Wisconsin pols turn on each other as Bucks arena deadline nears, but would team really move without one?

It already seemed like it was headed this way, but the Milwaukee Bucks arena squabble is fast deteriorating into a slap fight between the state, county, and city on who’ll pay for the share of the cost that the team’s owners don’t want to. I mean, check this out:

[State Sen. Alberta] Darling accused [Milwaukee Mayor Tom] Barrett of “appalling leadership,” saying he was shifting the blame for crime without taking responsibility for what’s happening in the city. Last week, Barrett called on Gov. Scott Walker and the Republican-dominated Legislature to devote more resources to public safety in Milwaukee, saying the state’s gun laws have resulted in more guns on the street.

“He never is at fault for anything,” Darling said. “He’s never the key player.”

Asked if she wanted Barrett to bring cash to the table for a new arena, Darling nodded yes.

Ooooooooh!

If you’re wondering what arenas have to do with gun laws, this all goes back to last week when a toddler was run over by a car and killed, leading to a gunfight that left two other people dead as well, and Barrett blamed state legislators for loosening gun laws. In other words, the two have nothing to do with each other, but now the legislators who are pushing for a new Bucks arena aren’t going to pay for one to spite Barrett, or something, I mean anyway:

“Politics is about relationships,” [state Rep. John] Nygren said Friday. “You poke a finger in our eyes, it makes it a little harder.”

Ooooooooh!

The legislators’ idea here, presumably, is that they will be able to shame Barrett into finding more money to chip in for a Bucks arena, even though he doesn’t really have any to spare. But Wisconsin officials are up against a deadline, kinda sorta, as ESPN’s Brian Windhorst reminds us:

If an arena is not in place in Milwaukee by the start of the 2017-18 season — an ambitious schedule — the NBA has the right to buy the team. League insiders suggest a sale and relocation is the next logical step. The team would be worth more, by most analyses, in another city. … The NBA has communicated it could give on the schedule a bit, but only in the case of true progress. The league isn’t threatening consequences; it’s guaranteeing them.

Let’s check the record on that. This all goes back to Wes Edens and Mark Lasry’s deal to buy the Bucks last spring, when they agreed to a clause that would allow the NBA to buy the team (and presumably move it) if arena construction isn’t underway, or at least in the works, by November 2017. You have to assume that Edens and Lasry didn’t need much arm-twisting to include this clause — it neatly lets them make the NBA the bad guys who are forcing them to demand hundreds of millions of dollars in arena subsidies, or else. And while we don’t know much about the details of the clause, thanks to the fact that the only people talking about it are unnamed sources, it sounds vague enough that the NBA could easily give Milwaukee some more rope if it feels like subsidies might be just around the corner. So the deadline is fake, just like stadium deadlines usually are.

Ultimately, though, would the Bucks likely move if more more arena funding is forthcoming in Milwaukee? The assumption here is that Seattle would be the likely relocation site, given that it’s a bigger market than Milwaukee and Chris Hansen has an arena plan ready to go, or could next year anyway, assuming he finds somebody new with deep pockets to take over for Steve Ballmer as part of his ownership group. And on top of all that, recall that the last time we went through all this with the Sacramento Kings, the NBA seemed way more interested in using Seattle as leverage to extract arena subsidies from the team’s existing city, rather than actually jumping at the chance to move into an arena that, on the plus side, would be built without a ton of taxpayer subsidies, and on the minus side, would saddle any team with arena debt since it would be built without a ton of taxpayer subsidies.

I’d say right now the move threat level posed by Seattle is low-to-moderate — worth keeping an eye on, but also not something that necessarily means Milwaukee taxpayers need to shovel as much money as possible at the Bucks owners or their team is 100% gone. (Shoveling moderate amounts of money might well do it.) Instead, we have city and state officials shouting at each other increasingly frantically to find some money already, either out of genuine fear that time is running out, or just in hopes that with enough finger-pointing they can make sure people get mad at the other guy if the Bucks do end up leaving. The American political system continues to be corporate subsidy seekers’ best friend.


16 comments on “Wisconsin pols turn on each other as Bucks arena deadline nears, but would team really move without one?

  1. If the buyback clause is to be believed, then failing to build an arena would mean that the Bucks’ owners (savvy investors by trade) would have to accept $575 million for an asset worth many millions more ($600 million by current Forbes valuation). I just can’t see the Bucks’ owners allowing that to happen. Either the buyback clause is B.S. or the new owners are going to end up being willing to pay for a larger share of arena costs so that they can keep the team.

  2. Re: Buyback clause. If the arena plan goes pear-shaped in the next few months would Edens and Lasry be able to throw up their hands and say they tried and then sell the team to Seattle, Louisville, or Tuktoyaktuk before the clause kicks in?

  3. Excellent summary. The bigger issue here isn’t the money but the finger pointing. As you noted, Republicans at the state level are trying to demand more money from the city and county. However, they conveniently omit that under the leadership of Republicans in Madison, the state imposed property tax caps on municipalities, both on total levy and on rate of growth. The GOP is being completely disingenuous when it suggests that the city and county find more money. The city and county can’t find more money without cutting other spending, as the usual and customary tool in this instance – Tax Increment Financing – won’t apply since the facility will be tax-exempt. And if the local governments wanted to impose a special sales tax? Oh, that requires state approval too, and the GOP will never give it to them.

    In other words, the road to nearly any local contribution leads through Madison. And the answer from Madison is going to be no.

    Outstate Republicans hate Milwaukee, and most of them want to offer just enough to look sincere but not enough that they’d actually have to commit the resources. The bigger issue for Milwaukee is that the Bucks departure would continue this narrative of a rust belt city in decline. The schools are rotten, population is decreasing, jobs are fleeing the city, and now a potential move by the Bucks. Most of these stadium financing plans are giant giveaways, but so long as someone’s willing to do it, there’s strong motive for others to participate. Can Milwaukee afford yet another black eye in terms of its public image?

  4. Stormy: It looks like about the only benefit MKE would get out of Bucks staying is the “lack of a black eye.” No new property taxes (possibly net loss).

    Despite being hit hard by the recession (and overall rust-belt decline) Downtown MKE is actually booming with major construction projects in past year or so. New housing has increased for quite a while in several key downtown areas in recent years. City still struggles, but it’s on the upswing in many respects.
    The Bucks have only 4,000 season ticket holders, and attendance has been pretty spotty for years. It often seems boosters like the “idea” of the Bucks being in MKE more than folks actually like the Bucks. No comparison with Packer mania (forever) and not nearly the fandom for Brewers (which also fluctuates based on performance). MKE is much more famous for Summerfest music festival (a huge tourism driver) than for the Bucks. But low self-esteem has Milwaukeeans always worrying that any perceived lower estimation in “the nation’s eyes” will be devastating.

    Also, city has already pledged $17.5 in tax incremental financing, even though there likely won’t be any new taxes to collect on it. They probably just will try to limit how much they give away through this “incentive.”

  5. Milwaukee & Wisconsin……..you have political and money issues about a new arena being built…….Seattle is waiting patiently

  6. So, the stage is set for Walker to enact huge taxes on firearms and ammo to fund the NBA arena ? Because that would sure make for some nice conversations during cold mornings in the deer stand.

  7. Colm: If that’s what they want to do, I can’t possibly imagine that the NBA would say no to it.

    Everyone needs to keep in mind: The buyback clause is not the NBA holding a gun to Edens and Lasry’s heads. It is Edens and Lasry holding a gun to Milwaukee’s head, then handing it to the NBA to put their finger on the trigger.

  8. The frustrating thing is that the buck’s owners and politicians have successfully transitioned the argument away from why should we even fund this project? to who is going to pay for it. Everyone is pointing fingers at each other instead of at the people who should be funding this thing! It is maddening.

  9. Marquette poll last week found 79 percent of voters statewide opposed to public funding of $150M in bonding debt. I don’t think it asked about other subsidies, including free land & buildings, property & other tax exemptions, and free infrastructure for roads, utilities etc. It adds up fast. Bucks & NBA want a much bigger “footprint” than they have now, to be as “opportunistic as they can,” not just in the arena proper but the whole complex. The tax-exempt arena-related development Bucks proposed in the pretty pix is about 27 acres-about double current footprint, but no one’s saying how much that comprises. Does it include new parking structure(s), a planned new practice facility, maybe Bucks corporate headquarters? What about existing Bradley Center facilities, such as the parking structure, maintenance buildings, etc. (Bradley Center would also be folded over into new entity until the building is razed or whatever.) The public-authority Walker proposes (a state entity) would be on the hook to maintain all of it. Depending on the contract, that could mean endless costly upgrades…

  10. Scott, what’s wrong are the usual things…not enough luxury suites and ways to make money.
    Some say the design has flaws too–that it’s boxy and windowless. But the NBA told them they it was too small and they had to keep up with all the Joneses who built arenas since this one opened. New arena design has about 1,700 fewer seats, but many more ways to “capture” revenue…

  11. Lasry and Edens have nothing to lose if the buyback clause comes into play. They could magically appear as part owners of a relocated team, then sell their stake some years later at a healthy profit. They built fortunes through savvy investment and structured the Bucks deal with assurance that they would come out ahead regardless of how things turn out.

  12. I am curious if anyone will ask to see the bucks purchase document. I would also like to see the financial statements. I doubt this team is losing money like people claim.

  13. Hi MilwaukeeNative,
    Thank you very much for the explanation. So a a new arena would generate more revenue for the Bucks, who can easily pay for 100% of the cost with the new TV contracts about to go into place. I’m sorry to see your town getting extorted like my town (Tampa Bay) and many others. It is time for all elected officials all across the nation (and maybe Canada too) to say ‘No Mas’. All of these major sports leagues are making gobs of money and can pay 100% of the cost of any new venue – worst case they may need to become a little or a lot more intelligent when agreeing to long term player contracts in order to keep their profits outrageously obscene.

  14. To clarify the buyback clause — something that was first instituted in the NBA-negotiated sales agreement between the Maloofs and the Ranadive group for the Kings purchase — the NBA has the option to purchase the team if a new arena is not opened by the start of the 2017-18 NBA season. They also approved the Bucks current lease agreement with the Bradley Center to run through October 2017 with the strict understanding that it would be the last lease and a new arena would then take the BC’s place.

    There has been a lot of reporting that the Bucks just have to have an arena plan in place by the fall of 2017; that is not the case. Now, the NBA is likely to give some leeway, say a few months, if construction actually starts this year. Basically, though, the Bucks would need to have shovels in the ground this fall at the latest to even attempt meeting that deadline. If they are able to secure the financing package this summer, though, the NBA would probably work with them on that timeline. If not, either expect a quick turnaround on getting the team out of town — logistically, the middle of July is commonly seen as the latest a team can relocate — or a lameduck season next year.

    I would bet, though, that unless there was specific language in the sales agreement to appease Herb Kohl that Lasry and Edens wouldn’t ever directly try to relocate the team on their own under any circumstances, the NBA wouldn’t object to them seeking to move the team elsewhere. If there is, I doubt the NBA would block them selling the team out of state on their own. Like Neil mentioned, the buyback is a motivation for Milwaukee more than it is for the owners. (After all, they’ve already spent more than the $25M profit they’d make if the buyback clause is enacted.)