Civic Blackmail Works For Brewers Again

American Family Field. Photo by Jeramey Jannene.

The standard playbook for pro teams seeking a subsidy is civic blackmail — warnings they could move to another town. In the Brewers case it was an empty threat.

Could the Brewers make more money in another city? Sure, if New York, Los Angeles, Chicago or Atlanta were available. But they’re not.

As the latest Forbes estimate of the net worth of Major League Baseball (MLB) teams show, the big market teams are all at the top of the pyramid. The Brewers rank 19th in value among the 30 teams, higher than nearly any other small market team.

One reason for that is the fantastic fan support in Milwaukee. Though ranked at the bottom of the MLB in metro area population, Milwaukee ranks 15th in total attendance, ahead of big market teams like the San Francisco Giants or Texas Rangers and 12 other teams.

Then there is the value of the Brewers venue. Back in April 1996, I did an in-depth analysis of the ballpark subsidy for Milwaukee Magazine, and found the percent of it to be paid by taxpayers was higher than for any recent baseball stadium deal.

That’s because teams learn from each other and continually find new ways to add profit centers in their stadiums and ratchet up the direct and indirect subsidies from the taxpayers. Only 12 MLB teams have newer stadiums and deals from taxpayers than the Brewers, meaning they probably have a better subsidy than most teams.

Just how good a deal was documented in an analysis by Urban Milwaukee, which found the stadium agreement was laden with tax exemptions and subsidies that inflate its true value to $1.6 billion over the 40 year period (until 2040) the current stadium is expected to last. Because the media reports only the $605 million cost of the five-county sales tax, it underestimates both the incredible value of the tax subsidy for the team and the reason why the Brewers would be reluctant to leave Milwaukee.

Another way to measure the subsidy’s impact is the incredible increase in the team’s value since Mark Attanasio bought the team in September 2004. In 19 years the value of the franchise has risen nearly 6-fold, from $232 million to over $1.6 billion. Who would want to walk away from a deal like that?

Moreover, the team still hasn’t sucked all the juice from that luscious lemon. Before the sales tax was retired in March 2020, the stadium authority board built a $90 million reserve fund to pay for estimated maintenance and capital costs for the stadium that was expected to last until 2040. While a chunk of that money has been spent, and we are now hearing that the fund may not last until 2040 (one of many claims that may or may not be true), it’s a cinch it will last until 2030. Meaning there was no rush to provide a new subsidy for the team.

Indeed, the Brewers president of baseball operations Rick Schlesinger has said the stadium is in very good shape. Why then did the team want the subsidy deal settled quickly? Because taxpayers hate stadium and arena subsidies. As the recent poll of Wisconsin residents by Milwaukee Works done by Public Policy Polling found, only 29% of respondents support tax money being used to subsidize a stadium. That included 68% of Republicans and 72% of Democrats, a remarkable unity in highly partisan times. The last thing the Brewers wanted was for state politicians to ask a lot of pesky questions about why yet another subsidy was needed by the team.

And Democratic Gov. Tony Evers  played right into the team’s hands, agreeing to a generous deal that the Brewers were pleased to support, And then, astoundingly, Republican legislators objected to that deal and offered an even more generous deal to the team, while switching the funding to make sure the city and county of Milwaukee pay a big chunk of the tax bill.

Meanwhile, neither the governor nor legislative leaders were asking any hard questions about the Brewers demand for so much money. For instance, the most obvious one: what are we paying for? Given three wildly different estimates of what it would cost for future maintenance and upkeep of the stadium, an analysis by the nonpartisan Legislative Fiscal Bureau (LFB) should have been requested to un-muddy the waters and protect the taxpayers interests.

And how long could the current stadium have continued as is using the reserve fund and the Brewers contractually required, annual contributions to maintenance and repairs? That, too, could have been answered by a LFB analysis.

Then there is the issue of the team doing some development around American Family Field. Mayor Cavalier Johnson has derided the “sea of parking” around the stadium, pushing for the Brewers to do the kind of development the Milwaukee Bucks and Green Bay Packers have done, with nearby restaurants, apartments and a hotel.

Schlesinger has said the team wants to continue to accommodate tailgating at the stadium, and its parking lots are typically filled for many games. But not every fan is tailgating. The Brewers could build a parking structure or structures for the many fans who don’t tailgate and free up land that could be used for development.

The stadium bill passed by the Senate and Assembly yesterday calls for a study of potential development to be done after the subsidy legislation is passed. That’s like locking the door after the horse has left the barn. The Brewers have done absolutely no development around the stadium in 19 years under Attanasio, even though anything it built, even a hotel, would be tax exempt. By contrast, the Bucks adjoining land is not exempt, meaning property taxes must by paid on any development.

Schlesinger’s recent, lukewarm comments about development only reinforce what two decades of ownership under Attanasio have proven: the team is making scads of money with no adjoining development and has no interest in doing this. A post-legislation study of potential development will simply gather dust in the state Capitol.

Back in 1995, when the Brewers last demanded a subsidy, the team was losing money, had an outmoded stadium and ranked at the bottom in team payroll. And yet there were far more questions asked by legislative leaders and then Gov. Tommy Thompson  — and much tougher negotiations — before the subsidy legislation was passed. Indeed, the Legislature demanded a state audit of the team’s finances. And that was a time when the threat of the team moving was more worrisome.

This time around the team is incredibly successful and still benefitting from the massive taxpayer subsidy passed in the 1990s. And yet none of the state’s top political leaders asked any questions, demanded any audits or stood up for the taxpayers.

And that includes most Democrats in the Legislature. Right up until this week, Republican Sen. Majority Leader Devin LeMahieu was having trouble getting a majority of the Senate to support the Brewers deal because his GOP caucus was divided on the issue. But the Democrats rescued him, with eight members of their senate caucus voting for the bill. After demanding a better deal for Milwaukee, Senate Minority Leader Melissa Agard released a statement praising is as a wonderful bipartisan compromise.

The bill as amended added a ticket tax on non baseball events, which slightly lowered the state’s contribution, but didn’t alter the subsidy by the city and county of Milwaukee. Yet Evers announced he plans to sign the bill rather than demanding a better deal for Milwaukee.

It’s not that the Brewers were such adroit negotiators. Rather, this was a complete failure by our political leaders to protect the taxpayers. The new subsidy adds another $500 million subsidy on top of the $1.56 billion total subsidy the team previously gained.

But don’t expect it to end there. As state Sen. Tim Carpenter, the Democrat from Milwaukee predicted, “The Brewers will be back here around 2035 saying this ballpark is inadequate, outdated, and we want a brand new $1.5 billion stadium… And the sad part is the individuals who put together this package … what they’ve done is continue the deception of what’s going to happen to taxpayers.”

And when that demand for a new stadium comes — and it will — you can bet the Brewers will play the civic blackmail card, once again threatening to move the team.