Tuesday, May 11, 2004
Miller Park Funny Money
While looking over the published findings of the Milwaukee Brewers audits, one thing caught my eye - the Brewers are claiming $4.7M in depreciation on Miller Park. Somehow the Brewers are given credit for owning 29.1% of Miller Park, and as a result can write this off on their taxes.
The first question is "how do the Brewers get a roughly 30% stake in Miller Park?" Breakdown the numbers. Miller Park cost about $425M. Of this, the Brewers were supposed to pay $90M. They were given the naming rights, which they passed on to Miller for $41M. The Brewers took out a $36M loan from the governmental organization that built the ballpark. According to the agreement, the government was also going to give the Brewers $3.85M a year for stadium repairs. A later agreement reduced this payment in exchange for the elimination of the $36M loan. This means that the Brewers paid $13M on a $425M stadium. If you own a nice $750K house, then you would get the Brewers' deal if you paid $22K and other interests picked up the rest.
Now let's get to the depreciation. The quick and dirty is that the Brewers are allowed to take a $4.7M loss on paper every year due to "wear and tear" on their asset, Miller Park. The Wisconsin tax rate for corporations is 7.9%. The federal rate bounces around, but it is roughly 35%. So the sum of the state and federal tax rates is about 43%. Allowing the Brewers to subtract $4.7M each year amounts to a $2M savings in taxes. Ignoring all the other effects of owning a new stadium, on depreciation alone the Brewers will get their $13M back 6.5 years! After that, it's gravy.
Bud Selig is going to continue to cry poor and complain about small markets. Meanwhile, he got the tax payers of Wisconsin to give him a shiny new stadium for free. And yes, in 2003 he got $24.7M in revenue sharing from the other teams in baseball. It makes me sick...
posted by David 11:48 AM
