Category: Milwaukee Brewers

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.

It looks like the MLB owners’ vote on the Oakland A’s move to Las Vegas is going to wait until Thursday, but during the lull the Wisconsin legislature approved their own nine-figure stadium subsidy, for the Milwaukee Brewers. Members of the state senate, which voted 19-14 to join the assembly in supporting the bill, had previously indicated that they wouldn’t sign on unless Brewers owner Mark Attanasio had to cough up a bigger share of the cost, so let’s see what they got:

An amendment approved Tuesday requires a $2 fee for events like concerts — with the amount rising to $8 for a ticket that allows access to “a stadium luxury box or suite.” The amendment increases the surcharge on non-Brewers events to $3 starting in 2033 and to $4 starting in 2042. The fee for box or suite tickets will increase to $9 starting in 2033 and to $10 starting in 2042.

Okay then! The $2 non-sports ticket tax and the $8 luxury suite ticket tax were already part of the previous version of the bill that couldn’t win passage last week, so the only difference is an extra dollar per ticket starting ten years from now and another dollar ten years after that. It’s a little hard to determine exactly how much that’ll be worth to Wisconsin taxpayers without knowing how many tickets will be sold, but given that the two tax surcharges together were only originally supposed to be worth about $8 million in present value, plus the way that time works, we’re likely talking about less than $5 million in additional new taxes. At best, then, the senate’s haggling brought the total public cost down from $440 million to perhaps $435 million.

And there was much rejoicing:

“We’re investing long-term in a state asset and ensuring that state taxpayers are coming out ahead,” [Senate Minority Leader Melissa] Agard said on the Senate floor ahead of Tuesday’s vote. “We’re working across the aisle — with partners inside and outside of the Capitol, with local governments — to ensure that a foundational, iconic part of Wisconsin remains in Milwaukee.”

Looked at another way, the senate just helped set the price for how much governments are willing to give up in tax kickbacks to keep a team from even thinking about leaving town, and it’s $435 million for a 20-year lease extension. That may not be the worst deal in recent memory — Maryland, let’s not forget, is plunking down at least $750 million to guarantee 30 more years of the Baltimore Orioles — but it’s still a ton of money for a stadium that is only 22 years old and only cost $400 million to begin with. The business model for running a sports team, don’t ever forget, isn’t just to use your cartel power to extract money to get a new stadium; it’s to use that power to keep getting more money, again and again, until the sun burns out. Stadiums are 100% the grift that keeps on giving, and nobody’s going to stop taking advantage of it until somebody makes them stop. It would be nice if elected officials would read the room and see that these public subsidies tend to be massively unpopular, but if lobbyists have their ear more than constituents, flaming torches and pitchforks are always an option.

It looks like last week’s tweaks to the Milwaukee Brewers stadium renovation subsidy bill haven’t been enough yet to win a majority of votes in the state senate. Tim Lakin, chief of staff for Republican bill co-author Sen. Dan Feyen, told the Milwaukee Journal Sentinel, “I’m hopeful that we can get to 17 votes by Tuesday,” which means he didn’t have 17 votes on the 33-member body when he said it.

For one, Democratic Senate Minority Leader Melissa Agard is still opposed, though she said she’d potentially support the bill if the state’s share of the cost, currently around $300 million in present value, was reduced further (she didn’t say by how much) and Milwaukee got more members on the board of the state stadium district. Democratic Sen. Kelda Roys likewise said she’d “like to get to yes” but “I can’t swallow the massive size of the public spend, nor the lack of board representation for the city and county and legislative Dems,” so it sounds like at least some bill opponents are in line with each other in terms of their asks.

Counting city and county money, the total subsidy package is currently worth about $440 million in present-value public money. Brewers owner Mark Attanasio would put up $150 million, though $100 million of that would be spread out in annual rent payments, meaning the total value could be as little as $100 million, or less than 20% of the total cost. Most of the money, according to the Journal Sentinel, would be used for luxury suite and concessions concourse renovations that would help “provide a unique space for socializing while the game becomes background entertainment” — that’s the Brewers consultant’s words there, they said it — which, needless to say, would benefit Attanasio’s stadium profits while taxpayers would see no revenue from the increased hobnobbing.

And then there’s this:

Some lawmakers who voted in favor of the deal in the committees conceded the package is a hard sell to their constituents, but said they’ve ultimately concluded it’s worth doing in order to keep the team in Milwaukee through at least 2050.

So, constituents — only 29% of whom think it’s worth spending any public money on the Brewers at all — think it’s worth risking the team leaving rather than giving Attanasio $440 million? Or they don’t think the Brewers would leave? Or they think the Brewers would agree to stay for less? Maybe somebody should ask them before handing over $440 million in public money for their own good? Lots of questions, but I’m guessing no one will be asking them — to constituents or anyone else — before the senate votes on this bill, potentially tomorrow.

 

The Wisconsin Senate government operations and joint finance committees added a bunch of amendments yesterday to the Milwaukee Brewers stadium renovation subsidy bill in an attempt to trim public costs slightly. Let’s attempt to understand what they all mean, together!

• Two of the state’s last three payments to the team, in the years 2044-46, would be eliminated. The payments were previously reported as $20 million a year, but now the Wisconsin Examiner says eliminating two of them would only save $20 million total; it can’t be that the Examiner is using present value numbers, because the present value of $40 million 22 years from now is about $13 million, so that doesn’t match up either. It’s possible that the last few state payments are set to be lower — the Examiner talks about the final payment being $10 million — but ¯\_(ツ)_/¯.
• A $2 ticket surcharge would be added to all non-Brewers events, raising an estimated $14.1 million through 2050. (Some quick math indicates that this assumes about 175 sold-out events over the next 27 years, or 6-7 a year, which is actually within the realm of possibility, at least.) That’d be about $8 million in present value.
• The Brewers would pay about another $10 million in rent through 2050.
• There would be an $8 surcharge on luxury boxes and suites — per suite per game? per ticket? No one is saying, nor do press reports indicate if this would go to the state or to underwrite the team’s increased rent payments.

So that all adds up to … gonna go with “not much,” though it could reduce the previously estimated $471 million price tag to maybe $440 million, depending. That’s better than when it was $507 million two months ago, but also nothing to get too excited about, which is pretty much exactly where many state senators seem to be landing:

“I’m not going to tell you anybody loves it, but they’re kind of where I’m at … [it makes more sense to] keep the Brewers and come out hundreds of million dollars ahead at the end of the 2050 lease than to allow the Brewers to leave.” —Sen. Mary Felzkowski (R-Irma), who voted for the bill in committee

“It still falls short of where I think we need to be, but the amendment is a step in the right direction.” —Sen. Julian Bradley (R-Franklin), who voted against the bill

“This is a deal that has ballooned, almost doubled in size since the governor’s initial proposal. … We’re looking at it ongoing 27 years, millions of millions of dollars, not only from state taxpayers, but from Milwaukee and Milwaukee County taxpayers. Meanwhile, the Brewers are putting up about 21% of the total cost.” —Sen. Kelda Roys (D-Madison), voted against

With this much ambivalence, passage in the full senate is, unsurprisingly, still up in the air. A full senate vote is expected sometime next week.

Also this just in!

More news on the possible amendments being planned to the half-billion-dollar-ish Milwaukee Brewers stadium renovation bill as it heads to the state senate after passing the state assembly:

• Bill co-sponsor Rep. Robert Brooks said yesterday at a senate hearing that he may add a ticket tax on non-baseball events at the stadium — “everything from monster truck rallies to George Strait concerts,” in the words of the Associated Press — to help trim the public’s costs. Brooks didn’t say how much money taxing the occasional stadium concert would raise, but he did say that taxing the 81 baseball games a year that are the main programming at the stadium was a “non-starter” for team owner Mark Attanasio, so that’s gotta be off the table, I mean obviously.
• It’s also possible that Attanasio could be asked to put in more than the $100 million he’s currently expected to contribute, though no one is saying how much more.
• State Sen. Kelda Roys said yesterday that she wants to see more city and county members of the state stadium board, which, uh, that’s a choice, I guess.

Will all this add up to enough to get 17 votes in the 33-member state senate? Your guess is as good as mine. Will it significantly move the needle on the public price tag, currently standing at roughly $471 million? What do I look like, here, a crystal ball? (History says “probably” and “almost certainly not,” but there are always outliers.)

Meanwhile, Brewers president of business operations Rick Schlesinger said at that senate hearing, “The last thing I want to do is figure out a way to leave. … I’m not here threatening to leave. I want to be here.” This is a pitch-perfect rendition of the non-threat threat, best explained way back in 1996 by then-Miami Heat exec Jay Cross:

“We never threatened. We never said we’re going to leave. When people asked us what we’re going to do if we don’t win the referendum, we said, ‘We don’t know. We don’t know where we’re going to play. We don’t have a choice. We’ll have to look around.'”

That’s a good strategy not just to keep from being hated by everyone in town, but to avoid anyone fact-checking your possible relocation targets to, say, notice that the leading candidate just elected a mayor who ran on a platform of opposing stadium subsidies. So long as both local elected officials and local journalists keep falling for it, though, team execs would be crazy to change it up now.