Final Bucks arena plan would still put public on hook for nearly 100% of costs

Wisconsin state assembly leaders released a revised Milwaukee Bucks arena funding plan yesterday, and … it looks pretty much exactly the same as the arena funding plan released by Gov. Scott Walker four weeks ago. Same $55 million in bonds to be repaid out of state funds, same $55 million to be repaid out of currently uncollected county property taxes (assuming those can actually be collected, which is a big question), same $93 million diverted from current Wisconsin Center District funding streams, same $20 million (in two $10 million increments) to pay off the state’s remaining Bradley Center debt. Add in maybe $234 million or so in city funds and tax breaks, and you have a nice total public cost of about $457 million, or more than 90% of the total arena price tag — which could easily be 100% if you add in arena naming rights to the public building, which the Bucks are counting as part of the private side of the ledger.

So, nothing new at all here. Did the legislative leadership at least give a hint whether the arena would be included in the never-ending budget process, or get exiled to its own bill?

Still not clear is whether the arena deal will be included in the budget, or considered as stand alone legislation. Vos said it was important for the public, as well as members of both legislative chambers, to consider the draft, details of which are included in a memo from the Legislative Fiscal Bureau.
“I look forward to feedback from the members of the Senate and the public as they review the full details of this proposal, and will continue to work with all parties involved to ensure that any deal that keeps the Bucks in Milwaukee is a good deal for Wisconsin,” said Senate Majority Leader Scott Fitzgerald (R-Juneau).

You heard the man. Members of the public, provide your feedback.

New Atlanta Hawks owner introduces self, immediately complains that 16-year-old arena sucks

The Atlanta Hawks have a new owner, because the old one got caught complaining too many black fans were going to games and had to go. What do you have to say to your new team’s fans, leveraged buyout king Tony Ressler?

Ressler allowed that there were three things the new owners could do about Philips Arena, which opened in 1999: Nothing, remodel or rebuild. And the first, Ressler said, “isn’t an option.”

(Ressler also described Philips as being “not in the upper quartile of arenas.”)

Now, I know we’re in an age where sports venues are declared defunct after only a couple of decades — especially in Atlanta, for some reason — but declaring that your arena is obsolete because it’s 16 years old and there are seven nicer ones elsewhere is pretty ballsy.

And upping the ballsy quotient: For his reported $850 million purchase price, Ressler (and his co-owner, former NBA star Grant Hill) go not just the Hawks, but Philips Arena itself. So he’s not actually in a position to threaten anything if he doesn’t get a new arena, unless he’s prepared to attach his old one to balloons and fly it to Seattle. (Which, come to think of it, would defeat the point.) [CORRECTION: Ressler only bought operating rights to the arena, which is owned by the state stadium authority. So, sadly, no balloons.]

The hope is that Ressler won’t be looking for any public subsidies (ha ha ha!), and if he decides a new arena really is needed, will just spend his own money on building a new one. This time one that won’t start to look obsolete to its owner as soon as the shrink wrap is off, okay?

NHL to take expansion bids from Vegas, Quebec, Seattle, etc. because MONEYYYYYY

The NHL is taking bids on expansion franchises starting July 6, which doesn’t necessarily mean it’s going to expand, but does mean it’s testing the waters. And given the price tag, it’s easy to see why:

That’s kind of aggressive, considering that Forbes estimates the average NHL team to be worth $490 million, and given the markets we’d be talking about here (more on that in a minute), these teams would be below average. But then, the magazine’s team value figures always seem to lag a bit behind actual sale prices — as Forbes notes, there’s a bit of a bubble thanks to the fact that “Wall Street guys like Joshua Harris (New Jersey Devils) and Andrew Barroway (trying to buy a controlling interest in the Arizona Coyotes) are willing to pay a lot of money for hockey teams that lose money.” (It also doesn’t hurt that they can get huge tax breaks on their purchase price.)

The next question, obviously, is where, and everybody from Deadspin to the New York Times is assuming that one of the cities will be Las Vegas. This seems pretty daft from here — Las Vegas would be the second-smallest NHL TV market (ahead of only Buffalo), it’s in the middle of the Sun Belt where hockey franchises go to die, and it has a relatively poor permanent population. (A proposed Vegas team has managed to get $150 deposits on 11,500 season tickets, though those are refundable if there’s no team starting in 2016.) But it does have a new arena going up, and those things are guaranteed gold mines, right?

If Vegas were one team, the other would likely be either Quebec (where telecom giant Quebecor is almost certain to throw its hat in the ring) or Seattle (which has interest but still no solid NHL arena plan). Quebec would actually be the smallest media market in the NHL (smaller than Flint, Michigan!), but it’s in Canada, so maybe that compensates? Also, new arena!

If nothing else, all this means that Glendale should probably feel relatively secure in playing hardball with the Coyotes owners over their lease, since the NHL is unlikely to encourage the team to move to a new city if that would jeopardize a half-billion dollars in expansion fees. And with that, let’s go look as some photos of the under-construction Las Vegas arena:

Yeah, that, um, looks like an arena. With two levels of luxury suites, which I guess is standard these days, but makes for just awful views from the top deck. But hey, not like anyone’s likely to be sitting up there anyway, amirite?

Sacramento says giving parking, billboards to Kings cost nothing, because they were just lying around

Testimony has begun in the Sacramento Kings arena hidden-subsidies lawsuit, and we’re already deep into “it depends on what ‘is’ is” territory:

[State assemblymember Kevin] McCarty said he felt the city should have told the public more about the dollar value of two other elements of that deal – several thousand underground parking spots the city agreed to let the Kings operate, and the right to build six billboards on city property…

[Assistant City Manager John] Dangberg said the city did not assign a value to those assets because, even if they are of value to the Kings, giving them away did not cost the city any money. He did acknowledge a potential “opportunity cost” on future revenues for the signboards.

Needless to say, Dangberg’s argument is what economists call “stupid” — there are any number of assets that a city could give away that don’t cost money yet that have significant value (unused land, taxes on projects that haven’t been built yet, the right to sell advertising space on the mayor’s suit jacket). Eye on Sacramento previously estimated the present value of the parking at $57.8 million, and the billboards at $18 million.

The court won’t be determining whether the city included hidden subsidies, though, but rather whether it committed fraud in doing so, which is a stickier legal wicket. In the court of public opinion, however, we are free to issue a verdict of liar, liar, pants on fire.

Conservative think tank proposes making construction workers help pay for Bucks arena

Good news, everybody! The MacIver Institute, a conservative think tank in Wisconsin, has come up with a way to save public money on a Milwaukee Bucks arena! Nick Novak, the MacIver communications director who formerly worked for the Republican National Committee and for top Bucks arena booster Gov. Scott Walker, writes that ideally there would be no public subsidies at all, but “taxpayers are likely on the hook for some part of the new arena,” so here are three ways to keep costs down:

  • Pay construction workers $56.5 million less in wages by eliminating a “prevailing wage” provision!
  • Hire non-union workers, who are cheaper!
  • Use slaves, like FIFA does!

Ha ha ha, no, not really that last one, that would be wrong! Proposal number three is actually “ask the Bucks owners to let naming rights money count toward the public’s share of costs, not the team’s share,” which is effectively the same as “ask the Bucks owners to pay for more of the arena themselves” — not a terrible idea, but as Novak starts out by accepting that “pay for it yourself” isn’t going to fly, it’s unclear why he thinks that naming-rights money is some special pot of cash that the Bucks owners would be more willing to let go of.

I understand why a conservative think tank would use an unpopular arena plan as a way of complaining that union workers get paid too much — it’s what they do, especially in Wisconsin — but it’s less helpful in a sports venue project, which are exceptionally materials-intensive, with labor costs amounting to a smaller portion of the cost. Novak doesn’t link to the source of that figure that ditching prevailing wage rules would save $56.5 million in labor costs, though he does cite the Wisconsin Taxpayers Alliance, so I’m guessing he’s referring to this report, which figures that workers could be paid about 40% less (including benefits) if the state’s prevailing wage laws were jettisoned.

Now, far be it from me to uncritically defend construction unions, which are typically among the more self-interested labor organizations, acting as knee-jerk supporters of any construction project that will earn them jobs even if it’s a waste of money that could be going to other needs (and other union workers), and circling the wagons to reserve union membership for existing members. But it’s more than a bit odd to present an arena funding argument that says you can’t ask billionaire team owners to take less money (except for naming rights, maybe), but you should ask for the people who actually build the thing to take 40% less money. Either it’s because construction workers can’t threaten to move to Seattle, or because conservative think tanks just like complaining about labor costs — you make the call.

Lawsuit begins over Sacramento officials hiding tens of millions in Kings subsidies in plain sight

It’s time for another lawsuit to go to trial over the Sacramento Kings arena deal, because it’s been absolutely months since we’ve had one of those. This one charges that the deal is illegal because its backers lied about its costs:

Downtown residents Jim Cathcart and Julian Camacho and Tahoe Park community activist Isaac Gonzalez say the deal is a fraud, and they’re asking for a court order invalidating the subsidy. For the next two weeks in Sacramento Superior Court, they will press their claim that the mayor and people around him lied to the public about the true value of the arena subsidy.

Instead of holding the line during negotiations, they contend that city officials covertly agreed to the investors’ demands, larding up the deal with as much as $200 million worth of undisclosed “sweeteners,” such as the parking garage beneath Downtown Plaza.

“They gave stuff to the Kings, and they did it without full public disclosure,” Cathcart said. “It’s wrong, and it’s got to be exposed.”

The problem with this lawsuit is that, while Sacramento city officials certainly didn’t go out of their way to publicize all the public subsidies that the Kings owners would be getting, it was all right there in the term sheet, spelled out clearly enough that budget watchdogs could add up the costs for all to see. So this comes down to a lawsuit charging city officials with spinning figures to make them look better for their side — which while we might wish it were illegal, is pretty much 90% of what city officials spend their time doing. So good luck with that before a judge, though if it means two weeks of court dates where Kevin Johnson and company are forced to acknowledge all the goodies that they ladled onto the Kings deal, there’s a benefit to that, too.

Wisconsin Dems and Reps to meet to discuss who wants less to vote for $500m in Bucks subsidies

This is what passes for action in the Milwaukee Bucks arena squabble: Top Democratic legislators in Wisconsin will be getting a meeting with top Republican leaders, after griping that they were being asked to vote for the arena deal without having any input on it. No sign, though, that Bucks representatives will be present, so this doesn’t appear to be actually so much a seat at the table in negotiations as just a briefing on what they’re being told to vote for. (What they’re being told to vote for, as a reminder, is $328 million in city, county, and state cash plus $180 million in property tax breaks to help two billionaires pay for a $500 million arena to replace a building that’s just 27 years old.)

Meanwhile:

Republican leaders are still finalizing a draft of the arena proposal to be released to legislators and the public, Assembly Speaker Robin Vos, R-Rochester, said Wednesday, adding that he thinks a majority in his caucus supports the proposal “to some extent.”

That’s not exactly overwhelming confidence there. It’s still possible something can get worked out at the last second that a majority of the legislature will actually vote for, but I wouldn’t bet big money on it at this point.

Milwaukee sets July 2 hearing on Bucks arena plan, maybe will figure how much it’d cost city by then

The Wisconsin state legislature may be at a total standstill on deciding what to do about Gov. Scott Walker’s Milwaukee Bucks arena funding proposal, but Milwaukee Mayor Tom Barrett is moving ahead, calling a public hearing for July 2 to discuss the city’s part of the plan.

How much the city would be funding has been a bit of a moving target, thanks to a pile of tax kickbacks and free land that would be involved, so maybe this Milwaukee Journal-Sentinel article will provide a coherent rundown of … nope, nope, do yourself a favor and don’t even try to read it. (There are a lot of numbers, but not in any way that’s easy to add up.) Here’s everything the city would be on the hook for, best as I can make out:

  • $35 million for a new parking garage, to be paid off mostly with property taxes from an existing downtown tax increment financing district. ($8 million of this would be initially paid for by the Bucks, but the city would repay them with TIF funds, so it’s really all city money.)
  • $12 million for a “public plaza” within the Bucks’ new entertainment space, to be repaid via a new TIF district on the team’s non-arena development (i.e., the Bucks would get to pay their property taxes and eat them too).
  • An existing parking garage worth $7 million, which the city would give to the Bucks so they could tear it down and build stuff on it.

And not addressed in the J-S article:

If there’s one thing that hearings would be good for, it would be actually getting a complete accounting of what Milwaukee taxpayers would be giving to the Bucks as part of this deal, and how much it would all be worth. I’m not holding my breath that this is going to happen — I expect more Barrett’s staff showing Powerpoints of how great it all is, Common Ground folks demanding that more funding for schools be part of the package, and lots of people dressed like this — but it’d be nice.

[UPDATE: Just noticed that Urban Milwaukee has attempted its own summary of the total city costs, though it admits that this is an “elusive task.”]

Wisconsin still trying to find way to build Bucks arena without anyone actually voting for it

It looks like the Milwaukee Bucks arena bill is headed for a vote separate from the state budget, according to Wisconsin state senator Alberta Darling, chair of the legislature’s joint budget committee:

There’s momentum to do just that,” Darling told WTMJ’s Jon Meerdink. “I’m not saying there’s been a decision made. There hasn’t been.”

Most observers believe holding an arena funding-only vote would hurt the chances of the state Legislature approving the proposal.

“It’s going to be tough either way,” said Darling, who supports public funding for an arena.

The plan by the state’s Republican majority, much of which doesn’t like Gov. Scott Walker’s arena plan but wants to support his budget, is that by making a vote separate, they could avoid having to get saddled with voting for $300 million or so in public expenditures (most of it city and county, not state, but still), while forcing Milwaukee-area Democrats to decide whether to take the blame for the Bucks leaving, if they do. Not that this plan seems to be working — most Milwaukee-area Democratic legislators hate the deal too — which is no doubt why Darling sounds so pessimistic.

Meanwhile, the Wisconsin Legislative Council, which provides independent legal analyses for the state legislature, says that a big chunk of Walker’s claim that paying the Bucks $300 million is cheaper than losing them is actually not true:

“It appears unlikely that a court would hold the state financially responsible for all debts and obligations of the Bradley Center Sports and Entertainment Corporation solely on the basis of (this) ownership interest,” the attorneys wrote to [Rep. Dean] Knudson, who also sits on the Legislature’s powerful budget committee.

Walker had projected $120 million in future costs on the existing Bradley Center, which already seemed inflated, since much of that would be for improvements the Bucks would want, and in this scenario they wouldn’t be around to want them anymore. Walker’s “cheaper to keep them” line already looked like a load of crap, so the WLC finding just adds a bit more crap to the scales. Of crap.

Wisconsin state committee plans to call in sick until it can agree on a Bucks budget bill

The Wisconsin state legislature’s joint budget committee isn’t meeting today to discuss the Milwaukee Bucks arena proposal, or anything else, it turns out:

Wisconsin’s budget committee remains at a standstill and won’t meet on Wednesday, as previously suggested…

GOP leaders are still finalizing a draft of the arena proposal to be released to legislators and the public, [Assembly Speaker Robin] Vos said, adding that he thinks a majority in his caucus supports the proposal “to some extent.”

“I don’t expect to ask anybody for a vote until they have a document they can see,” he said.

Actually seeing legislation before voting on it? Wisconsin is so quaint.