Bucks exec threatens move to “Vegas or Seattle,” er, that is, NBA would move team, yeah, those guys

Ooooh, he said it!

At an informational hearing held by the state Legislature’s Joint Finance Committee, [Milwaukee Bucks president Peter] Feigin said the Bucks owners’ purchase agreement for the team includes a provision that construction of a new arena start in 2015. If that does not occur, he said the NBA will buy back the team for a $25 million profit and move them to “Las Vegas or Seattle.”…

“The window is closing,” Feigin said. “We can’t wait months, even weeks to start the public process.”

This, of course, has been the threat behind the arena demands of Feigin’s bosses, Bucks owners Marc Lasry and Wes Edens, ever since they bought the team early last year with the provision that the NBA could buy it back and move it if there was no deal in place for a new arena by 2017. (Whether this meant a new arena in place by 2017 or a deal in place by 2017 has been a topic of some debate, though Lasry himself seemed to indicate it was the latter.) But this is, I’m pretty certain, the first time that a Bucks exec has come out and said “Approve this deal now or the NBA shoots this team,” and absolutely the first time that anyone has dared name specific cities, which comes awfully close to a straight-out threat by the owners, even if the NBA is still cast in the role of the big bad.

So how real is the threat? The buyback clause is obviously there for a reason, and Seattle is both a TV market twice Milwaukee’s size and the home of a guy willing to both build a $500 million new arena and pay $625 million, plus relocation fees, for an NBA team to play in it. (Las Vegas is a tiny market, and its main association with the NBA is of an All-Star Game that everyone involved would seemingly rather forget.) That would represent a $50 million profit for the NBA if it bought the team off Lasry and Edens for $575 million (which would in turn be a $25 million profit for Lasry and Edens), and if that’s a crazy amount of money for Chris Hansen to be putting up for a team and arena — or more accurately, for an as-yet-unidentified Steve Ballmer 2.0 to be putting up — that would be Hansen’s problem, not the NBA’s.

On the other hand, this is the same decision that the NBA faced two years ago with the Sacramento Kings, and the league decided then to give Sacramento some more rope to get an arena deal finalized, even though that deal wasn’t any more approved at the time than Milwaukee’s is now. Plus, that was before Chris Hansen was revealed to have secretly funded a petition drive to keep the Kings from getting their Sacramento arena, which undoubtedly didn’t win any friends in NBA offices.

Still, that isn’t going to stop the NBA from using Seattle as a threat, because that’s what it’s there for. As to whether it would go ahead and consummate a deal if its bluff is called by the Wisconsin legislature — that’s a tougher guess, but I’d recommend putting your money on Milwaukee getting at least a couple more drop-dead deadlines if this one doesn’t work.

23 comments on “Bucks exec threatens move to “Vegas or Seattle,” er, that is, NBA would move team, yeah, those guys

  1. I presume if nobody builds an arena in Milwaukee, Herb Kohl will somehow get back his much publicized $100 million dollar gift to the new arena ? Sounds like he gets the most deferred profit if the team is sold to another market.

  2. I live in Milwaukee, am a Bucks fan, and have tried to follow this arena deal closely. A concept that I have not heard addressed is if the NBA has the power to buy the team back for a profit, and assuming the current owners do not want that to happen, what private investment avenues have been pursued by the owners? Is there a reason that the deal is do or die with public financing? Or, perhaps, is it that obvious that there would be no private investors interested in putting such a large sum of money into a stadium?

    My problem with the tone of the supporters is that there is an assumption that if the public doesn’t finance (or invest, or whatever the term they’re using is) the arena, why isn’t their an private alternative available to the owners if this deal is so good? Is it because the incomes generated from the deal would be available only to the government (tax revenues)?

  3. ChefJoe: Yeah, Kohl gets his $100m back if the team is sold to the NBA.

    Jon: It’s because threatening to have the NBA buy the team and then sell it to someone else in Milwaukee who’s willing to put up more private money isn’t much of a threat, now, is it? The NBA buyback clause was always structured this way to provide a blame-free way for Edens and Lasry to hold a gun to Milwaukee’s head while claiming it wasn’t their finger on the trigger — due diligence for alternative financing plans isn’t a plus when your main goal is holding a hard line with the people across the table.

  4. There is no way any public revenue generated from this deal is going to be anywhere close to the spending being talked about (not for the city, the state, or the county). The issue is, as usual, is that there are some private parties that can benefit (but even then there really is not too many of those other than the Bucks; the commercial real estate people will benefit but then they benefit when there is any game of property musical chairs).

    If the Bucks stay in their perfectly fine current arena there may not be much benefit for public entities either. This is the nature of sports–there is almost always a better public investment. Milwaukee will generate way more revenue and visitors if they keep having festivals; keep their parks in top shape (especially the lakefront), and subsidize the custard industrial complex (Gilles, Kopps, Leon’s, Froedert Cardiology, etc.) they would do much better.

    I do not have the citation unfortunately as the work was done 15-20 years ago but some UWM profs should that Milwaukee benefited economically and socially between the Braves and Brewers (and that work was not even about the subsidies).

  5. “showed that Milwaukee benefited economically” (I cannot write)

  6. So, say the mean ol’ NBA takes the Bucks away from Milwaukee, what do they do then? Doesn’t this mean that they’ll to find someone with a couple hundred million kicking around, then have even less leverage in trying to get Vegas and Seattle to do what they want?

  7. @Jon

    The owners can’t really do anything about the buy back clause because that was a condition of the sale. They had to agree to it in order to buy the team in the first place.

    OTOH, you would think they would be smart to pursue a quick private investment option before the buy back clause deadline strikes, whenever that may be. The value of these teams continues to rise and rise. It would seem to make more sense to do this privately and have an asset that eventually gets close to $1 billion plus whatever value there is in the real estate aspect as opposed to selling the team for $575 to the league.

    I guess the scariest scenario for Bucks fans is if the owners sell to Hansen and his group for around $1 billion before the buy back clause deadline strikes. Neil mentioned $625 but I’ve heard that they’re desperate enough to go as high as $1 billion.

  8. I cannot fathom that the NBA will employ this buyback clause over the wishes of Lasry and Edens. That’s just not the way sports leagues operate.

  9. While I can see Seattle putting up a palpable relocation threat, I still can’t see Vegas as a viable alternative, despite CBS Sports Radio’s national morning show, Gio and Jones, trying to talk it up as one. Really, the NBA and NHL have shot themselves in the foot by not having the LA market open to exploit concessions from elsewhere.

  10. @Neil

    I think there will be compromise. They might give them an extra 6 months to come up with something if this current deal falls apart but let’s not forget, the league would prefer to be in Seattle over Milwaukee. The same held true with Sacramento. Give us a brand new arena or we’ll go to Seattle. The league created a win-win scenario of sorts with the buy back clause. Brand new arena or better market.

    All that being said, I could see the league giving them extra time to pursue some sort of deal with more private money. Maybe Kohl is still lurking out there with another $25 million and they can cut out more of the state money or something along those lines.

  11. Trueblood: I don’t disagree, but I still think you’re painting this as more adversarial than it probably is. Lasry and Edens undoubtedly bought this team for $550m because they were promised an out if they couldn’t get a new arena out of the deal — if they want to keep negotiating, there’s no reason for the NBA to tell them no. Seattle will always be around for the next team (the Hawks?) to threaten to move to.

    More on this at Vice as soon as my editor finishes editing my submission…

  12. And here it is!


  13. @Jeff

    Neither league can really keep LA open since they already have 2 teams in each league. Being able to use Seattle as leverage is stronger than being able to use a 3rd team in the LA market.

    I do realize that the NFL has been able to use LA as leverage but that wasn’t by design. They just had 2 failing franchises that supposedly found greener pastures elsewhere. Ironically, they both want back now.

  14. Actually, NFL having LA open was not by coincidence at all. It was because large markets don’t mean nearly as much for the NFL, since so much of the revenue is national TV.

  15. @Neil

    Right and combined with the fact that there are only 8 regular season games and very few events aside from NFL games, it makes the public funding hand out even more of a joke.

    Back to Milwaukee, that was a good article you linked although the part about “if they can build privately in Seattle then why can’t they do it in Milwaukee” is easy to answer. Chris Hansen is a lot more passionate about Seattle having a team than Lasry and Edens are about Milwaukee having a team. L & E are trying to a certain extent but at the end of the day, they want it on their terms and that may wind up a very bad thing for the Bucks and their fans.

  16. “Our billionaires are greedier than Seattle’s” isn’t the kind of thing sports boosters usually like saying out loud in public.

  17. LOL. Well, they don’t necessarily have to say “greedier” but “less passionate about the region than Hansen is about his hometown” may work a little better.

  18. I think Steve Wynn will outbid Chris Hanson for the Bucks if it came down to it. Vegas is closer to completing its arena while Seattle isn’t even in the talking stages.

  19. @JessyS

    Actually, Seattle finished the talking stages 3 years ago. That’s when they signed a 5 year MOU to get an arena built. They just need a team. As soon as one becomes available, they’ll break ground and just play at Key Arena while it’s being built.

    The problem is that the MOU only has 2 years to go. If the Bucks stay in Milwaukee and the league holds firm on it’s no expansion idea then I don’t know where Seattle would get a team although that would hold true for Vegas as well. No Bucks and no expansion means no NBA for Vegas either.

  20. I smell some bullshiitt here.

    Hedge fund guys who buy a basketball team know that the money is in a buy, build, and hold strategy. See Sixers, Philadelphia. Appreciates at 10% per year were not out of the realm of possibility BEFORE the TV deal. Witness Dan Gilbert buying the Cavs for $325 million, which is now valued at $915 million.

    They payed $550 million. A $25 million profit in less than a year is nice, but if they waited another year THEN sold to Hansen, they certainly would make more than $25 million.

    Prediction — They will magnanimous and give the city and state more time. There are 50 or 60 million reasons to do that rather than selling back to the league and letting the league reap that profit.

  21. @Trueblood, not quite true. The MOU agreement in Seattle exists, but further city council votes are actually needed to go forward/commit to the project/issue bonds. The road is well lit, but the city isn’t driving down that path without another round of city/county votes.