Dan Shafer is the founder of The Recombobulation Area, an award-winning, reader-supported weekly column and online publication. Click HERE to subscribe.
The home of the Milwaukee Brewers, American Family Field, is in need of some funding for maintenance and upgrades. You may have heard something about this.
Gov. Tony Evers proposed a one-time infusion of state funding to the tune of $290 million as part of the state budget, which would have extended the lease on the stadium through 2043, but as they do with most of the governor’s budget proposals, Republicans got rid of that one. It always seemed likely that any Brewers stadium funding package would be spun off into its own piece of legislation anyway.
And that’s what has now happened. On September 18, Assembly Speaker Robin Vos and state Republicans held a press conference at American Family Field and introduced their proposal for more than $600 million in public funding for the stadium, to extend the Brewers’ lease at the stadium through 2050.
The bill is structured in a way that would include about $400 million from the state and about $200 million in local funding, combined from the city of Milwaukee and Milwaukee County, along with an additional $100 million from the Brewers franchise. Unlike the five-county stadium tax that funded the construction of Miller Park and ongoing maintenance until it was sunsetted in 2020, it includes no local funding from Ozaukee, Waukesha, Racine, and Washington counties.
The merits of whether or not it’s a good idea to include public funding for a professional sports stadium or arena is a worthy debate. But it’s also a debate that exists more in the abstract than in reality.
If only we had a recent example in reality of a funding deal for a professional sports facility that might be a worthy comparison to what’s being proposed…
Oh right! We just did one of these!
The deal to fund Fiserv Forum was passed just over eight years ago. So let’s compare that deal to the one being proposed for American Family Field.
A quick disclaimer though: Each of these deals are very, very complicated. There are going to be pieces of them that aren’t perfect side-by-side comparisons. NBA arenas are smaller than MLB stadiums, and there are more players and more home games for an MLB team, of course. And even though we’re trying to make this as comprehensive as we can, there will be pieces of each that won’t make this full breakdown. So just know that we know that going in.
OK, let’s recombobulate.
TOTAL COST, PUBLIC AND PRIVATE
American Family Field: $700 million
Fiserv Forum: $524 million
OVERALL PUBLIC COST
American Family Field: $614 million
Fiserv Forum: $250 million
Each of these deals involve a certain level of long-term borrowing, so technically, these costs are not the total total costs to fund each project over the duration of their respective leases, once you factor in interest payments.
For example, for Fiserv Forum, the $250 million in public contributions from the state, city, and county means “residents will ultimately pay $400 million on the arena when accounting for $174 million in interest over 20 years.” But the Brewers’ deal is structured similarly, by making some up front payments and then borrowing or making annual payments going forward that will increase over time, so it is comparable in this case.
Breaking down costs and payment structures at different levels of government
American Family Field: $411 million
Fiserv Forum: $55 million directly, $93 million from taxes supporting the Wisconsin Center District, $45 million from a $2 ticket surcharge
There are a lot of pieces to this, and there are a great many ways in which these deals diverge, but there is one piece of each where there is a key commonality, and that is in the state’s direct payments.
In 2015, when Scott Walker made the state’s proposal to fund construction of what became Fiserv Forum, a centerpiece of the deal was a portion the former governor dubbed, “Cheaper to keep them.” What this essentially amounted to was that the state calculated how much income tax it received directly from players and team employees and used those projected tax collections along the duration of the lease to essentially redirect toward funding the arena.
When Robin Vos and state Republicans unveiled their funding proposal, that phrase returned. They’re playing the hits!
But then it gets complicated.
A significant portion of the deal for Fiserv Forum involves the state-created entity that is the Wisconsin Center District (WCD). The WCD also operates the convention center (now Baird Center), UW-Milwaukee Panther Arena, and Miller High Life Theatre. The state deal in 2015 made Fiserv Forum a part of the WCD, essentially dissolving the previous entity that separately governed the Bradley Center.
The WCD is funded by special sales taxes on hotel rooms (3%), car rentals (3%), and some food and beverage sales (0.5%) within Milwaukee County, and it also receives a 7% hotel room tax within the city of Milwaukee. Following the 2015 state deal, those tax collections also go toward paying off the debt from the bonds issued to fund construction of Fiserv Forum, in addition to funding the other facilities.
The $2 ticket surcharge that’s part of the Fiserv Forum deal is estimated to generate $60 million over the Bucks’ 30-year lease, with 75% of funds going to the WCD and 25% going to the state.
The Brewers deal, while also administering things through a state-created district—The Southeast Wisconsin Professional Baseball Park District (snappy name!)—does not involve anything like a ticket surcharge or special sales taxes. So, this part of that proposal is a bit more straightforward.
According to the bill breakdown from the nonpartisan Legislative Fiscal Bureau, state funding would start with one initial payment of $35.8 million, along with a second payment of $25 million to a separate account used “only for the purpose of winterizing the baseball park facilities.” Another $50 million in loans would also be initially issued to the stadium district. From there, annual payments would begin in 2024 and go for 22 consecutive years, starting at $13.4 million annually.
American Family Field: ~$130 million
Fiserv Forum: $55 million (and a $1 land sale)
In the state of Wisconsin, counties are structured to essentially be an arm of state government, and carry out many services mandated by state law. With that comes shared revenue payments that the state controls. This issue was obviously a big one earlier this year, as the state passed a bill with significant shared revenue payment reforms (which we covered extensively at The Recombobulation Area with Marquette professor Phil Rocco).
For both the Fiserv Forum deal and the AmFam Field proposal, the County’s portion of the overall funding package is created by slicing off a piece of that annual shared revenue payment from the state.
For the Fiserv Forum deal, that amounted to a $4 million annual commitment from the County, at a total of $55 million, which does not cover the entire 30-year lease. For the American Family Field deal, that would be $5 million annually taken from shared revenue, which amounts to roughly $130 million over the course of the deal.
That number appears to be in question, though, as state Republicans have already signaled that the local contribution from Milwaukee County would be reduced.
In addition, one of the biggest pieces of the Fiserv Forum deal was the $1 land sale that transferred ownership of several acres of land from Milwaukee County to the Milwaukee Bucks. That sale was agreed upon by then-County Executive Chris Abele, and while it was under the valuation of the land it required the Bucks to prepare the land for development, which involved cleaning up leftover underground infrastructure from the demolished Park East Freeway. Other proposals for developing on Park East land at the time asked for additional public funding from the County, which this did not. This land deal also set the stage for the construction of the Deer District and other ancillary development that has boomed around the arena since its construction.
THE CITY OF MILWAUKEE
American Family Field: ~$70 million
Fiserv Forum: $47 million (TIF/loan)
The City of Milwaukee’s contribution to the AmFam Field deal as proposed in the Republican bill was $2.5 million per year for the duration of the lease, taken from shared revenue payments, just like with Milwaukee County. The total roughly amounts to $70 million, but here again, that number appears to be in flux.
State Rep. Robert Brooks—not to be confused with the former Green Bay Packers wide receiver and “Jump in the Stands” recording artist of the same name—said in an interview on WISN’s UpFront that the combined local contribution from the City and County would be reduced from $202.5 million to $130 million, both spread over 27 years. That would include the combined contribution of the City and County. Initially, it would be $5 million annually from the County and $2.5 million annually from the City, both taken from annual shared revenue payments.
For Fiserv Forum, the City’s portion of this deal was significant. It was the final linchpin making the larger agreement possible, and it passed the Common Council with a 12-3 vote. This was done through tax incremental financing (TIF), a common development tool utilized by the city to borrow against future projected property tax revenue to fund new projects. This TIF plan included $35 million in funding for the construction of a new parking structure at 6th and Juneau, with revenue being split 50-50 between the city and the Bucks. It also included $12 million toward building what is now the Deer District, which also involved closing one block of then-4th St., now Vel R. Phillips Avenue, and taking down a city-owned parking lot to free up space for the new developments.
While the overall funding level is greater for the AmFam Field deal, there is no equivalent to the City’s development portion of the Fiserv Forum deal. Unlike the stadium or arena themselves, which are property tax exempt, the Deer District and other ancillary developments are now generating property tax revenue for the city of Milwaukee, which will repay the initial investment made through the TIF agreement (kind of like a loan), and will eventually be funding the city’s budget.
METRO AREA COUNTIES
American Family Field: $0
Fiserv Forum: $0
This one is pretty simple. Suburban counties are not pitching in for either of these deals.
American Family Field: $100 million
Fiserv Forum: $274 million
For Fiserv Forum, that included $100 million from outgoing Bucks owner Herb Kohl and $174 million from the incoming ownership group, initially led by Marc Lasry and Wes Edens, who announced a $100 million contribution at their introductory press conference after purchasing the team. Additional private funding was added later as the ownership group expanded.
For the Brewers, this is the first private contribution of this magnitude toward the ballpark since its construction, which was funded entirely through public funding.
There are other key components to this deal, too, like how the GOP bill removes any Milwaukee representation from the stadium district’s board of directors. The Bucks also signed a labor and community benefits agreement for the construction of the arena, which has thus far been missing from the AmFam negotiations.
It is also worth noting that these public dollars, whether it’s state funding from the income tax projected from player salaries or shared revenue returning to cities and counties, could otherwise be used for anything else.
Would it be nice, as every professional sports facility funding opponent inevitably suggests, that the public entity that commits these funds to an arena or stadium gets a stake in team ownership? Sure. But that’s never, ever happening, and is completely unrealistic. Would it be nice if the state also funded more important priorities, like—to name an example that has been in the news of late—child care, which faces potentially thousands of closures without new funding? Certainly.
But the same time, the state owns this ballpark. That is an obligation we have, and there are costs to be incurred regardless of whether or not the Brewers extend their lease beyond 2030. And the Brewers do provide a real benefit to the region, and the Milwaukee area would be worse off without them. To reiterate: I want the Brewers to stay in Milwaukee for the long term.
So, the bottom line, then, is this: A deal to keep the Brewers in Milwaukee can and should get done, but it needs to be done right. You only get one chance to do this right. Luckily, we have this very recent local example of how an arena funding package can be done right. The deal to fund Fiserv Forum has been a successful one, and an example of how a sizable state investment in an arena or stadium can be leveraged for meaningful transformation, catalytic impact, and the type of regional economic development often touted as a reason to make deals of this nature in the first place. What we need to do is learn from this very recent history to inform the negotiations and conversations in the present.
The first public hearing on the proposed bill is today, at 11 a.m. at State Fair Park. Hopefully, it is the first of many. Because we need to take the time to get this right. As it stands, it’s not there yet. But we don’t have to look too far in the rear view mirror to find something to help guide a path forward.
Let’s learn from this successful example to improve this new deal, leverage this investment for more economic development, and keep rooting for the Brewers for decades to come.
— Milwaukee Record (@milwaukeerecord) October 5, 2023