How Much Do Brewers Benefit Milwaukee?

American Family Field. Photo by Jeramey Jannene.

You could argue that the most important job of Milwaukee’s mayor is to build the property tax base.

Yes, the mayor must maintain and improve police and fire, garbage collection, water and street maintenance services, among many other critical functions. But none of this is possible without money, and most of that comes from the property tax base. A tax base that isn’t adding to and increasing the value of residential, commercial and manufacturing properties is a city that will soon begin to decline.

You might think the Milwaukee Brewers and the team’s fancy stadium would be a big help with that effort. The most recent analysis by Forbes magazine estimates the team is worth $1.6 billion. But the team pays nothing to the city in annual property taxes. That’s because the state law creating the Brewers stadium entirely exempts the ballpark and its 265 acres of land from property taxes.

Which is a huge loss to Milwaukee. As an estimate by Urban Milwaukee has found, the property tax exemption on the stadium is worth $216.6 million over the 40 years (2001-2041) it was originally expected to last. The exemption on the 265 acres of land, mostly used for parking, is worth $483 million. That’s a loss of nearly $700 million over 40 years for Milwaukee and all its governments that depend on property taxes, including the city, county, Milwaukee Metropolitan Sewerage District, Milwaukee Public Schools and Milwaukee Area Technical College.

And the new proposal to maintain the stadium through 2050 will add another nine years in lost property taxes, a loss of some $175 million. The Brewers (and Milwaukee Bucks) do make payments to the city for police and fire personnel costs for events, but that still falls far short of what the baseball team would pay out if not exempt from property taxes.

And yet Assembly Speaker Robin Vos has claimed that Milwaukee is the primary beneficiary of the Brewers since the stadium is located within the city. He made the claim to explain why his proposal would exempt four of the five counties in southeast Wisconsin (Waukesha, Washington, Ozaukee and Racine) which previously helped pay for the stadium sales tax and make only Milwaukee pay for the new stadium subsidy. Would any of these governments want the stadium in their county if they couldn’t collect the usual property taxes?

Since Milwaukee had no city sales tax, it also got no payoff from any concessions sales at the stadium. And now that Vos and the Legislature have passed a law giving Milwaukee permission to levy a 2% sales tax and Milwaukee County to hike its .05% sales tax to .09%, they are requiring every likely dollar in estimated city and county sales taxes paid by the Brewers over the 27-year period of 2024 to 2051 — some $200 million — to be paid back to the team for stadium maintenance and improvements.

In short, Milwaukee will be stuck with all the local expenses and none of the local revenues, property and sales taxes, for a team with a state following, whose fans mostly (62%) come from outside the county,

The entire proposal by the Republicans is based on the fallacy that the potential departure of the team for another city would mean a loss of tax dollars and “economic impact” generated by a pro sports team. But the overwhelming consensus of economists is that these teams have almost no economic impact, and that a city like Chicago could lose all five of its pro sports teams and suffer little or no economic loss. That’s because consumers have only so much money for discretionary spending and this doesn’t change no matter what pro teams are located in the area. If the teams leave the consumer will spend on other things: sports bars, restaurants, concerts, movies, gambling, you name it, with about the same amount of money flowing into the economy.

The only analysts who claim an economic impact from pro sports are typically consultants hired by sports teams, such as the Texas company called Conventions, Sports & Leisure International, which has done many such reports (along with helping teams develop “a negotiation strategy” to gain taxpayer subsidies). The company was hired by the Metropolitan Milwaukee Association of Commerce to do a 2020 report claiming a huge economic impact for the Brewers, in preparation for their latest demand for a new government subsidy.

Once you accept the fallacious argument that there is a unique economic impact, then you can claim any income taxes paid by the team or its players as something that would be lost rather than a case of discretionary spending that would instead be spent on other entertainment and workers at such businesses. That is the argument offered by Vos and company.

But in the real world, there is no economic impact for Milwaukee from the Brewers and any sales taxes they pay would instead be generated by other entertainment and hospitality venues should the team leave town. Except that these other businesses, because they aren’t sports teams, would pay property taxes and would require no return of the sales taxes they pay in form of a government subsidy.

The phantom economic impact theme was further embroidered by Rep. Robert Brooks (R-Saukville) who predicted the proposed Brewers subsidy will lead to “a lot of ancillary development in the area.” Even if this did happen, any and all development on this land would be exempt from property taxes and provide no payoff for the city or county. Moreover, Mark Attanasio has owned the team for 19 years and has done no development to date.

And when Brewers President of Business Operations Rick Schlesinger was asked by the media last week whether the team would consider doing some development near the ballpark rather than simply continuing with a “sea of parking,” as Milwaukee Mayor Cavalier Johnson has complained, Schlesinger said the team had no such plans and was concerned about maintaining the “tailgating culture” that is part of the Brewers’ experience.

One final note: Even if all of this was untrue, even if there was a unique economic impact from the team, the main beneficiary for this would not be Milwaukee. An analysis by the nonpartisan Legislative Fiscal Bureau done at the request of Republicans took a look at the likely taxes paid by the team from 2024 to 2051. The vast majority of the revenue 78.2%, will go to the State of Wisconsin through its income and 5% sales taxes.

Milwaukee isn’t the biggest beneficiary of this deal. It’s the government that will suffer the greatest costs and greatest loss of taxes.