Bruce Murphy
Murphy’s Law

The Eternal Stadium Tax

It was originally supposed to end two years ago, but the Miller Park sales tax just goes on and on.

By - Jul 27th, 2012 08:49 am
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Miller Park

Miller Park

It’s the tax that never seems to end.

In 1995, the state legislature passed a law creating a new five-county sales tax to underwrite a new stadium for the Milwaukee Brewers. At the time, the tax was expected to sunset in 14 years, in 2010. Yep, that was two years ago, and the sales tax just keeps getting collected, and its sunset date moved back. The latest estimate for its end is 2018 — six years from now.

The tax has operated as something of slush fund that can be grabbed to pay for everything from a new scoreboard for the Brewers, installed in 2011, to $1.6 million worth of PR help for the public stadium authority.  A year ago, Tim Sheehy, head of Metropolitan Milwaukee Association of Commerce, floated the idea of extending the tax to pay for new NBA arena, which could cost as much as $500 million. The idea was shot down, but you can probably expect a few more grabs at this slush fund.

A decade ago, I did a story for Milwaukee Magazine that tabulated all costs of the ballpark, including countless hidden tax subsidies: the total bill was more than $1 billion, or $1,585 for every household in the five county area.

In the early years of the ballpark, the state’s Legislative Audit Bureau did updates of the escalating costs. But it’s been nearly a decade since its last report, and we can only guess at what lovely new amenities we taxpayers are bankrolling.

The Southeast Wisconsin Professional Baseball Park District began imposing a 0.1% sales tax in Milwaukee, Ozaukee, Racine, Washington and Waukesha Counties on January 1, 1996. The original cost was supposed to be $250 million for construction of the stadium, with $90 million coming from the Brewers, plus $72 million for infrastructure.

But it turned out the Brewers couldn’t come up any money, besides $40 million in naming rights the team would be paid by Miller Brewing, so there was a scramble to throw in more money, with $15 million coming from the city’s Milwaukee Economic Development Corporation.

Meanwhile the board of the public stadium district, which oversees the project, began to creatively expand the parameters of how it could spend our money. Legislators thought the $250 million would pay to construct an entire ballpark, but the district decided to lease such items as a scoreboard, roof-drive mechanism, concession equipment and furniture, adding some $45 million in costs, the audit bureau estimated.

Other unexpected costs itemized by the audit bureau included a $28 million increase in infrastructure costs, some $15 million (over five years) for the stadium authority’s administrative and operating costs, and $4.9 million on furniture and equipment the Brewers requested, including a whirlpool bath, ice machines, sauna and steam room, batting and pitching machines, exercise equipment and video coaching system — all financed through the generosity of the taxpayers.

The stadium authority also thought it a fine idea to build a $3.3 million youth ballpark on the stadium grounds, with $1.1 million of it coming from the stadium tax.

A story I did for the Milwaukee Journal Sentinel in 2002 found the stadium district spent some $1.2 million on outside public relations consultants during a time it was also spending $230,000 on a full-time communications director. Of course, with all the spending it was doing, it probably needed a lot of help with its image.

In the years since the audit bureau’s last report, no outside analyst has been tracking the district’s spending. A new scoreboard, installed in 2011, cost $11 million, of which half was apparently paid for by the taxpayers. A Journal Sentinel story also suggested that taxpayers may have helped pay for refurbished luxury suites, added party areas and new team stores overseen by the Brewers, but the tax bill wasn’t tabulated. Did we taxpayers help finance upgraded stadium club patios, new signage and a new chalet for Bernie the Brewer? Your guess is as good as mine.

Meanwhile, the tax’s sunset date keeps moving forward: as early as 2000, it was pushed back to 2014. In 2010 the estimated date was moved back to 2015. Since then sundown has been moved back to 2017 or maybe 2018. The economic decline and reduced sales tax collections are one factor. But how much of the delay is due to increased costs?

Occasionally, legislative frustration with the endless tax has surfaced. In March 2008, two Republicans, Rep Robin Vos (Caledonia) and Sen Alberta Darling (River Hills), proposed setting a 2014 deadline for sunsetting the tax. The idea went nowhere.

Legislators from Racine County have been particularly restive. The county’s voters have always resented the tax and recalled former state Sen. George Petak for casting the deciding vote in favor of the stadium bill. In March 2010, Democratic state Sen. John Lehman proposed a ticket surcharge be collected from ballpark attendees to speed up payoff of the stadium debt. The Brewers politely rejected the idea. In May 2011 two Democratic representatives from the Racine area, Cory Mason and Bob Turner, sponsored a bill to remove Racine from the taxing district. Another idea stillborn.

The most recent estimates are that some $530 million will be paid by taxpayers by the time the sales tax ends. That leaves off a dozen or more items — more infrastructure costs and multiple tax exemptions — that helped pay for the stadium, whose costs my Milwaukee Magazine story estimated at more than $500 million.

Back in 1996, when the stadium district was created, the Brewers sold stock at a price which indicated the team’s net worth was $96 million. By March 2012, an analysis by Forbes magazine estimated the team’s value at $448 million. Most of that increase in value is a direct result of building — and continuing to improve — Miller Park. You might call us taxpayers the co-owners of the team. But don’t expect to be issued any stock.

 

Categories: Murphy's Law

12 thoughts on “Murphy’s Law: The Eternal Stadium Tax”

  1. Ed Werstein says:

    A home run.

  2. bruf says:

    Thank you, Bud Selig.

  3. blurondo says:

    Lest we forget, we, the dunned residents of the five county area have the generous pay-back of being able to see the “boys of summer” at half price for five meaningless games in April.
    It would seem that the residents of the five counties are entitled to more, much more.

  4. Rob says:

    The fact that the Brewers paid nothing out of pocket is ridiculous, but that shouldn’t detract from one simple point: a tenth of a cent per $100 tax produced an enormous amount of revenue. If it had went toward other proposed regional services (transit) that would have created substantial public AND private wealth.

    The Bucks and all other interested parties should look to Seattle for guidance on how to fund another arena. The current proposal caps the taxpayer contribution at $125/200M (NBA/NBA & NHL team), an amount which could possibly be shouldered by Milwaukee County alone as part of a full 1% sales tax increase (assuming Republicans actually believe in local control). I’m generally skeptical of how much spending capacity the region’s sports fan have — and how much of a boost it really provides — but at least this could ensure the Bucks stay in Milwaukee and requires Kohl to pony up a responsible amount. He can’t take it with him, anyway.

  5. Mike says:

    Let’s not forget its location. Unlike myself, who had parents instilling me gratitude for even an unwelcome gift, Allan Bud nixed a downtown location where our “gift” might have parlayed some new nearby construction or businesses. Nope the proximity to our Inner City had Bud saying no, it must be where County Stadium sits. There has been zero new spillover business for our largess.

  6. Bill Sweeney says:

    Great article. Am I right in thinking that former Governor, now senatorial candidate, Tommy Thompson was a primary player pushing for the sale tax, and didn’t he play a key role in “persuading” Mr Petak to change his vote? Also, if it were possible, wouldn’t it be interesting to count all of the people in the 5 county area who have never ever set foot in Miller Park, let alone attend a game there. Not quite taxation without representation but close. And to tax my failing memory once more, did’t an overwhelming majority of Milwaukee voters vote to have a slight increase in the sales tax to pay for mass transit, and wasn’t this overridden by the Republican State legislature, and signed by Governor Walker?

  7. Bruce Murphy says:

    Yep, Thompson was the key man pushing for this and made his famous statement, “stick it to them,” encouraging out-state voters to support a vote by their legislators to approve the 5 county tax (which was never voted on by the counties themselves, speaking of taxation without representation). A less-than-overwhilming majority of county residents did vote for a sales tax increase for transit and the parks, which the legislature declined to approve. Finally, it’s worth noting that prior to passage of the stadium, an overwhelming majority of state voters voted against any handout for the Brewers.

  8. Tom says:

    The most disturbing part of miller park is how the Selig family took tens of millions of tax dollars from hard working Wisconsin tax payers. Mr. Selig, in fact cut the payroll when the brewers took the field at Miller park. While telling fans that a new ballpark was required to make the team competitive and that the added revenue stream would allow the team to increase its payroll. And then Mr. Selig proceeded to sell the team with a higher multiple based in the new revenue and profit stream the new park generated. Quite a transfer of wealth from Wisconsin tax payors to the selig’s. Now one in the media likes to touch this because the man is revered and even has his own statue.
    One could argue that the benefit of the ballpark was mostly lost when new ownership (Mr. Annatasio?) had to buy the club with more debt to finance the higher selling price. The higher revenue stream to fund ball players salaries was instead paid back to the selig’s based on selling the team after the new park was put into service.

  9. Bruce Murphy says:

    Tom, I have in the past estimated the pay-off to Bud Selig from selling the team at $33 to $36 million, as he owned an estimated 28%-30% of the team. The total payout to owners (minus the debt they paid) was $120 million. It looks like Attanasio will do even better, given the remarkable escalation in value since he bought the team.

  10. Tom says:

    I am one of those people who never set foot in Miller park and really don’t care to watch sweaty men chase each other around on the grass. This tax infuriates me! We were initially told that the revenue was also going to help lower property taxes due to the revenue brought in by the Brewers – this of course never happened. Why do I have to pay for everyone elses diversions?

  11. getch says:

    @ Tom, Miller Park is a great venue. Its a good stadium to watch baseball games and also a great place to see other events, such as Farm Aid, two years ago and another non-baseball event happening there on August 11th, Field of Honor. I do not mind paying the extra sales tax, I am a MKE county homeowner. I wish the people in charge would use the money more wisely, but that seems to happen with tax payer dollars frequently. The Brewers have a large payroll and that is not just the players, but every single person employed by the brewers. They also seem to give a lot of money back to the community with their charity activities, from 50/50 raffle to concession stands being operated by non-profits who get a percentage of the sales of that stand. With that being written, it sounds like you just dislike baseball, and now having to pay for it puts you in a frenzy. If the sales tax does continue for a Bucks Arena, I think the sales tax should only be in MKE county, and not the surrounding counties. I was originally against a new bucks arena, but after understanding how it affects so many people and businesses(JOBS), that changed my mindset.

  12. PaulS says:

    Next time the word “welfare” makes an image of an African-American woman pop up in your mind, maybe temper that with the visage of Miller Park. There always seems to be tax money for shrines and never enough for groceries.

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