Where Did the Playoffs Payoff Go? It Wasn’t to the City

The Bucks’ NBA victory produced some $3 million in tax revenue – but without a municipal sales tax, none of that went to the city.

The Milwaukee Bucks’ playoff run paid off in big bucks for state and local governments, which scored about $3 million in taxes from the team’s NBA championship, according to a Milwaukee Magazine analysis.

Almost all of that tax revenue went to the state and the Wisconsin Center District, which raked in more than $1 million each. By contrast, none of those tax dollars went to the City of Milwaukee – which shouldered much of the public safety costs for the Bucks-in-Six victory parade through downtown and the Deer District celebration – while less than $200,000 wound up in Milwaukee County coffers.

Mayor Tom Barrett and County Executive David Crowley see that disparity as another reason why voters should be allowed to raise local sales taxes – an idea that has gone nowhere in the Legislature, despite strong support from local governments and Gov. Tony Evers.

Photo by Visit Milwaukee

Visit Milwaukee recently estimated the economic impact of the playoff run at $57.6 million, including the indirect and induced impact of more than $26 million in employee wages and business-to-business spending. The direct impact of almost $31.6 million in fans’ spending included $8.4 million on lodging, $6.6 million on recreation, $5.8 million on retail goods, $5.2 million on food and beverages, $4.3 million on transportation and $1.2 million on business services and space rental.

According to Visit Milwaukee’s calculations, that spending brought in $1.1 million in local taxes. However, the organization’s software did not provide a breakdown of those taxes, Visit Milwaukee spokeswoman Claire Koenig says.

 

 

Milwaukee Magazine estimated the state and local tax impact by applying current tax rates to the figures provided by Visit Milwaukee and the paid attendance figures at each of the 11 home games and three final-round away-game watch parties in Fiserv Forum. That analysis included state sales taxes and arena ticket taxes, which do not appear to have been part of Visit Milwaukee’s tax estimate.

Assuming all of the spending was in Milwaukee County, here’s how the revenue would break down for each government, along with what they spent during the playoffs:

District: Fiserv Forum’s landlord would have received $291,315 from its $1.50 share of the $2 ticket tax and $26,096 from its 0.5% food and beverage tax. Depending on how many of the hotel rooms rented were in the city, and on how much of the transportation spending was for renting cars, it could have received about $900,000 from its 3% countywide and 7% citywide room taxes and its 3% car rental tax.

That could add up to roughly $1.3 million. District Vice President Sarah Maio says her agency didn’t have any playoff expenses, because the Bucks run the arena and pay its day-to-day costs.

The district shared Fiserv Forum’s initial $524 million construction cost with the state, county, city and the Bucks‘ current and former owners. As part of the deal to build the arena, the team pays $1 million a year in rent but receives naming rights revenue, reportedly worth $150 million.

State: The 5% state sales tax would have brought in $1.5 million, plus $97,105 from the state’s 50-cent share of the ticket tax, for a total of $1.6 million. Mobilizing about 150 Army National Guard troops for Game 6 and the subsequent revelry cost the state about $115,000, says Maj. Joe Trovato, a Guard spokesman. The Air National Guard flyover for Game 6 was considered part of regular flight training, not an extra expense, he says.

County: The 0.5% county sales tax would have produced $151,537. The Sheriff’s Office spent $15,879 on deputies’ wages and overtime, almost all for the parade and celebration, while the team reimbursed the county’s Office of Emergency Management for supervising paramedics, say sheriff’s spokesman James Burnett and Crowley spokesman Brandon Weathersby.

City: Lacking a local sales tax, the city’s only Bucks-related revenue is from fees and reimbursements paid by the team, plus half the net income from the arena’s N. 5th St. parking garage, which is owned by the city and managed by the Bucks.

Contracts with the city call for the Bucks to reimburse the Milwaukee police and fire departments for public safety costs connected to events at the arena, including the playoff games. Police protection for the July 22 victory parade and celebration cost $278,980, of which the city is planning to bill the team $163,653, leaving taxpayers to cover $115,327, city budget director Dennis Yaccarino says. Unreimbursed Fire Department costs totaled $11,040, Yaccarino says.

The Bucks paid $66,334 in fees for special events, fireworks displays and other permits, which covered the cost of fencing, barricades, signs and inspections, said Brian DeNeve, spokesman for the city Department of Public Works. and Steph O’Connor, then spokesperson for the Department of Neighborhood Services. Federal funding paid for city Health Department vaccination clinics at the games, Yaccarino says.

Although parking figures aren’t broken down by individual days, the city’s share soared 173%, to $116,821 for May, June and July combined, from $42,822 in the preceding three months. The sold-out playoff games and the crowds packing the Deer District were likely a big part of the increase, but probably not the only factor, because COVID-19 restrictions were easing during the spring and summer.

Excluding that parking revenue, which can’t be clearly attributed to the Bucks alone, the city was the only local government that wound up spending more than it took in from the playoffs.

But far more sales tax revenue would have flowed to the city and county under a plan that local officials have heavily lobbied lawmakers to approve. The “Fair Deal” plan would allow Milwaukee County voters to decide whether to triple the county sales tax, from 0.5% to 1.5%. That would bring in $160 million a year, of which 7% would be set aside to deal with lead pipe and paint issues and the rest divided among the county, city and suburbs.

PHoto by Visit Milwaukee

Before a 2020 Assembly Ways and Means Committee hearing on the issue, the panel’s chair, Rep. John Macco (R-DePere), said he was open to discussing the concept. But the panel showed little support for the legislation.

In his 2021-’23 state budget, Gov. Tony Evers proposed a different approach, which would have authorized referendums to increase sales taxes to 1% in any county and to establish 0.5% sales taxes in any city of more than 30,000 people. That could have raised $80 million for Milwaukee County alone, and significant sums for the City of Milwaukee and its largest suburbs. But the Legislature’s Republican-dominated Joint Finance Committee killed that provision, too.

Barrett and Crowley emphasized that they’re thrilled with the Bucks victory and the boost that it brought to Milwaukee’s economy and morale.

Still, “The one thing that kind of sucks about it all is … how much of those tax dollars that are staying here,” Crowley said. “We have to be able to capture those tax dollars to be able to compete globally … and invest in the people who live here, especially those who have been historically marginalized.”

Photo by Visit Milwaukee

“The county executive is spot on,” Barrett said in a separate interview. “It really underscores the reality that has been present for some time in Milwaukee, which was once considered a drain on the state and is now an incredible generator for the State of Wisconsin in terms of positive publicity, income taxes and sales taxes, (but) we don’t get a penny of that.”

Barrett, who was interviewed before he was nominated to become U.S. ambassador to Luxembourg, said the city will continue to fight for a local option sales tax and a greater slice of state shared revenue. Crowley said he remains hopeful that local officials will prevail.

“It’s always an uphill battle, but I am optimistic,” Crowley said. “Some would say I’m recklessly optimistic.”

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Larry Sandler has been writing about Milwaukee-area news for more than 30 years. He covered City Hall and transportation for the Milwaukee Journal Sentinel, after reporting on county government, business and education for the former Milwaukee Sentinel. At the Journal Sentinel, he won a Milwaukee Press Club award for his investigation of airline security. He's been freelancing since late 2012, with a focus on local government, politics and transportation. His contributions to Milwaukee Magazine have included in-depth articles about our lively local politics, prized cultural assets and evolving transportation options. Larry grew up in Chicago and now lives in Glendale.