The Neverending Grift

How dare workers expect more than $7.25 per hour! Don't count on a decent retirement or health care plan from your employer either. Fix poisonous lead pipes? Gonna have to wait. Repair potholes and crumbling bridges? Not this decade. Strengthen Social Security and Medicare? Not a chance! Maybe we should phase them out. 

More money for private, billionaires' sport stadiums? No problem. There's always hundreds of millions in public dollars for private playgrounds and speculation.

Milwaukee's Miller Park (now American Family Field) baseball stadium (for the Milwaukee Brewers) opened in 2001. Total cost to taxpayers was estimated over a billion dollars. Already, twenty years later, the Brewers need nearly $300 million more from taxpayers.

The same old myth is playing out in this greed and grift saga, wrapped in the contrived cloak of economic development and jobs. As the fairy tale goes, sports have a significant economic impact, spurring other developments, and creating jobs. And, as always, there's the threat of leaving. The Brewers may find a new host city if Milwaukee and Wisconsin don't fork over the cash.

Thought experiment: Can a business (sport team) claim to be infinitely successful and astoundingly economically impactful if, every twenty years or so, said entity must bribe and blackmail to be able to afford, supposedly, needed upgrades for their place of work (the sport arena)? 

Or, sadly, is that just how this blackmail song-and-dance shakes out, each and every time, in city after city? [Spoiler - yes, this is how it plays out in city after city, year after year.]

The boondoggles march on.

For Further Reading:
Site Selection Shenanigans

Stadium Swindle

Bonds & Bondage: Indentured to the Sports Stadium Cabal

Sunday Reading

Popularity Of CBD Oil Vexes Regulators & Researchers
The Great Dismantling Of America's National Parks Is Under Way
Trump's Economy Is An Absolute Disaster For People And The Planet
Is Venture Capital Worth The Risk?
Can We Have Prosperity Without Growth?
Innovation, At University And In Industry
Union Density: Yet Another Low
Tax Incentives: The Losing Gamble States And Cities Keep Making
'Skills Gap' Arguments Overlook Collective Bargaining And Low Minimum Wages
Making Excuses For Unemployment: The Myth Of A "Skills Gap"
5 Companies Make Up 18% Of The S&P 500. Should Investors Care?
Bitcoin Is The Greatest Scam In History
The Wile E. Coyote Of Stadium Consulting Takes On Brewers' Stadium, Gets Crushed By Anvil
About That Miller Park Economic Impact

Weekend Reading

Alexandria Ocasio-Cortez's Tax Hike Idea Is Not About Soaking The Rich
Unions Did Great Things For The Working Class
Economists Get Serious About Harm From Monopolies
If Only Obama Had Done The Things Obama Actually Did
Antitrust And The Financial Sector
Cory Booker's Baby Bonds Nearly Close The Racial Wealth Gap For Young Adults
All Of The Extremist Killings In The US In 2018 Had Links To Right-Wing Extremism
How Elizabeth Warren's Wealth Tax Would Remake America
Alexandria Ocasio-Cortez, Crusher Of Sacred Cows
Progressive Labor Standards
What Do We Actually Know About The Economy?
Yes, Polarization Is Asymmetric - And Conservatives Are Worse
Should Billionaires Even Exist?
How Frigid Polar Vortex Blasts Are Connected To Global Warming
The Wealth Gap And Miller Park's Deal
Republicans Cynically Demonized Government For Decades. The Shutdown Belongs To Them.

Weekend Reading

Koch-Backed Bill Guts Local Control
GOP Leaders Call Extraordinary Session To Change Election Laws

Legislators Pass Law to Benefit Landlords

Inflation? Bring It On. Workers Could Actually Benefit.

What Do We Know About Subsidized Employment Programs?

Six Teenagers Are Running For Governor In Kansas, And Suddenly This Doesn't Seem So Preposterous

Plight Of Phoenix: How Long Can The World's Least Sustainable City Survive?

Is Population Decline Bad?

Miller Park Tax Ends In 2020. Not.

How Vulture Capitalists Ate Toys 'R' Us

As Storms Get Stronger, Building Codes Are Getting Weaker

Wells Fargo CEO Is Getting A 36% Raise After The Bank's Nightmare Year

Kris Kobach Is A Loser

The Suburban Mystique

Sunday Reading

Want To See How America Is Changing? Property Taxes Hold The Answer
The Failed Promise Of Miller Park
Paul Krugman Gets Retail Wrong: They Are Not Very Good Jobs
United Isn't The Reason Air Travel Is So Miserable
Where Is The World's Most Sprawling City?
Growing Life Span Inequality Has Given The Rich An Extra $130,000 In Government Benefits
The Retail Apocalypse Is Suburban
Florida's Go-To Stadium Economist Is A Hack, A Shill, And Also Not An Economist
Climate Change Is Altering The Environment In Ways That Increase The Potential For Viruses Like Zika
11 Charts That Show Marijuana Has Truly Gone Mainstream
CEO Pay Is Out Of Control. Here's How To Rain It In

The Math and Taxes of Stadium Boondoggles

Jim Owczarski over at OnMilwaukee feels Milwaukee should "Stop whining and pay the arena freight."

He's talked to a few people about the Miller Park tax, it wasn't a big deal to them, so a new basketball arena shouldn't be a big deal for anyone else either. 

Owczarski then uses an example of buying a car to clarify his point, "People get all worked up over the idea of a tax, than the actual number itself. Let's be real. If you're buying a $30,000 car, an extra $200 or whatever it comes out to isn't a big deal in the scheme of it."

So we can see why Jim doesn't have a big problem with taxes or paying them - he doesn't understand them and he's not very good at math. If you're buying a new car in Milwaukee County, your paying a 5.6% sales and use tax on it, which is a $1,680 tax on a $30,000 car. 

Most people probably do have a difference of opinion if you're talking $200 or $1,680. To which, Jim says, "Do a better job negotiating that [the tax] out of your final [car] price if you're that upset by it." Just as we can negotiate with team owners - making them pay the majority of costs for their team. 

I find it unbelievable that in a state with such a strong labor history, prudent social investments, and an aversion to boondoggles, so many are suddenly reverse Robin Hoods, wanting the many to subsidize the few. [Yet, when calls are made for the rich to feed the hungry, employ the jobless, house the homeless, or pay more taxes, those people are labeled parasites, moochers, and communists.] Bribery is now an accepted form of negotiation. Taxpayers must fund private team owners' cost of doing business. 

Sports are a great diversion and entertainment option, but they are not economic catalysts. They typically represent less than 1 percent of a local economy. Often, much, much less.

Jim then moves forward with the Major League City argument, "If the new ownership group winds up having to sell the team back to the NBA in 2017, the people of Wisconsin will relegate their marquee city a second-class citizen on the national landscape." Even with the Brewers still here, by not having the Bucks - who haven't competed for over a decade and have had among the worst attendance among NBA teams - suddenly Milwaukee will fall off the map.

Austin, El Paso, Louisville, Las Vegas, Albuquerque, Rochester, Birmingham, Hartford, Richmond, Providence, Virginia Beach, Riverside and Tucson are just a few larger U.S. cities that have no major league sports team. 25 of the states have no professional sport team. All second-class cities and states, no doubt.

Owczarski closes with a flourish of gobbledygook, "If the Brewers are left alone, Milwaukee becomes … what? San Antonio? Oklahoma City? Jacksonville? Ugh. I'm sure some would like it to become Portland, but the city won't allow for strip clubs Downtown and, frankly, we don't have an ocean about two hours away. Name every important city in this country. Professional sports are an integral part of its culture, and its economy. It is here in Milwaukee, too. I'm a taxpayer and I won't mind keeping it that way."

San Antonio, Oklahoma City and Jacksonville are all faster-growing and larger cities, Yeah, we'd hate to be like that, not to mention their warmer weather. Portland's success is due to downtown strip clubs? We may not have an ocean, but we have the two largest Great Lakes nearby (one within minutes for most citizens). See two paragraphs above for important cities without professional teams. Also, most wouldn't consider a less-than-1% economic-impact an "integral" part of the economy.  

It seems taxpayers are again hurtling toward more corporate welfare in the form of another stadium subsidy. The boosters' regurgitated arguments have been dubious, at best, and have often been proven false. There may be a place for the public in helping to finance local sport facilities or site preparation. But it's a minimal one. Taxpayers should not be footing 70%, or more, of facility cost, which has been the typical amount over the past few decades.

For Further Reading:

Buck The System
Buck You
Big League Confusion
Stadium Swindle
More Bradley Center Bull
The Time Is Now?
Is There Anything A Stadium Can't Solve?
The Legalized Bribery That Is Sports Subsidization
It's A Scandal! It's A Outrage!
Bradley Center Boosters Keep Pounding That Drum
Overblown Bradley Center Impacts

The Toys Go Winding Down

James Causey, of the Milwaukee Journal Sentinel, is the latest to jump on the 'Milwaukee must build the Bucks a new basketball stadium or else' bandwagon. He opines, The clock is winding down for the Bucks.

Local taxpayers should not expect Kohl to foot the entire bill for a new or renovated facility. No owner will take on such a task. But, remember, taxpayers didn't pay for the Bradley Center. The facility was a $90 million gift from the late philanthropist Jane Bradley Pettit. And although everyone groaned about the stadium tax — that we all still pay — most of us are glad we have Miller Park.

"Everybody was bitching about the tax, but the stadium is pretty, so everything is OK." That's not a justification for spending millions of taxpayers' dollars.

Plus, most of the taxpayers probably never even go to a Brewers game. The majority of residents paying the stadium tax most likely never attend a game.

The Bucks averaged 15,035 people per home game last year. The five counties paying the stadium tax have a combined population (as of 2012) of 1,761,778. That's less than 1% of the five-county population per game attending a game. If we assume no person in the five-county area saw more than 1 game over the course of last season, based on last years attendance, that would still be less than 35% of the five-county population that went to a Bucks' game. [(15,035 * 41 home games)/1,761,778]

The Milwaukee Brewers' attendance in 2013 was the lowest its been since 2006. Miller Park is a lovely stadium...it should be, it was  built in 2001. The primary reason for increased attendance was not the new stadium, it was fielding a competitive team. Hence, the Brewers are back to their losing ways and less people are showing up.

In 2013, the Bucks had the 4th worst attendance and the 13th worst record. If the public must fund stadiums, can we at least have a clawback provision which assures that teams spend a certain amount on payroll? If they don't, they need to repay the subsidy. If we have to fork over cash to fund a private operation, we need some assurances that we'll be getting a competitive team (or at least a team trying to be competitive) for our investment.

Causey concedes stadiums are a low priority, "Milwaukee has a number of problems more pressing than a new sports arena. Our schools could use more funding, poverty is a very real problem and some of our roads and streets have so many potholes that you have to play dodge ball with your car. These issues will still exist with or without a new Bucks facility."

Or we could take the money to address those real problems instead of spending it on a sport stadium.

Yet, we really need this stadium?

For Further Reading:
Buck The System
Buck You
Big League Confusion
Stadium Swindle
More Bradley Center Bull
The Time Is Now?
Is There Anything A Stadium Can't Solve?
The Legalized Bribery That Is Sports Subsidization
It's A Scandal! It's A Outrage!
Bradley Center Boosters Keep Pounding That Drum
Overblown Bradley Center Impacts

Milwaukee Brewer "Destination" Delusion

A recent OnMilwaukee article proclaimed, "Attanasio has made the Brewers a destination."

For evidence, the following player signings were offered as proof:

• Kyle Lohse [34 years old, 4.45 career ERA]
• Zack Greinke [no longer with the Brewers]
• Ricky Bottalico [retired]
• Jeff Suppan [played for San Diego in 2012]
• Randy Wolf [no longer with the Brewers]
• Aramis Ramirez [34 years old, .280 career hitter]

The article also offers up the qualifier, "Yes, CC Sabathia and Prince Fielder walked away – the Brewers will never be in that financial stratosphere – but the signings of the last few years are more impactful than bringing in likes of Chris Coste, Scott Sheldon, Brooks Kieschnick, John Vander Wal and Tony Fernandez."

If the article were titled or was implying, "Brewers turn things around with good management, keen minor league development, and workable role-player signings," I'd agree. But to say the Brewers have become a destination among sought-after free agents, that's quite a stretch. 

According to the MLB Network (2013 season projections), the Brewers currently have only 3 of the top 100 players in baseball: Yovani Gallardo, Aramis Ramirez and Ryan Braun. Gallardo and Braun were both draft picks of the Brewers.

It's nice to see the Brewers are competitive again. But lets not put the cart ahead of the horse. 

Go Brewers!

Brewing Up An Inflated Impact

Major League Baseball recently released a study claiming a large economic impact due to Miller Park. Distant Brewers Fans Have $263 Million Annual Economic Impact.

A link to the study is not included in the article, nor could I find a copy of the study on the Institute for Survey & Policy Research's website.

[Coincidentally, this comes alongside the push for a new Milwaukee basketball arena.]

For starters, the study claims over 45% of fans come from outside the five-county Milwaukee metropolitan area. Yet, as I wrote in April 2012, "The UWM-Center for Economic Development notes in a study of another one of the Milwaukee development community's white elephants (PabstCity), "No venue in Milwaukee draws anything close to 30 percent of its visitors from outside the region. The Calatrava, with all its national and international publicity and iconic status, draws substantially less than 30% of its visitors from outside Milwaukee. Events such as the Wisconsin State Fair and Summerfest draw close to that figure, but these are once a year “special events,” with state-wide and civic participation and sponsorship."

Another odd caveat mentioned in the article, "The study did not consider spending by fans within the five-county metropolitan area in summarizing the economic impact of Miller Park. The reason is something economists call the "substitution effect," or the argument that local fans would be spending their money on other entertainment if the Brewers were not here."

When we're trying to decipher the economic impact a sport facility has on a region, you want to make sure you don't consider how the spending patterns of the majority of attendees affect other businesses in the area. WTF?

Next, we find that, "In estimating economic contributions of fan spending, Leib said the UW-Milwaukee study team used a reasonable multiplier of 2.1, though he usually does not use a multiplier higher than 2. This means that for every $1 spent by a distant fan, the study multiplied it by 2.1, arriving at an impact of $2.10 in the regional economy.  This summarizes how many more times - 2.1 - that dollar is spent in the region, according to Leib."

So, multipliers are usually under 2, but in this case, for some unexplained reason, a higher multiplier was used. Hmmm, I wonder why. 

Dennis Coates and Brad Humphreys found, "The multiplier for spending on sports in a city may be substantially smaller than the multiplier on other forms of entertainment spending, perhaps the most plausible explanation. The majority of the revenues from professional sports go into salaries for players, managers, coaches, trainers, scouts and to income for the ownership. Most of these individuals, especially the more highly paid ones, do not live full time in the city where the games take place. Unlike the wages and salaries paid to employees of local restaurants, movie theaters, car dealerships, department stores, etc., the large salaries earned by players and coaches leak out of the local economy."

Here, again, we have the media proclaiming quantitative evidence of a substantial impact from sport stadiums by merely regurgitating the bullet points of the latest "study." But upon further inspection, this "study" can hardly be taken seriously.

It was also disappointing (although expected at this point) to see that the Journal Sentinel didn't even attempt to find a few counterpoints to interview for the article. Onward with the media-enabled corporate welfare bonanza.

The Legalized Bribery That Is Sport Subsidization

A great article on the "system-gaming moocher class, an entitled, irresponsible, parasitic piglet subset, lazily suckling from the public teat, pulled up by shiny new bootstraps purchased with government giveaways, forever hiding in plain sight," otherwise known as sport subsidies.

As Patrick Hruby writes, "According to Harvard professor Judith Grant Long and economist Andrew Zimbalist, the average public contribution to the total capital and operating cost per sports stadium from 2000 to 2006 was between $249 and $280 million. A fantastic interactive map at Deadspin estimates that the total cost to the public of the 78 pro stadiums built or renovated between 1991 and 2004 was nearly $16 billion."

How does all this (continue to) happen? Especially considering our supposedly pinched budgets and ever-burgeoning fiscal constraints, why do we continue to subsidize sport millionaires? Hruby explains, "Team owners ask for public handouts and threaten to move elsewhere unless they get them, pitting cities against in each other in corporate welfare bidding wars -- wars rooted in the various publicly granted antitrust exemptions that effectively allow sports leagues to control and maintain a limited supply of teams to be leveraged against widespread demand."

Sound familiar? These are the same tactics (build us a stadium or we're leaving town) which were applied to Miller Park for the Brewers and which are being used to strong-arm the public into supporting a new Bradley Center for the Bucks. 

Go read the entire article - Cut Welfare To Sports - to find out more about the land giveaways, infrastructure freebies, tax breaks, and other government handouts the public provides to sport millionaires.

Adversely Impacted

"Major League Baseball has commissioned a study that will look at the direct and indirect economic impact of Miller Park," reports Don Walker, of the Journal Sentinel.

"This study, presumably, would produce evidence of tangible economic benefits of a stadium."

It's not much of a study if you already know what your outcome and conclusions will be. Let's study Miller Park. Miller Park has a big economic impact. Our study will show Miller Park has large economic impact.

Sophisticated analysts have reached a consensus on the impact of stadiums - and it's nothing close to the glowing, overblown claims of stadium boosters and promoters. In fact, most studies have shown that money spent subsidizing stadiums would be better spent on other, more pressing and more stimulative investments.

For Further Reading:
An Examination of Sporting Event Impact Studies

Miller Pork

Don Walker’s April 3, 2008 article, from the Journal-Sentinel, “Miller Park: Economic promises got it built. Has it paid?” implies there is a debate among economists about whether communities benefit from stadiums or not. There is about as much a debate among economists on this subject as there is among climate scientists about global warming.

But lets not get bogged down in nuance and fact.

First, we'll start with this corporate welfare defender. In this corner - the number one advocate, expert witness, and stadium-subsidy supporter - why, none other than Bud Selig. (Which is like asking Bill Gates if he thinks one should buy Microsoft.)

Walker states, “Selig believes passionately that such revenue growth did occur in the metropolitan area and commissioned a study released in October 2006 that showed the financial impact.” Amazing! Commissioning a study to show an impact and, low and behold, it does.

Selig then went on to use the well-worn contention about the intangible benefit of a sports stadium to a community. The problem with this type of implied, quasi-analysis is that, through taxation for this stadium, taxpayers felt a tangible deduction in their income. The hopes of everyone gathered at the ballpark to watch the game (direct use), or everyone getting together at the local pub to root on the Brewers (spillover) is all very quaint and well, but it’s not an economic impact analysis and it isn’t an economic development policy. Hoping and wishing should not be public policy.

Most studies show decreased activity in correlated economic sectors and the money being spent is merely a realignment of existing spending patterns. Growth is not occurring. Stadium subsidization is corporate welfare and a zero-sum game. Study after study has been done -- just because you build it, there’s no guarantee anyone is going to come. And, more likely, because you've built it, you now have less dollars in your city for schools, roads, parks, public transportation, etc.

Another hilarious declaration was Selig saying, “It [the stadium] saved baseball for Milwaukee and Wisconsin.” This equivocation reveals the real intent of the whole stadium-booster cabal: use public dollars for private playgrounds or else they will move to another city that will succumb to their bribe. And because this type of extortion is common in so-called economic development practices, it’s happening in every city. If people want to see the biggest welfare mothers driving around in their Cadillac's look no further than the corporate community, whom receive millions of dollars of giveaways, like stadium subsidies, every year.

The numbers the article's proponents cite from the 2006 study also seem to have been pulled from thin air. The talk of increased activity at hotels, restaurants and retail stores is mostly that – talk. Marc Levine of UW-Milwaukee Center for Economic Development [a former employer], the opposing view in the article, states that the actual total employment in the county and employment for hotels is down since the opening of the stadium. When we evaluate a stadium’s impact with measurable indicators we see no such gains in areas such as retail and hotels from having a stadium, as claimed by the boosters. So, I guess we're back to those intangible benefits.

If ifs and buts were candy and nuts, we'd all have a merry Christmas.