The Miller Park Economic Impact Analysis is Bad, and that Matters to Milwaukee

The Milwaukee five-county area (“the Milwaukee region”) has a gigantic economy, which shouldn’t be surprising because the USA has a gigantic economy that is based around urban forms of agglomeration or accumulation. Urban areas, and patterns of urbanization (such as the Interstate system and telecommunications networks), drive the economy. We probably don’t think about this all that much, because the City of Milwaukee is often called “small market” in terms of media consciousness and potential sports viewership, and because the population is relatively small compared to a large region like Chicago. For all that, according to the U.S. Bureau of Economic Analysis, in 2018 the Milwaukee region produced a Gross Domestic Product of approximately $100 Billion (chained 2012 dollars); by comparison, a seven-county Chicago metropolitan region produced a GDP of approximately $500 billion, and the five-county area alone produces one-third of Wisconsin’s GDP (!!!). Milwaukee isn’t *so* small.

Table One:

It’s important to keep the size of Milwaukee in mind when discussing its economic impact, because the small market mentality frequently leads to ideas that Milwaukee is what it is because of its sports teams. But Milwaukee isn’t what it is because of its sports teams; Milwaukee is what it is because of its proximity to Chicago (there’s a good argument to be made that it forms some type of super-metropolitan region), its proximity to Lake Michigan, and all of the corresponding industrial, transportation, and development trends that accompanied these locational advantages. Even economic restructuring and economic development strategies aligned to attracting so-called “creative class” professionals has defined the contemporary Milwaukee economy (see Parker). According to the Bureau of Labor Statistics employment by industry, the largest employment sectors in Milwaukee are Education and Health Services; Professional and Business Services; Manufacturing; and Retail Trade. Milwaukee’s economy is a large, service-providing economy with some vestiges of its manufacturing past imprinted on its landscape.

These first two paragraphs are an undoubtedly quick-and-dirty glance at complex economic issues. But I hope that they help to provide a framework for thinking through Milwaukee’s economy, because it’s important to have some general idea about the size and importance of the Milwaukee region when assessing claims about economic impact in the area, and assessing the importance of sports entertainment industries in Milwaukee. This debate raged during the lead up to public financing agreements for the Fiserv Forum, as the small-market mentality reigned supreme, that somehow the loss of the Bucks would define the region more than, say, Northwestern Mutual building a gigantic (and gorgeous) skyscraper downtown that could serve as a professional base employment center for decades to come (for a firm that collects approximately $28 billion in revenue, no less!). And now this debate will return to the Brewers, as the club commissioned a trumped up report on the economic impact of Miller Park. Coupled with Chairman and Principal Owner Mark Attanasio’s cries of operating losses, we will surely embark on a new publicly-funded stadium before long. For how could Milwaukee possibly lose the Brewers, too?

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On February 17, 2020, the Metropolitan Milwaukee Association of Commerce (MMAC) gave sports fans a late-but-worthwhile Valentine’s Day present entitled, “Economic, Tax Revenue, & Media Impacts of the Milwaukee Brewers Baseball Club & Miller Park.” The study features eye-popping statistics, perfect for quoting in publications such as WisBusiness News, who uncritically reported “the Milwaukee Brewers and Miller Park have had a $2.5 billion economic impact in Wisconsin over the past two decades, including $1.6 billion in direct spending.” Steve Baas of MMAC used this study as an opportunity to tell WisBusiness News, “Having things like major league baseball, NBA basketball, a world class ballet and symphony are distinctive ‘intangibles’ that give our region an edge over many of our peer cities when competing for jobs and talent.” The report was completed by Conventions, Sports, and Leisure, about which Field of Schemes has a phenomenal, scathing takedown.

It is worth digging under the hood of the report, not simply to critique the economic impact of the Brewers and Miller Park, but to demonstrate that the very structure of the report is faulty. “Why does this matter?”, you might ask — can’t we just roll our eyes, knowing that elite professionals like Mark Attanasio and the MMAC are colluding against regular working-class folks in Milwaukee, and move on? I would emphasize that this report matters because demonstrating that the structure of the analysis is wrong gives us an important opportunity to think about Milwaukee’s economy, and what economic impact may or may not actually be.

This matters because the field of economic development — which includes everyone from elected officials, banks, developers and financial professionals, and urban planners to chambers of commerce, academics (yes, academics), and “business leaders” — is tasked with allocating and distributing the resources of the broader national economy throughout states, metropolitan regions, cities, villages, and firms or establishments. Economic development is not simply about the efficient allocation of goods according to sound principles, but also the equitable redistribution of knowledge, training, job opportunities, etc. So, if a region like Milwaukee wishes to spend ungodly amounts of money on an arena such as the Fiserv Forum and accompanying entertainment district, or Miller Park, or the replacement ballpark, that matters because it is a specific decision about how finite resources ought to be spent, and it is absolutely benefits a certain economic class and political arrangement to say that spending money on these venues is important.

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The first issue with the economic impact analysis of Miller Park and the Brewers is the extended timeframe of the analysis. By extending the assessment of Miller Park two decades, there are numerous events in Milwaukee development history that correspond to the timeframe of the economic impact analysis. This makes it difficult to actually locate the specific benefits of Miller Park. For example, this timeframe includes the final years of Mayor John Norquist’s strategies to revitalize downtown Milwaukee (see Parker); the building boom of downtown Milwaukee, which occurred in numerous stages and includes substantial residential and office developments (see Shafer); and the boost of inner ring suburbs, which were bolstered in several areas with additional retail, restaurant, and entertainment facilities.

This matters because the authors of the report include “out-of-ballpark spending by patrons, visiting teams, and event personnel on hotels, food and beverage, retail, transportation, entertainment, and other such expenditures.” Since the report uses particular survey data from 2019, it would have been a better report if the authors simply said, “we have better, more detailed survey data for 2019, so we are assessing the economic impact of Miller Park for this year” — this would have been a more interesting report, terms of understanding the potential short-term boost of a winning sports team on an economy. Or the report could have studied the economic impact of the opening years of Miller Park, etc. Pick a change in the economy (a new stadium is built!) or a particular phenomenon (the Brewers spent the most money in franchise history following a League Championship Series appearance), and use those events to assess economic impact.

Not only is the timeframe associated with the analysis problematic, but the very definition of direct spending is downright unorthodox for an economic impact analysis. An economic impact analysis is somewhat based on assumptions about building a base of economy, specifically that once changes are made to an economic base industry, additional spending and employment wrinkles through the regional economy to produce a broader impact. The entire point of assessing an economic event (such as the construction of a new stadium) is to assess the corresponding impact on other industries, services, and employment. Thus, an analyst will look for the direct impact of the new economic event; the indirect impact provided by supply chains to the industry; and induced effects, which are wrinkles across other sectors that may be the result of the economic event.

Thus, when you’re a sports team building a stadium, you typically say, “we want to build a stadium because it will benefit the economy by creating additional spending at local establishments.” This additional spending is an induced effect of the stadium; there’s no way to know if, when, or how someone will spend money on a restaurant related to a new stadium (unless, perhaps, if it’s directly adjacent to the stadium), and worse yet, it’s unlikely that such restaurant spending will be new to a region. Due to the fact that most patrons at restaurants (and arenas) are spending disposable income, it’s highly likely that building a new arena will solely redistribute existing spending rather than create new spending (if you live in Waukesha and don’t go to the Brewers game and Kelly’s Bleachers, chances are you might go bowling and eat at Kopp’s with that extra cash).

(As an aside, it is worth raising serious questions about the Miller Park report’s survey methodology, as they somehow got 48% of Brewers attendees to say that they would have saved this money had they not attended the Brewers game (page 24); this leads me to believe the Brewers ought to offer financial counseling services at the stadium in 2020).

I cannot stress this enough, it’s a real issue that the report defines direct spending to include “Out-of-ballpark spending by patrons, visiting teams, and event personnel on hotels, food and beverage, retail, transportation, entertainment, and other such expenditures.” By placing this in the “direct spending” category in an IMPLAN model (which is the industry standard software MMAC’s consultant used for this report), the report then includes the indirect and induced impacts of those hotels, food and beverage, retail, transportation, entertainment industries within their model! That’s a lot of noise! Basically, the report authors snuck in a sizable portion of the entertainment and services economy in the Milwaukee region and tallied those benefits to the Brewers by piling on more entertainment, retail, and services benefits (as induced economic effects).

Table Two:

If you’re skeptical about why this matters, let’s take a look at the tables provided by the report’s authors. On page 13, you can see the IMPLAN multipliers for themselves. If you’re focused solely on the impact of the construction of Miller Park and the operation of the Brewers (“commercial sports”), you’ve got respective Total Output Multipliers of 1.41 and 1.55, and Employment Multipliers of 9.83 and 10.13. As I said above, if you stopped right there, and assessed the construction of Miller Park, you’ve got a pretty good report! But, why stop there when you can take some excellent multipliers like Food and Beverage (1.59), Retail (1.64), Entertainment (1.53), and “Other” (1.73!) and add them to your report?

Table Three:

The results of this methodological issue are visible on page 28: the cumulative net construction impacts of Miller Park from 1999 – 2001 are approximately $448 million for the state of Wisconsin, from a basis of $318 million in direct spending. That’s not bad! But of course, I suspect that since the authors report $605 million in total taxes collected for Miller Park (and taxpayers also foot the bill for numerous Stadium District maintenance expenditures), no one wants to read a report that says “Congratulations, you spend $605 million on $448 million total economic impact.”

What’s worse, the report’s author collected survey data during the 2019 season, which they asserted was representative of annual Brewers attendance, demonstrating a total economic impact to the State of Wisconsin of $152 million, based on approximately $99 million of Direct Spending. In a vacuum, this looks great; but if you use Brewers attendance statistics to assess total output from the 19-year analysis and isolate the 2019 and Construction era data, it appears that the typical Direct Spending from 2001 – 2018 is around $68 million per year. This calls into question either the 2019 survey-based data, or the estimates used to construct the 2001 – 2018 operating data, but either way should raise serious questions about the validity of the assumptions for this report.

Table Four:

(Data analyzed for CSL “State of Wisconsin” impact (as the largest geographical area)

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Finally, it’s worth looking at that $2.5 billion estimated Economic Impact for the state of Wisconsin over 20 years, which is itself an economy with a GDP above $300 billion (in 2012 chained dollars; U.S. Bureau of Economic Analysis). The Brewers are a corporation that operates a final player payroll around $145 million (at best), with estimated revenues around $300 million (Forbes). This club is a miniscule part of the Wisconsin economy; by comparison, for example, the Brewers’ new corporate sponsor American Family Insurance pulls in estimated annual revenues around $10 billion (also a relatively tiny part of the Wisconsin economy!). So, why are we so concerned to place our sports teams’ value in economic terms? Why do entities like the MMAC focus on flashy reports and consultancy contracts to fudge the numbers for a Miller Park economic impact analysis, instead of focusing on issues such as segregation or income inequality? If you browse the MMAC website, you are more likely to find praise for the FoxConn boondoggle than an assessment of the region’s growing income inequality or the impact of segregation on Milwaukee’s economy (see Zettel). But, you don’t even have to believe that income inequality is a problem to oppose the Miller Park assessment, or the idea that we need to quantify the economic value of our sports teams. Take the data and assumptions at their word, and understand that if you’d like to see a justification for hundreds of millions of dollars of taxpayer money on sports teams, you need to fudge assumptions for an economic impact assessment; and, you might need to fudge a survey, too.

None of this is necessary to prove the value of the Brewers to Milwaukee: next time the stadium debate occurs, and Mark Attanasio turns his pockets inside out in protest, take a bold new stand about your favorite team. Say, “I love the Brewers, even if they don’t provide any economic impact to Milwaukee.” If you don’t care that taxpayer dollars go to a stadium say, “I don’t care if they spend taxpayer dollars on the Brewers; I like them.” If you do care about where your taxpayer dollars go, and you care about the potential allocation and distribution of resources in the Milwaukee region, consider the industries offering Professional Services or Manufacturing as potential recipients of those $600 million taxpayer dollars, as opposed to the Brewers.

In this sense, the Miller Park report is a blessing, because it’s a well-timed reminder of the misleading claims that can be made in the name of economic impact. The report serves as a reminder that the people who support these enterprises won’t let good data or good economic assumptions get in their way of their goals for allocating resources to their pockets. Which ought to leave taxpaying baseball fans to ask, why are we going to bat for billionaires that run a minuscule industry?

Resources

Bureau of Economic Analysis. GDP by County, Metro, and Other Local Areas. Retrieved February 22, 2020 from BEA.gov.

Bureau of Economic Analysis. GDP by State. Retrieved February 22, 2020 from BEA.gov.

Bureau of Labor Statistics. State and Area Employment, Hours, and Earnings, Retrieved February 22, 2020 from data.bls.gov.

deMause, Neil. “Meet the Wile E. Coyote of the Sports Stadium Racket.” Field of Schemes. January 23, 2020. Retrieved from http://www.fieldofschemes.com/2020/01/23/15699/meet-the-wile-e-coyote-of-the-sports-stadium-racket/.

Forbes. MLB Team Valuations: Milwaukee Brewers. Retrieved February 22, 2020 from https://www.forbes.com/teams/milwaukee-brewers/#781cdb2d41fe.

MMAC. “Economic, Tax Revenue, & Media Impacts of the Milwaukee Brewers Baseball Club & Miller Park.” February 17, 2020. Retrieved from https://www.homecrewadvantage.com/wp-content/uploads/2020/02/The-Economic-Impact-of-the-Milwaukee-Brewers-and-Miller-Park.pdf.

Parker, Brenda. Masculinities and Markets: Raced and Gendered Urban Politics in Milwaukee. Athens, GA.: University of Georgia Press, 2017.

Shafer, Dan. “Is Milwaukee’s Boom Going Bust?” The Recombobulation Area. November 1, 2019. Retrieved from https://recombobulationarea.substack.com/p/is-milwaukees-boom-going-bust.

Zettel, Nicholas. “Hader’s Tweets Matter in Milwaukee.” Baseball Prospectus Milwaukee. August 23, 2018. Retrieved from http://milwaukee.locals.baseballprospectus.com/2018/08/23/haders-tweets-matter-in-milwaukee/,