Milwaukee business leader wants Bucks arena plan by January, or he’ll hold his breath and turn purple

If there were an award for the most slavishly stenographic sports stadium journalism, we might just have to retire it in the name of the Milwaukee Journal-Sentinel’s Don Walker, who has never seen a press statement by a Bucks exec or elected official that he didn’t want to rush into print. Yesterday it was Milwaukee chamber of commerce president Timothy Sheehy, who noted that the 2015 Wisconsin legislative session starts in January, so he wants to have an arena plan ready to go in January, even though there’s a gubernatorial election in November and all state-level arena talks are on hold until then. This could have led to a headline along the lines of “Tight timetable for arena talks before 2015 session,” but instead they went with “Local leaders say arena plans must be in place by new year,” because the Journal-Sentinel.

Let’s move along, then, to the one piece of almost-news in Walker’s article, which is that Sheehy is considering proposing diverting income taxes paid by NBA players to pay off arena bonds. Sheehy says about $90 million in total costs could be funded with $6-8 million a year in tax proceeds; the math on that is correct, anyway. Whether NBA players really generate that much in income taxes is more doubtful: The Bucks’ salary cap is currently $56 million, the top state income tax is 7.65%, which gets us to about $4.3 million a year. (Yes, visiting players would pay the tax as well, but Bucks players could also deduct their out-of-state income taxes.) But NBA salaries will go up, so … maybe.

The bigger leap is Sheehy’s conclusion that “if there is no NBA play here in 2018, there’s an assortment of revenue that flows to the state that will no longer be there.” Even if one assumes that the Bucks will leave in 2018 without a new arena (possible, but hardly a sure bet), Bucks fans won’t go with them, and will still need to do something with their winter evenings other than watching terrible basketball. Those other things could include just about anything, but with a couple of obvious exceptions, they’ll all put income in somebody’s pockets that will be subject to income tax. So all that “new” money thanks to the Bucks isn’t actually new — some of it is just Milwaukee entertainment spending that happens to be going to basketball.

In any case, it looks like we can see where the Bucks’ (or at least Sheehy’s) strategy is going here: Piece together $200 million or maybe it’s $300 million who can say in private money, $90 million in player income taxes, maybe another $100 million in sales taxes on spending at the arena (likewise much of which would be cannibalized from other in-state spending), and voilà, you have half a billion-ish dollars and nobody’s really spending any public money, because public money that is rebates on your sales and income taxes doesn’t really count as public money, because it just doesn’t, okay? Now if the Bucks (and Sheehy, and Walker) can only convince the governor, whoever that may be, of this in the few weeks between the election and the start of the legislative session, they should be sitting pretty. At least for the 25 years it takes until they want another new arena.

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8 comments on “Milwaukee business leader wants Bucks arena plan by January, or he’ll hold his breath and turn purple

  1. Yeah, no big surprise that local sports (?) writers are shameless and dishonest cheerleaders for their ersatz employers.

    But the “loss of income tax” argument has always been a terribly weak point on which to make the case for any public subsidy – doubly so when the income in question is derived from the entertainment industry.

    Obviously, incomes earned by players would go away if the team did. It is also true that the income taxes paid by police officers, librarians, firemen, teachers and other public employees will be lost when the city in question closes down their facilities and terminates their employment to save the money necessary to fund ongoing boondoggles like professional sports facilities. And those workers spend a much higher percentage of their earned incomes in the community/state than professional athletes do – a consideration that almost never gets appropriate weight when this discussion comes up.

    It is a weak and simple minded argument. But perhaps that’s what the Journal-Sentinel caters to…

  2. Your timeline in paragraph 2 is off by two years. The NBA is requiring a plan that puts the Bucks in a new arena in 2017. If it isn’t possible then the Bucks will be somewhere else in 2018 or sooner.
    A funding plan needs to be in place by the end of their legislative session next May/June. They will have to know what they are going to ask for prior to the session start, and they should probably do some polling to see if a tax increase for the arena, youth athletic facilities, and public convention space. They keep piling on, and it might fall of its own weight.
    Walker will not approve of a tax increase without a public vote. He would have to approve in May/June, then a public vote after that. I don’t know if Wisconsin can vote on measures like this in a primary election or if they wait until Fall.
    If they are not voting or planning to vote then it’s likely that the NBA will pull the plug entirely.

    Diversion of their jock tax is not news, as it was mentioned about two months ago is a possibility. As you have noted, it is likely short of what they want. Couple that with the other things they are looking to fund in this effort and it just looks at a tax increase they would be voting on, if the legislature and Walker were to agree.

    Now is probably a good time as any to remind readers that the Sonics have not been playing in a new arena in Renton, Washington. The parallels are all there, sadly.
    Maybe they will figure out a much less impactful way.

  3. Mike: For every example like the Sonics (there really is only the Sonics), there are a dozen teams in various sports where owners and the league agreed to short-term lease extensions in order to take one more shot at the brass ring of arena subsidies. Do you really think that if the Wisconsin legislature doesn’t manage to pass an arena in 2015, the NBA will say, “Nope, don’t want to hear about you approving one in 2016, it won’t be ready until 2018 then, forget it, we’re ordering the owners to move to the first vacant arena they can find”?

    Milwaukee is not a big NBA market, and I’d say the threat level of them losing the Bucks eventually if they don’t build a new arena is probably yellow, at least. But the NBA, like other leagues, is in the business of levying hurry-up threats (in the stadium-grubbing playbook in Chapter 4 of Field of Schemes we called it the Two-Minute Warning), and there’s no reason to take them at face value.

  4. Yep.
    They are already on their short term lease extension. It ends in 2017.
    I think they start losing out on profit sharing since they are in an NBA termed “sub standard” arena. Owner profit sharing has been completely implemented.
    2017 is a popular year for the NBA to be drawing hard lines, Sacramento, Milwaukee.

    The sale to the new owners has a buyout clause for the NBA to pay the current owners $25 million if they can’t get it done.
    The NBA could then turn around and sell it for far more than what Kohl was paid.
    Las Vegas has an arena, Seattle is running in place waiting for a team.
    The people that make the decisions will get paid if this doesn’t work out.
    I think they can get it done, but anybody that thinks Silver will play Stern games are not paying attention.

  5. What we’re talking about here is a massive amount of investment in an arena for a team that has been generally mediocre and invisible for over 25 years. Does anyone really believe an NBA team is the difference between growth and failure in Milwaukee? Or that a new arena will be a “jolt” to the team? Strangely enough, building the Bradley Center certainly didn’t help their play.

  6. IMO, Milwaukee has until 2017 to break ground on an arena. The Seattle MOU expires in August of 2017 so if the Bucks haven’t broken ground by then, I could see the league exercising their option to take the team back and then sell it to Hansen. That’s a win win for the league. They get to be back in Seattle without expanding.

  7. That would be neat. Then we’d find out if Hansen’s gutsy enough to delve into his arena plan without billionaire steve ballmer fronting much of the money. I’m sure he’d like to get an NBA franchise again, but I think a whole lot of people will be lining up to remind him that this deal is projected to be in the red for operating the arena and he should be ok with 30+ years of that.

  8. @ChefJoe

    I’ve wondered the same thing now that Ballmer is gone. The fans claim that Nordstrom and some unknown to this point investors will have more than enough to make up for the Ballmer loss. I guess it all depends on who you believe.

    OTOH, we should keep an eye on Hansen’s hedge fund. The other side claims that it’s very shaky and that Hansen himself could pull out of the arena deal if he’s not comfortable with where he stands financially.

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