Brewers Subsidy Largest Ever Per Year?

American Family Field. Photo by Jeramey Jannene.

Last week Gov. Tony Evers stunned Republicans with a proposal to spend $290 million to pay for maintenance and repairs of the Milwaukee Brewers stadium through 2043. Senate Majority Leader Devin LeMahieu (R-Oostburg) scoffed at the announcement, saying “The Governor’s Brewers proposal… is just an idea.”

It did seem to lacking in details, and offered a drastically higher price tag than an earlier study of the stadium’s maintenance needs released in 2019, which concluded that $84 million would cover all costs through 2040. So how did the costs more than triple?

It was back in December 2018 that the Southeast Wisconsin Professional Baseball Park District, the government entity which oversees the tax subsidy of the Milwaukee Brewers stadium, hired the M.A. Mortenson company to do a study of all projected needs for replacement of any stadium features or equipment until the year 2040. Board members wanted to end the five-county sales tax which was still paying for stadium maintenance, but first amass enough money for pay for 20 more years of operation.

The Mortenson company’s mission was very sweeping, to consider a long list of stadium features and the study included the costs of “a full replacement of all 35,244 seats,” replacing two 800-ton chillers and air-handling equipment, the flat roof portion of the ballpark, the LED Ribbon Board and LED Out of Town Scoreboards, and doing “one more replacement of these boards” 10-15 years later, along with new LED lights and theatrical controls, a “drastically improved” sound system, maintenance and upgrades of 9 elevators and 10 escalators, parking lot and roadway improvements — the list goes on and on.

In short, it was a very comprehensive report. Released in March 2019, it concluded that $71.7 million would cover all the costs, but recommended the district include 15-20% more, “between $10.7 million and $14.3 million,” to allow for “unforeseen or unexpected conditions and inflationary impacts.”

If the study left anything out, it was not noted by representatives of the Milwaukee Brewers. “I recall several meetings… where we were adamant with the Brewers, asking ‘do you have any problems with the numbers’ in the Mortenson report,” board member and attorney Mark Thomsen told Urban Milwaukee in 2022. “If the Brewers had any concerns, they kept it to themselves.”

But Rick Schlesinger, the Brewers’ president of business operations, would later claim this report was not a “comprehensive” analysis and that the stadium board declined to have another report done by a company the team preferred. So the Brewers hired Tennessee-based Venue Solutions Group in late 2019 to do an assessment. That work was suspended in 2020 due to the pandemic and was completed last August. And it delivered an estimate that surely pleased its client.

VSG concluded that the cost of “major capital repairs and necessary improvements” is a whopping $428 million — $344 million more than a study done just two years before this.

Schlesinger had promised to release the study in the summer of 2022, but that would have plopped the issue of yet another huge Brewers subsidy in the middle of hotly partisan race for governor between Evers and Republican challenger Tim Michels, forcing both of them to take a stand on an always controversial issue. So the Brewers must have decided to sit on the report until after the election.

By then it was clear that the state had a massive budget surplus, which eventually hit $7.1 billion, providing a golden opportunity for the Brewers to request a huge subsidy. But what was the best way to handle this politically?

Legislators of both parties, particularly Republicans, had made it clear they were sick of subsiding the team, passing legislation in November 2019 to sunset the sale tax by August 31, 2020. So it didn’t make political sense to try to revive this. Besides the sales tax was something for the media to report on each year, as the cost for the stadium’s repairs drove up the total cost of the subsidy and left taxpayers grumbling. A one-time gift to the team made far more sense.

And so the Brewers went to Gov. Evers rather than legislators to craft a plan. As Assembly Speaker Robin Vos complained, legislators were left out of the discussion.

Once the Brewers shared their hired consultant’s hefty $428 million price tag, what did Evers do to protect the taxpayers? The state Department of Administration hired a private consultant to analyze the study that VSG did for the Brewers.

The consultant was CAA ICON, whose website declares in capital letters it is “TRUSTED BY OWNERS” and the “industry-leading owner’s representative and strategic management consulting firm for public/private sports and entertainment facility owners and operations, professional franchises, and leagues.”

Budgets passed by the state Legislature are normally analyzed by the nonpartisan Legislative Fiscal Bureau, which has a well-earned reputation for scrutinizing budget estimates. Or there’s the Legislative Audit Bureau, which has previously done reports on the stadium’s financing. The Evers administration had hired a company that specializes in making pro sports teams happy.

How was this company chosen? A spokesperson for the state DOA said only that for projects under $300,000 the department can use a “Qualifications-Based selection process.” CAA ICON was paid $219,000 for its report. The company was hired on December 22 and completed its report on January 17.

The Mortenson report had taken four months and much of it analyzed estimates by other companies. The VSG report was done over a period of more than two years interrupted by the pandemic. The CAA ICON report was done in less than a month and jacked up the cost estimated by VSG by “26% to 41%,” concluding it could cost “approximately $540 million to $604 million to extend the useful life of the Stadium through 2040.”

That’s a median price tag of $572 million or $488 million more than the Mortenson report’s estimate.

It would appear the main function of the CAA ICON report was to make the VSG’s high price tag look low. The Brewers, we’re told, agreed to live with the VSG price tag of $428 million, and Evers agreed to bump that up to $448 million to account for any inflation in future costs. That was lowered by $70 million, the amount of reserve funds now in the stadium board’s account, which leaves $378 million and the deal assumes the proposed $290 million would be put aside to earn interest and would grow to $378 million. Of course if it had been put aside for the taxpayers it would have grown just as much, so in reality this is a $378 million subsidy from the taxpayers.

But even at $290 million, this is a historically high price tag to keep the Brewers in Milwaukee for 13 more years, until 2043 (the team’s current lease runs until 2030). Neil deMause, whose website Field of Schemes tracks all pro sports subsidies, puts it this way: “$290 million is a high price to pay for locking a team down for just 13 more years: At $22.3 million a year, that would be the biggest per-year MLB lease subsidy in history.”

But the deal is even worse than that sounds. Evers has agreed to tear up the current lease for the Brewers’ stadium, under which the team was responsible for paying 36% of the stadium’s maintenance and repair costs. This deal appears to leave the taxpayers paying for everything, which might help explain the historically high price tag.

As Urban Milwaukee has calculated, the total cost to taxpayers for the Brewers stadium to date is $1.56 billion. This deal will increase that price tag to $1.938 billion. And for all that it doesn’t address the issue of building a new stadium, which will likely be necessary by the 2040s. Taxpayers will pay a hefty price to delay the inevitable for just 13 years.