Former Bucks owner to get giant tax writeoff for giving money to new Bucks owners for arena

Hey, remember how as part of his deal to sell the Milwaukee Bucks, former U.S. Senator and current really rich guy Herb Kohl pledged to donate $100 million to a new arena in Milwaukee? This was painted by the local media at the time as a sign of Kohl’s generosity and commitment to his home town, something that is only slightly diminished by the news that Kohl is using the gift as a tax shelter that could be worth as much as $36 million:

The [Greater Milwaukee Foundation] will simply pass-through the $100 million Kohl had already promised for a new arena to that project. And so Kohl gets a charitable write-off for money that will essentially go to benefit a private business.

“It’s a classic tax avoidance maximization approach,” says Aaron Dorfman, executive director of the Washington, D.C.-based National Committee for Responsive Philanthropy. Dorfman notes that because Kohl sold the team this year, “he needs to get the donation on the books for this tax year.” And the foundation was happy to help Kohl. “We are honored to help a dedicated philanthropist fulfill his charitable wishes,” Gilligan told Urban Milwaukee.

This is an awfully expansive definition of “charitable,” given that the money is actually earmarked to build a new arena for the private NBA team whose new owners just gave Kohl $550 million for the franchise. (The state or city will need to create a tax-exempt public authority to receive the arena gift for this to work, but that’s standard operating procedure for most new sports venues anyway.) In fact, looked at the right way, new Bucks owners Marc Lasry and Wesley Edens are effectively laundering $100 million through Kohl and the Greater Milwaukee Foundation to spend on their own arena, though it’s awfully early in the morning for me to figure out the exact tax benefits to this route vs. just spending the money and taking it as a capital expense.

Anyhoo, this has been your daily reminder that rich people don’t have to obey the same tax laws as the rest of us. Just in case you forgot.

Bucks owners now don’t know where to put arena, let alone how to pay for it

So apparently all that talk about how the Milwaukee Bucks owners were interested in buying the Milwaukee Journal Sentinel’s building as the site of a new arena and the Journal Sentinel owners were “willing to listen” didn’t actually mean they’d be able to agree on anything. Bucks co-owner Marc Lasry now says that talks have “gotten more complicated” (the Milwaukee Business Journal’s Rich Kirchen claims this is because of “possible environmental contamination” at the JS site) and “I think it’s going to force us to sort of go to Plan B,” which would be, um, somewhere. The JS speculates that the Bucks owners may not now be able to settle on a site by the end of the month as they’d planned, which isn’t that much speculation, really, since 2015 is only three weeks away.

Meanwhile, on the arguably more important issue of where to get the money to build this mythical arena, the co-chairs of the community group Common Ground’s Fair Play committee had an op-ed in the Journal Sentinel yesterday that began like this:

The Nov. 24 Journal Sentinel article about the possibility of funding a new Milwaukee Bucks arena with money from players’ income taxes seems almost oblivious to the fact that the tax already exists.

An excellent point, if I do say so myself. The Fair Play chairs go on to discuss how punching a $10 million a year hole in the state budget would either force the state to raise taxes or cut services (because math!), but you can probably figure out the rest from here. With the Republican who control the governorship and both houses of the state legislature the ones in favor of the “jock tax” kickbacks, budget math may not matter as much as ballot math, but it never hurts to point it out.

An NBA commissioner walks into a Milwaukee bar, says “Why the long face?”

NBA commissioner Adam Silver went to Milwaukee yesterday, and ate custard! Okay, no, he didn’t. (Or maybe he did, but that wasn’t the headline.) What he did do was meet with the owners of the Bucks, city and county officials, and local business leaders about a new arena, and emerge with this statement:

“Feel very confident that these guys are gonna get it done. I think it’s absolutely doable. We’ve seen an enormous amount of positive energy in this community,” Silver said.

That may be the most noncommittal non-statement in the history of sports commissionerships, but really, it doesn’t matter what Silver said, because all commissioners have to do to heat up arena talk is to get on a plane.

My favorite bit about this Fox6 report on the head of a sports league endorsing the notion of getting new sports venues built with public money is that with Silver, Mayor Tom Barrett, and Milwaukee County Executive Chris Abele all speaking mostly in platitudes, they had to turn to someone else to go into more detail about the arena plan:

Rich Kirchen with the Milwaukee Business Journal tells FOX6 News that preferred site is the location spanning the UW-Milwaukee Panthers Arena and the Journal Communications building.

“The Bucks like that site. It’s pretty centrally located,” Kirchen said…

One potential idea is a so-called “jock tax” — setting aside the taxes NBA players already pay the state  and using them specifically for building the new arena. That could cover a $150 million loan from the state.

“It’s the one thing that has not been ruled out by Gov. Walker or the Republicans in the State Legislature. And they’re the ones who would ultimately give sort of, the high-level approval on something like that,” Kirchen said.

That’s right, not only is Rich Kirchen warning Milwaukee Business Journal readers about the “culture of caution” that prevents cities from throwing money at sports deals, but he’s actually being interviewed by other Milwaukee journalists as an expert on the Bucks arena plan. I hope that he next returns the favor and next writes a column interviewing the Fox6 reporters about what they learned about the Bucks arena plan from their interviews with stadium experts, until eventually all of the Milwaukee media crashes from a stack overflow.

(And yes, I’m aware of the irony of criticizing a journalist for being interviewed as a stadium expert when I get interviewed on this basis all the time. In my defense, I’d point out two things: 1) I wrote a book, at least; 2) I’d hope that no reporters are lazy enough to ask me to explain the state of arena talks instead of, you know, actually doing the reporting themselves.)

Billionaire Bucks owner says if state offers him $150m, he’ll take it as his due

Breaking news about the Milwaukee Bucks arena plan from the Milwaukee Journal Sentinel’s Don Walker, who as we know, never breaks news unless it needs to be broken!

Bucks co-owner Wes Edens open to idea of ‘jock tax’ to help build arena

Wes Edens, a co-owner of the Milwaukee Bucks, says the idea of a jock tax to help finance the construction of a new, multipurpose arena in downtown Milwaukee is a good starting point for coming up with a workable plan.

“I think that how we actually pay for it and what the form of the financing is and kind of all the technical nuances at some point will be very important,” Edens said in an interview with the Journal Sentinel. “To me it’s less important today than just the notion that, let’s just agree what’s on the table with the benefit of the team being in town. Once we have done that, we’ve got a really useful place to start the dialogue.”

Okay, so let’s take a closer look at what we’ve learned here. First off, the co-owner of the Bucks would be “open” to the idea of having the state of Wisconsin take all the income taxes that his employees pay and sending them directly to him. This is truly remarkable, as most billionaires when offered $150 million decline, saying, “No, no, I have plenty of money already.”

Second, Edens didn’t even actually say much specific about the jock tax, beyond generally endorsing the argument behind the Bucks getting to collect all of their employees’ state income taxes while lobbing an oblique move threat (“If the Milwaukee Bucks are forced to leave town because they don’t have an arena, those taxes are leaving with them”). His statement above makes clear that he’s not going to endorse any particular method of giving him $150 million, just that he thinks he deserves it, because of all the revenue that his team generates for the state. And as for those studies by economists showing that income tax receipts don’t change one bit whether teams are playing in town or not, hey, how many jobs have they created?

Wisconsin reveals that giving Bucks owners $150m in income tax rebates would make Bucks owners $150m richer

This just in! (Well, in on Friday afternoon, but nobody pays attention to the interwebs then.) Rich Kirchen has breaking news that according to Wisconsin state assembly leader Robin Vos, redirecting income taxes paid by Milwaukee Bucks players and employees could provide up to $10 million a year in funding toward the Bucks arena project, providing enough money to pay off $150 million in arena costs!

This is the first we’ve heard from Kirchen on the “jock tax” since July, when he reported that redirecting income taxes paid by Bucks players and employees could provide up to $10 million a year in arena funding. But then it was Gov. Scott Walker saying it, not Vos, so, you know, news.

So long as Kitchen is rehashing old stories, I think I’ll just quote what I said back in July about the jock tax idea:

This is revenue that Wisconsin is currently collecting, so it’s hardly free money. (Yes, it’s money that the state won’t collect if the Bucks move elsewhere, but then sports fans would just spend their entertainment dollars on something else, and employees of that something else would make more money and pay more income taxes, and so on, and so on.) So it’s really just a way of totaling up all the money that the state could credit to the Bucks, then rebating them by writing them a check equal to that amount. Except the players would still be paying the taxes, while the team owners would be getting the check. Nice work if you can get it.

Kirchen also says that an extra $150 million would more than provide the $100 million in public funding expected to be needed for the project — but given that the current price tag is from $400-500 million and the current budget goes $100 million from the Bucks, $100 million from former Bucks owner Herb Kohl, and $100 million from Mystery Investor #1 (possibly via a naming rights deal), the gap may actually be a fair bit more than that. But yes, the Wisconsin Legislative Fiscal Bureau has confirmed that if the state sends the Bucks owners a check for all the state income taxes that their employees are paying, then the Bucks owners will have a bunch more money. It’s magic!

WI speaker to Bucks owner: Quit hanging with Dems or my GOP friends won’t let you eat lunch at their table

Wisconsin assembly speaker Robin Vos is a Republican, and supports the Milwaukee Bucks owners’ attempts to get public funding for a new arena. So, he tells Milwaukee Business Journal, he was aghast when Bucks co-owner Marc Lasry appeared at a Democratic campaign stop with Barack Obama, because none of his Republican friends are going to want to give Lasry money now:

“If you’re looking to people for support, you certainly don’t want to poke people in the eye,” Vos told the Milwaukee Business Journal Wednesday.

Wisconsin representative Mandela Barnes, who is a Democrat and supports the Bucks owners’ attempts to get public money for a new arena, says this is unfair:

“Personally I feel that that just because the legislature is controlled by Republicans doesn’t mean it should only be open to republicans and their supporters. Marc Lasry expressed his freedom of speech and may now see the Milwaukee area and entire state of Wisconsin be held hostage,” Barnes said.

Wisconsin Gov. Scott Walker, who is extremely a Republican, has said he’d consider kicking in state tax money toward a new Bucks arena.

What are we arguing about again? Oh, right, whether or not Obama is evil. Carry on.

 

Milwaukee paper’s HQ could become Bucks arena site, reports Milwaukee paper

This could be interesting, to say the least: The Milwaukee Journal Sentinel, the Bucks owners’ best buddy in seeking a new arena, has emerged as the property owner whose site is being targeted by the Bucks for their new home:

The Milwaukee Bucks have their sights set on downtown property now occupied by Journal Communications, the UW-Milwaukee Panther Arena and the Milwaukee Theatre as the future home of a new, multipurpose arena…

Steven J. Smith, chairman and CEO of Journal Communications, said … that “speculation is ongoing that our Journal Square property would be part of the development of a new arena.” He indicated the company “is certainly willing to listen as the community moves to a consensus on what to do.” But Journal Communications employees, he said, “need to be located in a place where we can continue to be a relevant, meaningful company serving our community and state.”

We’ve seen something like this before in Minneapolis, where the Star Tribune’s coverage of the Vikings stadium battle was for years scrutinized because of the belief that the paper was looking to capitalize on the project by unloading its downtown property as part of the deal. (The paper eventually sold off its headquarters to another developer once the stadium deal was in place.) The Journal Sentinel headquarters is currently mostly empty, since its printing plant has been moved elsewhere and modern newspapers only employ a handful of whattaya call, reporters, so a Bucks arena could certainly be an alluring prospect for unloading their land. Or, if the price isn’t right, a reason to oppose the plan until it is.

Either way, this is even more of a reason to treat Journal Sentinel coverage of the Bucks plan with a grain of salt — though to be honest, if you didn’t already bring a king-size container of Morton’s to the table when reading it, you really should have been.

Bucks owner: I know where I want arena to go, and you don’t

Milwaukee Bucks co-owner Marc Lasry made Don Walker‘s heart go pitter-pat yesterday at a press conference by dropping hints that he knows where he wants to build a new arena:

“As soon as I know — well, I know, but I can’t say it so I apologize — but as soon as I can tell you, I certainly will,” Lasry said. “I think within the next 30 to 60 days we’ll know where the new arena is.”

Ooh, a tease! Time for everybody to hack into Lasry’s phone and see where it’s been the last month or so. Though it might be more useful to hack into his phone logs and see which bankers, or which city officials, he’s been talking to about where to get the money for this thing.

Lasry went on to talk about a bunch of other things, including a recent preseason game where he accidentally interrupted coach Jason Kidd’s postgame address, then decided, hell with it, I’m the owner, and went ahead and talked over Kidd anyway. This guy is fitting in already.

Bucks’ arena plans exactly where they always were, reports breathless Milwaukee newspaper article

Let’s see, what’s up with the Milwaukee Bucks these days, according to our old pal Don Walker of the Milwaukee Journal-Sentinel?

With deadline looming, shortlist emerges for new Milwaukee Bucks arena

Oh my gawrsh, there’s a deadline looming! Circle the wagons! Scramble the jets! It’s only a matter of time before—

With a self-imposed year-end deadline, the Milwaukee Bucks and others involved in the search for a proposed new downtown arena are zeroing in on a few specific locations.

…before the Bucks owners have to give themselves more time. Okay, leave the wagons where they were.

The rest of the article is just rehashed stuff that’s been previously reported, about how the Bucks owners are trying to zero in on a site first, then figure out how to pay to build an arena, which still seems a little backwards to me, but then, I’m not a mega-rich sports owner. (Also, it’s the kind of backwards that can work to their advantage, if they can pull off the “We know where we’re going to build it, now we just need to figure out how this inevitability will be paid for!” trick.) The best part, though, is this quote from an unnamed source about the site selection process:

“There is no sexiness north of the Bradley Center.”

You want context? You really don’t want context. This is the best thing you’re going to read in a Journal-Sentinel article about the Bucks arena plans for years, so just savor the moment.

Milwaukee group says Bucks owners “don’t need our money” after getting cold shoulder on playground demands

Common Ground, the Milwaukee coalition that previously said it would support public funding for a Bucks arena if it would also provide $150 million for school athletic facilities and playgrounds, now says it is opposing public funding for the arena altogether. The reason, apparently: The Bucks’ owners refused to meet with coalition leaders to discuss their plan.

Common Ground leaders had sought a meeting with the new Bucks owners to discuss their plan but have been rebuffed so far. Bob Cook, the Bucks’ vice president of business affairs, had offered to meet, but Common Ground said it wanted Edens and Lasry to fulfill a commitment to meet with the group.

Common Ground has also targeted Bucks co-owner Wes Edens for holding mortgages on several abandoned foreclosed properties in Milwaukee, which … has nothing to do with anything, I can tell, except maybe that they’re trying to argue that Edens is a guy who doesn’t really care about the city, so doesn’t deserve public money.

All its new talk of moral outrage over arena subsidies aside — “They do not need our money,” declared Jennifer O’Hear, co-chair of the group’s Fair Play campaign for public recreational facility funding — this still seems to be less a matter of principle and more a matter of wanting to use holding back support for any arena subsidies as leverage to get funding for programs they want, too. Common Ground is affiliated with the Industrial Areas Foundation, the community activist umbrella group founded by Saul Alinsky, whose guiding premise was to focus on winnable battles over concrete local issues, not big-picture ideology. That certainly has strengths, but it also has weaknesses, one of which is that it can become easy to buy off Alinsky-style groups by throwing some money at their pet projects, as Brooklyn Nets developer Bruce Ratner did by offering the IAF-inspired ACORN control of affordable housing on the site in exchange for its support of arena subsidies. (And as the same ACORN group earlier attempted to do around a minor-league baseball stadium in Brooklyn.)

So, this is all presumably tactical for Common Ground, in order to get a seat at the negotiating table. Which may end up being good for Milwaukee playgrounds, but that’s not necessarily the same thing as being good for Milwaukee.