shelters that are defined and often approved by the IRS, these folks have many other options such as charitable foundations (a great way to take some of your playing years income and turn it into retirement income as an employee of your own foundation…) etc.
In addition, there is no guarantee that the “home” team players will pay tax on exactly one half of their income in Wisconsin. They may play half of their game there, but that is not the same as half their income (they don’t just get paid for games, of course, there’s travel, training and many other duties – real or purported). I don’t know what individual players or their accountants do in respect to taxes, but I do know it would not be all that difficult for Brewers player to make the case that they work and live in Wisconsin for less than 100 days out of the year and should be taxed accordingly.
It is not hard to imagine that a $20m pitcher – who’s notional state tax due to Wisconsin might be $800,000 – would pay as little as $200-225k in reality.
You are quite correct that it is still “money” to the state to have pro athletes working in it, but it’s probably not as much as people think (and certainly not as much as MLB and other leagues would like us to think).
It’s not poor calendar skills. Pretty common knowledge if you want to put something out that nobody will read, you do it on a Friday. Gets lost in the news by Monday.
I called the author some names here but apparently that isn’t “allowed”.
Not only isn’t it “allowed,” it isn’t allowed!
And yes, I suppose Milwaukee magazine could have been intentionally burying the story, but then why write it in the first place? I’m going with Hanlon’s Razor on this one.
Milwaukee magazine didn’t bury the story, the brewers did by releasing it on a Friday.
Keep up there champ!
The Brewers didn’t release anything. Did you read the part about “Based on information from the nonpartisan Legislative Fiscal Bureau”? Milwaukee magazine did all the calculations for this on their own.
Milwaukee and Milwaukee County both got seats on the Stadium District board, after only 23 years. The Stadium District is responsible for maintaining the Stadium. The team owns 36% and the District owns 64% of the stadium. You left out a few facts. The Brewers are paying $150 million, which is $10 million more than Gov. Evers original plan. It is also Milwaukee Magazine. I give you a B minus for your story.
AP Style is to use the name of the publication as it appears on the front page, and the magazine just says “Milwaukee.” So if you’re going by AP, it’s “Milwaukee magazine,” not “Milwaukee Magazine.”
As for how much Attanasio is paying, that’s from the magazine’s reporting, which is summarized in the first set of bullet points. Yes, he’s putting in $150 million over time (more like $100 million in present value), but a bunch of that is for things other than the stadium proper, and he’ll get naming-rights money to cover most of the rest, so “closer to $0” is 100% accurate.
I suppose that depends on how you account for the naming rights money.
The owner, presumably, has to show up for at least some of the meetings with prospective sponsors, so he may think that’s “his money.”
And if the name sponsor goes bankrupt, somebody that he employs would have to make a few calls and get a new one.
Privatizing public spaces is very hard work. Or so I’m told.