New Brewers Subsidy Substantially Better For City, County

Rally towels at American Family Field. Photo by Jeramey Jannene.

A Wisconsin State Assembly committee endorsed a revised Milwaukee Brewers subsidy agreement Thursday that is, at least financially, a much better deal for the City of Milwaukee and Milwaukee County.

An initial $700 million Republican proposal in September called for the city and county to jointly come up with $202.5 million by 2050 to fund repairs and upgrades to American Family Field. The city was on the hook for $2.5 million annually and the county $5 million, with both expected to pay from the proceeds of their newly-awarded sales taxes.

The new agreement cuts the county’s contribution in half, reducing the overall size of the public subsidy to $546.5 million, and effectively creates a new funding source for the contributions. It also requires a study to be completed within two years on the feasibility of developing land around the ballpark.

The revised deal was praised by Mayor Cavalier Johnson, County Executive David Crowley and endorsed by Governor Tony Evers.

As part of the deal, the Wisconsin Department of Revenue‘s (DOR) fee to administer county sales taxes across the state is being cut from 1.75% to 0.75%. The fee reduction would create additional capacity for Milwaukee County to fund its now-smaller local contribution. According to the Wisconsin Counties Association, it will also yield $6 million in additional revenue for counties that already have a sales tax.

The city’s administrative fee will stay at 1.75% but is effectively being split as 0.75% for DOR and 1% for the city’s ballpark contribution until the amount reaches $67.5 million. The ballpark contribution would also include any excess amount not required by the DOR to administer the tax. DOR officials and Milwaukee Comptroller Aycha Sawa previously estimated the city will collect between $194 million and $184 million in 2024 from the new 2% sales tax.

DOR currently does not require all of the 1.75% fee to manage its collection process and remits the excess to the state’s general fund. Act 12, which awarded a 2% sales tax to the city and an additional 0.4% sales tax to the county beyond its existing 0.5% tax, was explicitly written to send the city’s excess to the state’s general fund. But Evers line-item vetoed the general fund provision, directing the funding to an escrow account until a solution could be found.

“A great deal of hard work and thoughtful discussions have taken place to reach this juncture.  I want to thank the Governor, Speaker [Robin Vos], Minority Leader [Greta Neubauer], and so many others who have participated in this work,” said Johnson in a statement. “From the outset, I have stated two priorities:  I want the Brewers to be our home team for the indefinite future, and I want local taxpayers to be protected from excessive costs. The proposal shared today achieves those objectives, and it has my full support.”

The Assembly Committee on State Affairs endorsed the proposal on a 13-1 vote, with only Francesca Hong (D-Madison) in opposition. It now goes to the full Assembly for a vote.

Even if the Assembly endorses the agreement as amended, it could still change under the Senate.

“While we’ve secured a positive agreement in the Wisconsin State Assembly, I now look ahead to engaging with members of the State Senate on a path forward. My main priority has not changed: To deliver a bipartisan solution that allows Milwaukee and the state to retain the Brewers, while providing Milwaukee County with additional resources to support our residents and communities in the years ahead. I am looking forward to continued negotiations over the coming weeks,” said Crowley.

In addition to the local funding, the revised deal preserves a previously announced framework where the state would contribute $411.5 million and the Brewers $90.7 million over 27 years into a special stadium fund to cover the costs of repairs and upgrades through 2050. The Brewers would be required to spend at least an additional $50 million on the “development, construction, improvement, repair, and maintenance of the baseball park facilities.”

A total of $637.2 million would be placed into a fund over the life of the agreement for ballpark facility repairs. The Milwaukee Brewers would be required to expend an additional $50 million on discretionary repairs.

The state’s portion of the funding is intended to come from two-thirds of the income tax revenue generated by increasing player salaries. A similar strategy was used for the 2015 Milwaukee Bucks arena funding agreement, but the total public price tag was $250 million with $80 million covered by state income taxes.

One thing that wasn’t changed in the revised deal was the makeup of the new Southeast Wisconsin Professional Baseball Park District. The city and county are still without seats.

The proposal calls for a new nine-member board to be established, with four appointees for the governor, two for the senate leader, two for the assembly speaker and one from the Brewers.

“That’s taxation without representation,” said Johnson during a September interview. He didn’t mention the matter on Thursday, nor did Crowley.

The current board has 13 members: six appointees made by the governor, one by the mayor, two by the county executive and one appointee by each of the four suburban counties that levied the initial stadium tax.

In March 2023, the Brewers were valued at $1.6 billion, the 25th most valuable franchise, by Forbes. The estimated value increased by $300 million since 2022.

Owner Mark Attanasio acquired the team for $223 million in 2005. Sports team values have exploded in value in the past two decades primarily because of television rights agreements.

Evers negotiated an earlier proposal that involved using $290 million of the state’s $6 billion surplus with an additional $70 million in sales tax revenue in the stadium’s reserve account to cover $448 million in estimated repairs and a lease extension through 2043. The state’s contribution was to be made upfront, with the balance growing with interest. But Republicans stripped that agreement from the state budget.

In rolling out the legislative proposal, Representative Robert Brooks (R-Saukville) said he didn’t think the governor’s proposal, endorsed by the Brewers, included enough funding to cover the stadium costs. The reserve account, said Brooks and Vos, was said to also be closer to $10 million than $70 million and wouldn’t be sufficient to satisfy the current lease, which runs through 2030.

The Brewers’ lease would run through 2050 under the legislative proposal.

A portion of the funding, $25 million, will be used to winterize the stadium, making it an accessible, year-round venue for concerts and other events. Brooks said the move will “help to increase the amount of money that we can use for all the other priorities in the state.”

The Brewers and state both analyzed what upgrades and repairs are needed at the 22-year-old ballpark. The team conducted a study that concluded it would cost $428 million to improve the ballpark to its desires. The Wisconsin Department of Administration executed a separate study that estimated it would cost between $540 million and $604 million. Details on those findings can be found in our February 2023 coverage.