Boots & Sabers

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0628, 08 Apr 15

Playing games on a Bucks’ arena

I forgot to post my column from the West Bend Daily News yesterday. Here you go:

It seems that all of the politicians in Wisconsin are trying to find a way to help fund a new arena for the Milwaukee Bucks. The various plans and machinations are revealing.

When Herb Kohl sold the Milwaukee Bucks last year to an ownership group headed up by Wesley Edens and Marc Lasry for $550 million, they committed to keeping the Bucks in Milwaukee. Shortly after the sale, however, they revealed that there was a provision in the deal that would force them to move the Bucks out of Milwaukee in a couple of years unless they got a new arena.

The Bucks owners pledged $150 million for an arena and Herb Kohl committed another $100 million. They estimate that an arena will cost $500 million. So the situation is that the Bucks owners are challenging the rest of Wisconsin to pay the $250 million gap or else the team will leave the state.

While it is easy to oppose any taxpayer funding of an arena under the argument that the taxpayers should not be paying for an arena for billionaires so that millionaires can play a game, the Bucks are a Wisconsin business that has a positive impact on the state. It would be a true loss if they left.

Into the $250 million gap step the politicians. In Gov. Scott Walker’s budget proposal, he included a plan for the state of Wisconsin to cover $220 million of it with a bonding plan that would be paid back with the increase in tax collections from the Bucks players. The plan was quickly kiboshed in the Legislature for a variety of reasons.

The most recent proposal from state legislators being floated is more modest. It offers $150 million using funds from another state agency, instead of bonds, that would be paid back by the increased taxes from the team. This plan avoids using any state tax money, which is the only way that most legislators from outside of Milwaukee would vote for it. State legislators from Rice Lake, for example, would have a hard time supporting a plan that spends their constituents’ tax dollars for an arena in Milwaukee.

The city of Milwaukee and Milwaukee County are offering $50 million for the stadium, but mostly in the form of infrastructure improvements around the arena.

For those keeping count, the current proposals still come up $50 million short from the estimated needed for an arena. Nobody is stepping forward to fill that gap.

What does all of this tell us? First, it is clear that there is not any appetite in the state legislature to use tax dollars for an arena. The Bucks’ economic impact diminishes rapidly as one travels further from the city of Milwaukee and legislators rightfully have a hard time justifying using state tax dollars for an arena.

Second, Milwaukee Mayor Tom Barrett and Milwaukee County Executive Chris Abele have been noticeably slow to offer support for a new arena despite the fact that the city and the county benefit the most from a new arena. Specifically, Barrett is planning to spend more city tax dollars on a trolley with negligible perceivable economic impact than he is willing to spend on a new arena. As usual, a Milwaukee mayor is expecting those of us who do not live in the city to pay for Milwaukee’s projects. That stance is only making state legislators dig in their heels on their arena plans.

Third, the behavior of the Bucks’ owners divulges their true motivations. They have conspicuously failed to put forth an actual plan for a new arena. We have an estimate of $500 million, but they have not revealed what the arena would look like, how big it would be, what other attractions would be attached to it or even where it would be located. We know nothing about it other than they think it will cost about $500 million, but we do not even know if that number is valid without an actual proposal to evaluate.

Also, it is worth noting that the owners have unequivocally stated that they will not spend any more than $150 million on the arena. The combined net worth of the owners is several billion dollars, yet they will not spend a penny more than $150 million for their own building.

Why? Follow the money.

The value of NBA teams has increased in recent years. The most recent example is when the L.A. Clippers were bought for $2 billion. It is undisputed that the Bucks would be worth more, possibly a lot more, if they moved to another city with a larger media market. The San Diego, Seattle or Jacksonville Bucks are more valuable than the Milwaukee Bucks.

While the Bucks’ owners had to commit to Kohl that they would keep the Bucks in Milwaukee in order to get him to sell the team to them, everything they are doing now suggests that they are trying to keep that from happening. We must remember that the Edens and Lasry are investment guys and it appears that they are seeking to reap a substantial return on their investment in the Bucks by pushing them to a larger market where the teams’ value will dramatically increase.


0628, 08 April 2015


  1. steveegg

    Since you wrote that, some more details have leaked ahead of today’s expected $1 billion announcement:

    – The grand total cost, including development around the new arena, will be $1 billion. The source(s) of funding for the $500 million in other development might be addressed later today, but the sources of funding for the $500 million arena won’t be.

    – The new arena will be directly north of the to-be-torn-down Bradley Center and south of Juneau, with a public plaza taking out 4th Street and the city-owned parking structure at 4th and Highland.

    – Replacing the parking structures at 6th and Highland and 4th and Highland will be new parking structures in the Park East corridor between 4th and 6th.

    – A new Bucks training facility will be on Park East land west of 6th.

    – The to-be-torn-down Bradley Center and Bradley Center/MATC parking structure on 6th and Highland, as well as Park East land between 3rd and 4th, will eventually be redeveloped under the auspices of the arena project.

    When all else is said, I’ll still be saying, “Free the Deer!”

  2. Owen

    Not “since” I wrote this… “Because” I wrote this… ;)

  3. steveegg

    Well, you are still the most-infuential conservative blogger in the state.

  4. Kevin Scheunemann

    Let them go.

    I prefer to saddle the foolish Seattle liberals with this bill.

    I find it hilarious about how liberals scream against corporate welfare constantly, but in Seattle, they are waiting with open arms to subsidize the richest of the filthy rich from the poor and middle class.

    Showing how liberals rob from the poor to give to the rich in this case is much more valuable than a marginal pro basketball team!

  5. Paul

    Aside from Seattle and a non-existent arena, there are few viable market for the Bucks to relocate to. And the NHL may beat the NBA to the punch if a Seattle arena ever becomes reality.

    San Diego failed twice as an NBA city, and has no modern arena. All the eggs are going into the “Save the Chargers” basket.
    Kansas City, despite a new arena, is not viewed as a viable market.
    St. Louis would face stiff competition from the Blues.
    Norfolk has no arena.
    Jacksonville is considered a far-worse market than Milwaukee.

    On paper, the only market that may make sense is Louisville, and the NBA has not been supportive of relocation efforts in the recent past (Hornets, Grizzlies, etc.).

    Milwaukee has leverage here, and there’s no reason to give it away.

  6. Gee

    Your basic premise, from which all else flows, is that “the Bucks are a Wisconsin business that has a positive impact on the state” — and that their leaving would be an economic loss for the state.

    Nope. Not so, based on many studies of consumer behavior about such expenditures, which consumers consider part of “entertainment” expenditures, so they will spend these dollars, anyway — say, on Brewers baseball or Summerfest or movies or other entertainment.

    The only exception is in instances of teams that draw from across state lines, and I never have seen data that suggest that the Bucks draw from, say, Illinois . . . with another and better team only two hours from here.

    Your argument does not persuade as a reason for Wisconsin taxpayers to add to the wealth of the billionaires or the millionaires with the Bucks, and especially not with the sorry economy of the state. Now, there may be an argument that the Bucks draw some bucks to the city of Milwaukee that otherwise would be spent in fans’ home counties in Wisconsin — but that requires more data specific to the city, in the context of its budget, because something else on its agenda would lose. Budgets, like life, are a about a series of tradeoffs, and this is a long-term payoff for which the city would sacrifice short-term and serious needs. (Plus, an argument that city of Milwaukee residents ought to carry this is for the city’s bloggers to say, not a West Bend blog about the state budget.)

  7. Owen

    Don’t get me wrong, I was not advocating for taxpayer support of an arena. I am not convinced. I would need to see some real costs and economic impact projections before signing onto that. I was merely passing over that argument for now because apparently all of our political leaders had already done so.

  8. Gee

    Ah, then we agree.


    Still Paying for That Stadium for Bud Selig, Too — When Some of the Same Pols Used the Same Argument to Push More Taxes on Us, and Past Midnight. No, We Do Not Forget. We’re Watching. . . .

  9. B

    The understanding of the agreement between Lasry/Edens and the NBA suggests that if significant progress on an arena has not been made by 2017, the owners are required, not simply “allowed”, to re-sell the team to the league — which, then the league would, presumably, purchase the Bucks for $575 million ($25 million more than Lasry/Edens purchased it for in April 2014), and then re-sell the team to another group for relocation. After investing significant time, effort and money in moving the team’s HQ to Schlitz Park, revamping the logo, and hiring and designing architects are the owners really just looking for a quick $25 million profit — notwithstanding the circus that entails moving a pro sports franchise. This negates the entire premise of your post; the current deal prevents current ownership from moving the team itself.

  10. steveegg

    I thought the league buyout agreement was for $600 million. In any case, a $50 million gross profit on a 3-year-long $550 million initial investment (the logo change and architect fees are part of the cost of doing business, and as a privately-held enterprise, the Bucks don’t have to disclose whether the business operations are profitable) is pitiful. Even in the ObamiNation, once one gets 9 figures to invest, one expects an annual return rate of far more than 3%.

    Of course, that assumes it is a business investment and not primarily the ego stroke sports ownership has traditionally been, where the big payoff is in the eventual sale.

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