About that Miller Park Economic Impact

If you wanted a study to prove a professional ballpark, arena or stadium had a big fat economic impact, you couldn’t do better than to hire the Plano, Texas company called Conventions, Sports & Leisure International. Yes, CSL has done many such studies for a long list of pro sports teams along with helping some of them develop “a negotiation strategy” to gain taxpayer subsidies from the government in their particular metro area and state. Their latest client is the Metropolitan Milwaukee Association of Commerce, who hired CSL to look at the economic impact of Miller Park and the company came through once again, with a report claiming a total impact over the last 19 years of $2.5 billion.

For decades these sorts of reports have been panned by actual economists who study the issue. As a story by Marketplace reported: “There are a lot of things economists disagree about, but the economic impact of sports stadiums isn’t one of them.”

“If you ever had a consensus in economics, this would be it,” Temple University sports economist Michael Leeds told the publication. “There is no impact.” 

Leeds research found that “if every professional sports team in Chicago were to suddenly disappear [including the Cubs, White Sox, Bears, Bulls, and Blackhawks] the economic impact on Chicago would be a fraction of 1 percent.”

In their watershed book, Sports, Jobs, and Taxes, Roger Noll and Andrew Zimbalist presented a comprehensive review of stadium investments, which found that in all cases, they have extremely small (or negative) effects on overall economic activity and employment.

This latest report, like most of their ilk, ticks off the spending by fans at the stadium and nearby restaurants and bars to get most of the impact, which is problematic, economists says, because if the fans were not spending on the Brewers or Bucks, they would spend on museums, movies, concerts, theaters or restaurants. The reality is that most consumers have limited entertainment budgets, so dollars spent at a new stadium are not new spending but simply spending diverted. 

CSL is clearly aware of this critique and has come up with a crafty way to head off the criticism, surveying a “randomly selected” sample of Brewers fans. Given that they are supposed to be representative of the 51.3 million fans who attended Brewers games over a 19 year period, it would be useful to know how many such fans were surveyed, in what year or years, as well as including the raw data on their answers to questions, none of which is included. Whatever the number surveyed, they were asked how they would have spent their money if not on the Brewers and would you believe it, 47 percent said they would have saved or invested it! Another 9 percent said they would have spent it on something outside the state. 

So the study concludes only 43 percent of the spending at Miller Park would have happened anyway, leaving 57 percent it can count for the stadium’s economic impact. Leaving aside the question of whether it wouldn’t be better for our economy if these Brewers fans had invested their money, say in some productive companies that truly drive the economy rather than relying on huge tax handouts, the idea of taking their word for it that only the Brewers could have captured their entertainment dollar seems a shaky way to estimate spending that is then hiked up through an economic multiplier whose details are murky. 

The more solid numbers here, from Brewers historic attendance data, shows only 14 percent of fans come from out-of-state, and just 41 percent of that group stayed overnight (according to that survey) suggesting most drove up from Illinois. As for those who stayed overnight we don’t know how many are tourists to Milwaukee who would have come anyway, and decided to attend a Brewers game. As for the 48 percent of fans who were Wisconsinites from outside Milwaukee County, we aren’t told what percent of them are from southeastern Wisconsin, most of whom probably drive back and forth from Miller Park without spending any money in the city. 

And so it goes with this report. Based on that randomized sample we’re told that 95 percent of fans came for the primary purpose of seeing the Brewers game though 17 percent gave other reasons as their primary purpose. That gives me 112 percent. 

The report repeatedly cites the direct spending and employment by the Brewers team itself, but as Leeds has noted, “A baseball team has about the same impact on a community as a midsize department store,” with the number of jobs created actually smaller than at a midsize department store. 

And most of the payroll goes to the millionaire ballplayers, which presents a huge problem of “leakage,” economists note, as the players are constantly on the move, with half of their seasons on the road, and a long off-season typically spent in another state, meaning little of their spending occurs in the home state. 

The study claims Miller Park helped trigger such development in the Menomonee Valley as the Potawatomi Casino and the Harley Davidson Museum, which are located far from the park and closer to the redesigned and lowered 6th Street Viaduct, an initiative under Mayor John Norquist that opened the area to development, along with the efforts of the Menomonee Valley business district. 

As for the idea a sports team creates spinoff development, “Studies consistently find no discernible positive relationship between sports facility ­construction and local economic development, income growth, or job creation,” as Brookings Institution senior fellow Ted Gayer, co-author of a detailed report on this issue, told The Week.

“There are numerous reasons for the muted economic effects,” a story in Atlantic noted. “The biggest is that arenas often sit empty for a significant portion of the year.” There are only 81 Brewers games a year.

The report also claims an economic impact from the media’s mention of Milwaukee in stories about the Brewers, something which has always been a hard-to-measure claim, but CSL goes a step further, adding an impact of $38 million for the State of Wisconsin to the $132 million it claims for the city. Just how was this state impact derived — exactly how often was Wisconsin mentioned by the media over the last 19 years? — is never explained. 

And the cost for taxpayers of all this nebulous economic impact? The study notes the stadium cost $392 million to build, but taxpayers have continued to pay for the lion’s share of maintenance and repair costs at the stadium. The report notes that a staggering $605 million in taxes has been collected to date. 

And that doesn’t include all the tax exemptions that have never been fully documented. Back in 2002 I did an analysis for Milwaukee Magazine that estimated the full 30 year cost of the stadium, including a half billion in local, state and federal tax exemptions, brought the stadium’s total cost up to $1.1 billion. That includes an annual property tax exemption on the stadium and land, federal tax exemptions on interest earned from stadium bonds and on lease certificates of deposit, state tax exemptions on lease certificates of deposit, interest on stadium bonds and materials used to build the stadium and state administration expenses for a new, five-county sales taxes.

Also missing from the study is a discussion of the “opportunity costs” — what that $605 million in taxes and half-billion in tax exemptions might have been spent on instead. The government, for instance, could have spent the money on infrastructure (airports, potholes, highways, and bridges) which could increase productivity by reducing the cost (in time and money) of transporting goods and people. Or imagine if just half of that $605 million had been spent instead on support for startup businesses: how much greater would be the economic impact and jobs created? 

It’s sad to see the Metropolitan Milwaukee Association of Commerce, which is supposed to be teaching the community about the value of business, standing up for such a piece of puffery as this “study,” which will join a long line of reports meant to justify the blackmail of local citizens forced to subsidize their monopoly sports team or lose it to another city. 

As for the Milwaukee Journal Sentinel, which gets most of its ever declining readership and revenue from sports coverage, it duly reported the study’s conclusions, along with laudatory quotes from MMAC leader Tim Sheehy and Brewers president of business operations Rick Schlesinger. No actual economist, or anyone with the least doubt about the study was interviewed, nor was there a link to study so readers could check out the basis for its findings.

But reporter Tom Haudricourt, whose job is to cover baseball for the JS, did offer a quote from Sheehy warning that just because the sales tax has finally ended doesn’t mean we won’t continue to get gouged by the Brewers. After all, the stadium was only planned to last until 2030 and in the years after that you can expect a discussion of building a new venue. “We’re not trying to scare anybody,” Sheehy warned. “But we’re going to have to continue to make that kind of investment because it never ends.”

(For another take on this report, check the analysis by Neil deMause at Field of Schemes.)