My column for the West Bend Daily News is online. Of course, as happens when writing about a very fluid situation, some of the details have changed since I wrote this. When I wrote this, there was a deal that was to be announced any minute and the details were leaked. By Monday, they were still working on a deal and it still hasn’t been released. I suspect the feedback they got regarding the leaked details sent them back to the drawing board. Good.
After months of wrangling, the owners of the Milwaukee Bucks and political leaders from the city, county and state have come to an agreement on how to fund a new arena for the Bucks. They need to return to the smoke-filled room, because this is a bad deal both structurally and economically.
Let us start with the premise that we all want the Milwaukee Bucks to remain in Wisconsin. Putting aside the emotional attachment to a sports franchise, the Bucks are a profitable business that is good for Wisconsin. The reason this is a debate is because the new owners of the Bucks signed an agreement with the NBA that they will be playing in a new arena by 2017 or the NBA will buy back the Bucks and possibly move the team to another city.
The new and former owners have pledged $250 million for an arena estimated to cost $500 million. That leaves a $250 million gap that the owners expect the taxpayers to fill. The argument for taxpayer support is two-fold. First, if the Bucks leave, the BMO Harris Bradley Center will still cost the state taxpayers $120 million to pay off and for repairs. That number is likely exaggerated by supporters of a new arena because it assumes that the old arena should be repaired. Why repair an arena with no tenants? But there is no question that the taxpayers are on the hook for tens of millions of dollars should the Bucks leave.
Second, it is in the taxpayers’ interest to support economic development. The problem is making good projections that justify the expense. Will a new Bucks arena return an investment of $250 million to the taxpayers? The Bucks’ owners say yes. They say that the new arena will spur a billion dollars in economic activity. Will it? Maybe, but the history of these deals is dubious. According to a 2012 study from Colgate University, only 8 of 55 stadiums in use at that time that were constructed with at least 25 percent public funding actually resulted in spurring economic development in the surrounding area. That is a pretty dismal record that should cause taxpayers to pause and take a hard look at the economic development numbers being tossed about by the Bucks’ owners.
Given these factors, the political leaders making a deal began with the dubious assumption that $250 million in taxpayer support is the right amount just because the owners of the Bucks said so. There has not been any public justification for that $250 million to show that it is a good deal for the taxpayers. I suspect that is because it is not a good deal. It is far too much.
The deal itself is convoluted and full of holes. Let us examine a few of the more glaring ones.
The city of Milwaukee is offering $12 million in TIF bonding and a $35 million parking garage that they can use whether or not the Bucks stay. That is a paltry amount considering it is the city that benefits the most from the Bucks than all of the other communities being asked to subsidize the new arena. $12 million is less than a quarter of what Mayor Tom Barrett managed to put together for a useless trolley. It is apparent that, once again, the city of Milwaukee is expecting the rest of the state to pay for its luxuries.
Milwaukee County is offering $80 million — sort of. The $80 million is being “funded” by the state issuing bonds to be repaid with uncollected debt in Milwaukee County. Essentially, the county is giving up on collecting a lot of questionable debt for things like back taxes, fines, etc. and giving it to the state to collect to pay for the arena. It is likely that much of that debt will remain uncollected, thus leaving the state taxpayers on the hook to pay off the bonds anyway.
The Wisconsin Center District has the most honest approach to providing $93 million. They are going to raise taxes to do it. They will issue bonds and repay them with taxes levied on hotels, rental cars, food and beverages. They would extend taxes that were supposed to expire and raise the existing taxes to make it work. Yes, that is a tax increase.
The deal commits state taxpayers to $80 million plus assumption of the $20 million that is still owed for the BMO Harris Bradley Center. The plan is to fund that with the additional taxes collected from the net increase taxes collected from the Bucks and projected economic development. But make no mistake — the state taxpayers will have to pay whether or not the promised economic development ever materializes.
Finally, with no mention of who is responsible for any cost overruns for the project, we have to assume that the taxpayers would be on the hook for that too.
This is a bad deal. It is too much taxpayer money with too much risk for dubious value. They need to go back to the drawing board.
One more thing: the Republican legislative leaders are trying to put a deal for the Bucks arena in the state budget. This makes it easier for them to pass because legislators can hide behind their votes. The citizens of Wisconsin deserve better than that. Whatever the deal eventually entails, it should be voted on as a standalone bill so that the citizens can see precisely where every legislator — Republican or Democrat — stands.
(Owen Robinson is a West Bend resident. He can be emailed at email@example.com)