Baseball Makes a Mess in Milwaukee

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Sean Mota

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Sep 8, 2003
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Tommy G. Thompson played a key role in the building of Miller Park in Milwaukee with public money while he was governor of Wisconsin. Like many other residents of the state, he feels a bit jilted.

"The Brewers made it clear that if we built a modern, state-of-the-art stadium, it would provide them with the resources to field a winning baseball team," Thompson, now the secretary of health and human services, said. "The Brewers need to put an end to the games. They need to invest in a winning team."

Other politicians are more outspoken. Referring to the family that owns the Brewers, State Senator Mike Ellis said, "The Seligs just scammed the living dickens out of the people of this state."

It was agreed in 1995 that a retractable-roof stadium would be built for the team. The stadium was ready for the 2001 season. When it opened, the Brewers had not won a divisional race for 19 years and had not had a winning season in eight years. Each of the three years in their new digs, the Brewers have had a substantially lower winning percentage than in any year from 1995 to 2000.

When the deal was hammered out, the stadium was to cost $250 million, with the Brewers contributing $90 million. The Brewers were to receive (and have received) all revenue from the stadium, even from events other than baseball.

The state's Legislative Audit Bureau reported that as of the end of 2001 the stadium's total cost rose to nearly $425 million. The Brewers' share stayed at $90 million, $41.1 million of which came from a 20-year naming-rights deal with the Miller Brewing Company. The balance appears to have been borrowed by the team, and $36 million of the associated team debt was canceled by the quasipublic Stadium District in September 2002.

The Stadium District was supposed to contribute $3.85 million a year toward maintenance and repairs, costs normally assumed by the team. For ending that obligation, the Brewers' debt to the district was extinguished. The upshot is that the Brewers appear to be contributing only about $13 million of their own funds to stadium construction, and the audit bureau is concerned that the ballpark may suffer from inadequate maintenance resources over the years.

Meanwhile, the Brewers' ownership has decided that the team cannot be competitive in the near term. The opening-day payroll was reduced from $52.7 million in 2002 to $40.6 million in 2003 and to a projected $30 million for 2004. (The Brewers have dumped the salaries of seven of their higher-paid players from last season.) Fans want to know what happened to the promise of a competitive team.

Fans might also want to know what the Brewers are doing with their revenue-sharing money from Major League Baseball. During the labor negotiations, Bud Selig, who put his 30 percent interest in the Brewers in a blind trust after becoming commissioner in 1998, reportedly insisted that the new agreement restructure the revenue-sharing plan so that the third quartile of teams receive a proportionately larger benefit than the bottom quartile.

His family's Brewers just happen to be in the third quartile and just happen to have increased their net revenue-sharing receipts by more than any other team. It rose from $1.5 million in 2001 to $9.1 million in 2002 to an estimated $18 million in 2003, according to a financial analysis the Brewers provided to potential investors in July.

The labor agreement is clear that each club must use its receipts "in an effort to improve its performance on the field" and that the commissioner "shall enforce this obligation." Thus, the Brewers appear to be violating their covenants with the people of Wisconsin and with the players' union, as the commissioner seems to be idly standing by.

Do the Brewers have a defense? First, we have heard that the team is loaded with $110 million in debt. True enough, but this is about the average debt level for a major league team. Much of this debt appears to be from the stadium. (The naming rights are paid over 20 years, so some of the team's share had to be financed.) That is, this debt is the product of an investment, not a bleeding income statement. Indeed, the Brewers' own financial analysis shows a $20.24 million operating profit for their three years in Miller Park.

Some additional debt may have been taken on when the 29 teams bought the Montreal Expos two years ago for $120 million. This is also an investment that should yield healthy returns when the Expos are sold.

Second, the Brewers will say that they are rebuilding and that all teams go in a cycle. Never mind that the team has been rebuilding for 11 years and never mind that General Manager Doug Melvin says they want to emulate Minnesota (a team Selig tried to eliminate three years ago and whose opening-day payroll grew from $40.2 million in 2002 to $55.6 million in 2003). The real point is that the team can be developing its minor league talent at the same time that it acquires new major league talent.

The team needs pitching and a right fielder; many promising young players have been available at a range of prices this off-season, but the Brewers haven't shown any interest. If a new stadium is to be successful in generating revenue, the product on the playing field must be attractive. By refusing to invest in today's team, the Brewers are squandering the rich revenue opportunities of a new stadium as well as breaking the bonds of trust with their fans.

And if the Brewers were really sacrificing 2004 to be strong in 2005 and 2006, why do their projections for payroll and player development expenditures remain flat from 2004 through 2006? Something here doesn't compute.
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