Milwaukee paper says don’t give up on Bucks arena now, just because no one has money to pay for it

The Milwaukee Journal Sentinel editorial board wants you to know that just because three year after the owner of the Bucks started agitating for a new arena, everybody is still just staring at each other wondering who’s going to pay the half-billion-dollar-plus price tag, they still think it’s a great idea. Because “everyone is still talking about a new arena in Milwaukee. And when everyone talks, something usually happens.” And because “a small city in a cold climate needs all the quality-of-life amenities it can get.” And also because “if Milwaukee wants to remain an ‘NBA city,’ the city must comply with NBA standards,” which are never defined, by either the paper or the NBA, but never mind about that, Seattle wants your teeeeeeeeam!

Not that the Journal Sentinel editors think Milwaukee should just roll over and give the new Bucks owners anything they want, oh no: They suggest the state could kick in $150 million, the city and county kicking in something that “may depend on the size and scope of any nearby development spurred by a new arena” (why, we’re again not told). And then maybe the Bucks owners will actually kick in something more than $150 million out of their own pockets, notwithstanding that the Journal Sentinel itself has already reported that they won’t.

In other words, there’s nothing new here, other than “Jeez, guys, everyone’s been talking about an arena without knowing how to pay for it for years now, why give up on that momentum now?” And, presumably, trying to turn up the heat on elected officials to get a deal done, especially when you consider that it ends like this:

Where’s former Gov. Tommy Thompson when we need him? He’d know exactly what to do.

What has Thompson been up to since leaving Wisconsin elected office, anyway? Oh, right, lobbying his old bosses in government for Medicaid changes that would directly benefit his private companies. Yeah, he would no doubt know exactly what to do, but something tells me he’d more likely be sitting on the other side of the negotiating table.

Bucks owners say “exploring” added development, so why make fuss over them only funding third of arena?

Great news, everybody! The owners of the Milwaukee Bucks may only want to put in less than a third of the construction cost of a new arena, and nobody may have any ideas how to pay for the rest, but as soon as they get gifted with that, they’re willing to build some for-profit development next to it on their own dime!

“Not only have our owners committed a sizable investment for the new arena, they’re exploring investments in potential ancillary development,” team spokesman Jake Suski said Thursday. “They want to be actively involved with the city, county and state in the planning and help assemble a world-class development team to see this bold vision realized.”

You know, we really should take a moment to stop and appreciate the rhetorical artistry here: Not only are we willing to pay for part of an arena that will entirely benefit only us, but we’re also thinking of maybe paying for some other development that will also benefit us! Aren’t we generous? It’s almost worthy of a prize of some sort.

Bucks arena finance cost grows, supporters turn pockets inside-out to see who has $250m in loose change

Oh, yeah, we’ve definitely reached the racino phase of Milwaukee Bucks arena funding plans, where everybody notices how big the funding gap is and scrambles for ways to fill it, crazy or not. As the first sign, we have another negativish arena article from the usually upbeat Don Walker, this one reporting that the state Legislative Fiscal Bureau has determined that Gov. Scott Walker’s plan to sell $220 million in bonds for an arena would result in between $323 million and $488 million in state costs.

This is just an updated version of the state report that Rich Kirchen of the Milwaukee Business Journal reported on last month, and just like then it’s still not entirely clear whether this is nominal state costs (i.e., adding up all the bond payments over time) or present value (how much money you’d need to have on hand now to make all the future payments). (Hey, Don and Rich, can you start indicating the difference, please? Bloggers everywhere without a budget to make calls to the LFB thank you in advance.) Usually inflated figures like this result from taking the nominal value, which isn’t the best way of looking at things — but given that the repayment plan would involve backloading payments until NBA salaries rose enough for enough of players’ state income taxes to be kicked back to pay off the bonds, we could be looking at a Miami Marlins-like scenario.

Meanwhile, the local commercial realtors group gathered last night to come up with ways to help support an arena plan, by … okay, let’s watch the video … “Where the rest of the money comes, that is still a matter of discussion — some say it will come from the city, some from the county, some from the state. Stay tuned.” Hey, that’s not “Realtors group makes pitch to support, fund new arena for Milwaukee Bucks”! I call headline fraud!

Everybody in Milwaukee finally admits they have no idea how to pay for a Bucks arena

How much of a mess are the funding plans for a new Milwaukee Bucks arena? So much that even Milwaukee Journal Sentinel arena-buildin’ reporter Don Walker is willing to say so:

Now, everything has become murky.

The owners have drawn a line in the sand with their current financial commitment.

Gov. Scott Walker has proposed a $220 million bonding plan, but spent most of his time on the presidential campaign trail.

Assembly Speaker Robin Vos (R-Rochester) has said the governor’s bonding number is too high; Senate Majority Leader Scott Fitzgerald (R-Juneau) has said Walker’s plan was nearly dead, and he was working on an alternative.

Locally, one of the major tenants at the BMO Harris Bradley Center, Marquette University, says it won’t put any money in the pot. The school says it prefers to be a tenant.

Mayor Tom Barrett has committed help, but says he doesn’t have money and won’t raise property taxes. County Executive Chris Abele says he doesn’t want to do anything that will “burden local taxpayers or result in cuts in services.”

Yes, it turns out that when you put up a $250 million Kickstarter for a new private basketball arena and the only rewards are NBA players continuing to pay their state income taxes, people don’t rush to throw coins in your jar.

Not that this means the Bucks arena plans are dead — rather, just that figuring out how to pay for buildings that almost never generate enough revenue to pay off their own construction bills is real hard. We now enter what could be thought of as the “flailing” phase of arena talks — though maybe the “racino phase” has a better ring to it — as marked by Gov. Walker already saying he’s open to any funding ideas that anybody has. Hey, there’s an idea: Crowdsource coming up with a way to pay for it! People are way more free with their ideas than they are with their $250 million.

Bucks owners won’t spend more on arena, state senator has plan to fill funding gap, won’t say what it is

Breaking news! A Wisconsin state legislator has an idea for a new way to fund a Milwaukee Bucks arena!

A spokeswoman for state Senate Majority Leader Scott Fitzgerald told WISN 12 News that discussions are underway about a plan that could do away with the need for any state borrowing and could be done separate from the state budget.

Yeah? Yeah?

Fitzgerald (R-Juneau), in an appearance on Jay Weber’s WISN-AM (1130) show Wednesday, said it’s too early to discuss specifics of the plan.

“It’s a different funding mechanism that could possibly eliminate the whole bonding piece, which is something that was making everyone very uncomfortable,” Fitzgerald said.

Well, that’s … unspecific. And doesn’t even necessarily mean a different funding source, since state tax dollars could still be used to pay off the arena debt, so long as the state wasn’t the one doing the initial borrowing.

At the same time as Fitzgerald was floating his vague promises, meanwhile, a “source familiar with the [Bucks’] planning” was whispering to Milwaukee Journal Sentinel columnist and Bucks pal Don Walker that the team’s owners “will not go beyond their $250 million commitment for the project” (really $150 million in their money, plus $100 million that former owner Herb Kohl kicked in as part of the sale agreement). This is starting to feel like the endgame of an arena funding gambit, where the team owners put their final cards on the table, and dare local legislators to come up with the rest of the cash somehow, or else. And we know how that one all too often ends.

Milwaukee chamber chief: No debating arena cost until Bucks say they’re ready, okay?

What’s this? Is Milwaukee chamber of commerce chief Tim Sheehy actually breaking rank with his pals in the Milwaukee Bucks front office to make demands about a new arena?

The Bucks arena disclosure “has to happen in the next two weeks,” Sheehy said.

“It’s going to happen in the next two weeks because the Joint Finance Committee and the public need the vision and the cost,” Sheehy said.

Nah, he’s just passing along the message that the legislature is getting antsy, so the Bucks owners need to come up with plan details soon. And also to cut off any discussion of how exactly the arena would be paid for, because why talk about how to raise half a billion dollars if you don’t know if it’s really half a billion or half a billion and change?

Sheehy said it is premature for legislators to discuss dollar amounts. He hopes the final figure will be higher than $150 million toward the $400 million to $500 million project.

“Our goal is to get people to not draw a line in the sand until the whole package is assembled,” Sheehy said.

All quotes from Rich Kirchen’s article in the Milwaukee Business Journal, which as is becoming tradition in Bucks arena coverage (certain news outlets excepted), quotes only arena proponents: Sheehy, a Bucks spokesperson, and Mayor Tom Barrett. (State assembly speaker Robin Vos gets a link to a previous quote, but he’s in favor of public arena funding as well, albeit at a lower level than the governor.) Would have been nice to hear what the Joint Finance Committee thinks it needs to hear, let alone “the public,” but let’s give Kirchen the benefit of the doubt and assume that those’ll be included in his followup story today, yes?

Milwaukee mayor goes on and on about Bucks arena, doesn’t make damn bit of sense

Milwaukee Mayor Tom Barrett met with Milwaukee Journal Sentinel reporters and editors yesterday, and the paper’s Don Walker has written up a fairly confusing report on the mayor’s sales pitch for a new Bucks arena. (In particular, he compares the back-and-forth over arena funding to both “a tetherball game” and “a dating relationship,” neither of which seems very appropriate, let alone enlightening.) It’s hard to blame Walker entirely for this one, though — aside from running yet another article that almost entirely consists of quotes from a pro-subsidy official — since Barrett’s explanation of how he wants the city to aid the Bucks is lacking a bit in the logic department:

Barrett has said the city’s contribution will not come from increased property taxes.

Instead, he told editors and reporters, the city’s contribution could come in creating tax-incremental financing districts that would benefit the anticipated ancillary development the Bucks’ owners say will be part of a larger development.

A new arena, Barrett noted, does benefit the city but not in terms of tax revenue; no property taxes will be collected from the arena. The real beneficiary, he said, is the state, which will capture the income and sales taxes generated in the arena.

Um, not quite. A basic principle of economic development is that the bigger you draw the circle around a project, the smaller the impact, because more and more of the spending is just diverted from other places. (The Bucks draw some people from outside Milwaukee to spend their money inside the city, but how many people come from outside Wisconsin?) So yes, the Bucks’ sales and income taxes go to the state, but a large chunk of that would go to the state even if Wisconsinites had to go spend their entertainment dollars on something else.

Secondly, a tax-increment district wouldn’t “benefit the anticipated ancillary development” — it would take property taxes paid by the ancillary development and redirect it to pay for the arena. (The city can’t redirect property taxes paid by the arena because it’s already going to be doing that, to the tune of about $180 million.) [UPDATE: Barrett says elsewhere that he’d be counting any TIF subsidies as going toward the ancillary development, but this is pretty much semantics, since it would all be going into the same pockets.]

This is why it’d be nice for newspaper writers like Walker to either attempt their own analysis of public officials’ claims, or find independent experts who can say whether they pass the smell test. When journalism just consists of writing down whatever the mayor says, it’s less tetherball than Calvinball.

Wisconsin agency says Gov. Walker’s $220m “jock tax” for Bucks could cost state lots more

I’ve previously criticized the Milwaukee Business Journal’s Rich Kirchen for being overly credulous on the Bucks‘ arena, but today he reports on some news that’s not so positive for the team’s plans:

Wisconsin Gov. Scott Walker‘s proposal for the state to issue $220 million in bonds for a new arena in downtown Milwaukee could carry an actual cost of at least $380 million including interest, according to a preliminary estimate by the nonpartisan Legislative Fiscal Bureau.

Note that “including interest,” though. Is this just a case of misunderstanding the difference between present value (what a purchase costs you in today’s dollars) and nominal cost (what it costs you if you added up all your payments over time, like if you buy a $200,000 house and pay it off with $400,000 worth of mortgage payments over 30 years)? Or is it an actual case of the cost being higher than at first projected, like when it turned out that the Miami Marlins stadium included so many backloaded balloon payments that it was costing taxpayers an extra $450 million?

A little of each, it looks like. Since Gov. Walker’s plan relies on kicking back future income taxes from NBA player salaries, and NBA player salaries aren’t expected to soar into the necessary stratosphere for a while yet, the state probably would have to backload payments, which would increase the cost of the bonds beyond $220 million. How much, no one knows yet — Legislative Fiscal Bureau analyst Al Runde didn’t say — nor did he say how much additional the state could be on the hook for maintenance costs on an arena, something that has yet to be negotiated. Let’s just leave it at “a lot” for now, then.

Wisconsin tribe offers $200m for Bucks, no questions asked, if state just gives them a casino

And in other news that won’t officially be announced until later today: The Menominee Tribe of Wisconsin is expected to offer $200 million in money for a new Milwaukee Bucks arena if Gov. Scott Walker changes his mind about approving a new casino for them in Kenosha.

What’s the catch? Well, a Kenosha casino would undoubtedly draw off business from the Potawatomi tribe’s casino in Milwaukee, and the state agreed back in 2005 to reimburse the Potawatomi for any losses stemming from a new casino in Kenosha. The Menominee have previously promised to reimburse the state for any such losses, but haven’t put that in writing yet.

Of course, it’s always possible — not likely, but possible — that casino spending would grow so much that both tribes would come out ahead. Then you’d only need to deal with 1) the fact that if a new casino in Kenosha is really worth $200 million, the state could cut the same deal with the Menominee and use the money for something other than a basketball arena, and 2) encouraging Wisconsin residents to spend a whole lot more money at local casinos probably isn’t the smartest economic policy.

This seems likely to go down the same road as paying for a Minnesota Vikings stadium with casinos did, i.e., get kicked around in the press forever but not have legislators want to touch it. It does help shift the debate from “should the state help fund a Bucks arena?” to “how should the state help fund a Bucks arena?” though, so for that, the Bucks owners should probably send the Menominee a nice fruit basket.

Milwaukee Journal Sentinel runs actual journalistic report on arena project (just not Milwaukee’s)

I’ve been very harsh on Milwaukee Journal Sentinel writer Don Walker, with good reason, but credit where credit is due: He wrote a good article on Saturday on NBA arena plans, even citing Judith Grant Long’s research on total subsidies to sports facilities. It was an article on the Golden State Warriors‘ plans for a privately funded arena in San Francisco, mind you, not on the Milwaukee Bucks‘ plans for a mostly publicly funded one in Milwaukee, but still, at least Walker did lay out the basics of the Warriors plan and contrast it with the Bucks one.

Sure, it would have been nice if he’d dug deeper into how the Warriors owners expect to recoup their investment (development around the site, plus being the only sizable arena in one of the nation’s wealthiest markets) and whether it makes sense for the Bucks owners to do the same, but at least it quotes more than one person. Though the conclusion still leaves a bit to be desired:

In San Francisco, “They have a vision to make the Warriors world-class, second to none,” [Warriors spokesperson P.J.] Johnston said.

The Bucks leadership seems to have that same vision. Just a different way of getting there.

Yup, just two ownership groups trying to make their arenas the best they can, one by paying for it, the other by sticking taxpayers with half the bill. Potato, potahto, right?