Latest Bucks idea: Fund arena by redirecting income and sales tax — wait, isn’t this where we came in?

Clearly the Milwaukee Bucks arena campaign, facing both popular and legislative opposition, has hit the throwing-stuff-at-the-wall-to-see-what-sticks phase. Today’s projectile of choice: the “jock tax”!

[Wisconsin Gov. Scott] Walker, in a Friday interview with the Business Journal, said his staff is studying the possibility of tapping income taxes from NBA players and other tax revenue directly generated by Milwaukee Bucks games to possibly pay for a new arena. The income tax already is paid by Bucks players for games in Milwaukee and visiting team players.

The Milwaukee Business Journal’s Rich Kirchen — yes, that Rich Kirchen — goes on to report that state income taxes on NBA players in Milwaukee currently raises between $8 and 10 million per year. The average NBA team spends about $70 million on player payroll, and the top Wisconsin tax rate is 7.65%, so that … makes no sense, actually? The state can tax visiting teams as well, but then Bucks players can also deduct other states’ jock taxes from their Wisconsin tax bill, so this seems a bit optimistic to me.

And regardless, 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.

And this would only be enough to raise perhaps $100 million, and the Bucks arena is still $250 million shy of the funding needed to build it. So the rest would be filled in, perhaps, by sales taxes paid at the arena — and suddenly we’re back to the “super TIF” proposed by Sheehy back in April, but which Kirchen is apparently pouring into new bottles and hoping no one notices.

Which brings us to this, at the very end of the article:

The advantage of earmarking for debt payments NBA-player income tax and sales tax from Bucks home games is that the proceeds likely will increase in future years, [Milwaukee chamber of commerce president Tim] Sheehy said. NBA salaries continue to increase and, assuming the Bucks on-court record and attendance improve, sales tax on merchandise, concessions and ticket sales also should increase, he said.

Or, looked at another way, the amount of future revenues that the state would be handing over to the Bucks owners would go on rising inexorably year after year. Damn, sorry about that — I must have missed my shipment of Milwaukee Business Journal rose-colored reading glasses.

If you want to sell a sports subsidy plan, state it in terms of cups of coffee

There was yet another Milwaukee Journal-Sentinel column arguing for public funding for a Bucks arena on Friday, and I wouldn’t even take notice, but columnist James E. Causey brought back the dreaded coffee analogy:

The annual cost to regional taxpayers for Miller Park is about $10, or the cost of two venti Caramel Macchiatos at the local Starbucks.

Even if the figure was $25 a year, it still would be a bargain.

Pricing stadium costs in cups of coffee has a long tradition, most notably back in 2005 when it was the Minnesota Twins seeking public subsidies, and the Minneapolis Star Tribune’s Jim Souhan wrote approvingly, “Twins owner Carl Pohlad will pay $125 million. You’ll pay less than you leave in the tip jar at Dunn Bros.” (That’s a coffee place, FYI.) The problem — other than that the annual cost of Miller Park is repeated over 30 years, so really every man, woman, and child in the Milwaukee area (Causey divides by total population, not just adult taxpayers) is out $300 — is that you can do this trick with just about any public expense you can think of and make it sound reasonable:

Anyway, the point isn’t that big expenditures spread over enough people average out to a small amount — though no doubt writers like Causey are counting on readers’ innumeracy to obscure that realization. (He also buries deep in his article the news that a Bucks arena would cost more like $25 per person per year, or five Macchiatos.) The point should be what else could you be doing with that money. For the estimated $250 million cost of a new arena, Milwaukee could open another 19 libraries, or provide financial aid to an additional 18,000 college students, or, if you prefer, cut the average Milwaukee homeowner’s property taxes by $284 a year.

Not that any of these are necessarily the best uses of $250 million. But you’re talking about how to spend public money, you need to be comparing apples to apples, not to Macchiatos.

Bucks owners to Milwaukee: Fund arena or big bad NBA will take your team away

With economists savaging their plan to seek $200-300 million in public dollars for a new basketball arena, and voters not much happier with it, Milwaukee Bucks owners Marc Lasry and Wes Edens had to do something to jumpstart their plans. So, speaking to reporters and Rotary Club members yesterday (yeah, I don’t get it either, just go with it), they pulled out the big guns:

“The problem we have is in our agreement with the NBA if an arena is not built, the NBA has the right to take the team back,” Lasry said. “I think we’ve got three or four years to do that. So we’re under huge pressure to do it.

“Wes has said it and I’ve said it: There are no other alternatives,” Lasry said.

So, really, if Milwaukee doesn’t come up with money for a new arena, the league is going to take the Bucks from Lasry and Edens and … do what with it, exactly? Sell it to owners who’ll move it? Hang onto it and see if the league can be any more successful at shaking down local politicians for arena money? Come on, Rich “Culture of Caution” Kirchen, we want to know the answers to the big questions!

I asked Lasry later Monday morning whether the NBA required the “buy back” clause in the Bucks transaction and he said “yes.”

“It was what the NBA wanted,” Lasry told me.

Sigh. I guess “Is Bad Cop making you threaten us with this?” is technically a question, but it’s not the one I would have led with, you know?

Anyway, none of this is really new — the buyback clause has been public knowledge since April — but it’s now more clear than ever that “Don’t make Adam Silver mad, who knows what he’ll do?” is going to be Lasry and Edens’ main negotiating tactic. I’d still like to see a Wisconsin journalist try to investigate whether Lasry and Edens (and former Bucks owner Herb Kohl) conspired with the NBA to insert this buyback clause, but so long as Wisconsin journalists think that “investigation” means asking the team owners “Are you co-conspirators?” we’re probably not going to get much of an answer.

Wisconsin voters on Bucks arena: We will not fund it on a boat, we will not fund it with a goat

We already knew that Milwaukee area residents were overwhelmingly opposed to a sales tax hike to help fund a new Milwaukee Bucks arena. Now it turns out they’re overwhelmingly opposed to giving the Bucks owners any public money of any kind:

Sixty-three percent of those surveyed in the five-county region said they were opposed to spending state funds for such a purpose. A total of 34% were in support of spending state money for a new Bucks arena.

Statewide, an even larger percentage, 73%, were against spending state money on a new arena, while 24% were in support…

Asked if they supported spending state money on development of infrastructure associated with a new arena, 53% of those surveyed within the five-county area said they were opposed, while 45% were in support.

Statewide, 60% were opposed, compared with 37% who were in support.

Not that this is likely to stop talks about public funding for a new Bucks arena, since elected officials (and certainly sports team owners) tend to see massive public opposition as a hurdle to clear, not a mandate to be followed. Though it may get a few local politicians worrying what the consequences will be if they throw themselves behind another unpopular sports facility funding plan.

Milwaukee journalist blames lack of Bucks arena deal on dreaded “culture of caution”

Oh, Rich Kirchen, Milwaukee Business Journal writer and man who never met a Bucks arena plan he didn’t like, what have you done now?

The year was 1931 and the place was Milwaukee. The topic - Milwaukeeans’ “sensible” approach to building their city.

“Milwaukee’s citizens (for the most part) are thrifty, conservative beauty-loving Germans; they plod at their play, but drink deep of every emotion; they linger over their drinking and eating — they tarry with reverence at their shrines of music and drama. There is a slow, deep urge to their work and play.”…

But as metro Milwaukee gets down to the business of debating funding for a new downtown arena in 2014, does this long-running culture of caution stunt the effort?

People, we have a new meme attempt: the culture of caution. This is apparently a dysfunctional social behavior, rooted deep in the psyche of Germans, that involves … wanting to think before you act, I guess? Conducting studies before coming up with a plan? Which is un-American, because real forward-thinking types say things like this:

“It is a time for heroes,” [Milwaukee real estate developer Barry] Mandel told me. “It is a time for people to step up and recognize that we are at a critical juncture where we can leapfrog to the future and the 21st century or we can wallow in mediocrity for the next decade.”

Leapfrog to the future. Now that’s something those filthy Germans with their drinking and eating would never say. But it’s how we need to get to the future, which is after all where we’re going to spend the rest of our lives.

“Optimism” in Milwaukee over Bucks arena is “fading,” says TV station, so it must be true

Oh, goodie, somebody in Milwaukee has noticed that a new Bucks arena would actually have to be paid for, and the new Bucks owners aren’t going to do it themselves:

When the sale of the Milwaukee Bucks was announced, the city was filled with optimism, but now, as the community debates how a new arena will be paid for, some of that optimism is fading.

“There just seems to be a tendency — at least the initial response from a lot of people in the community is ‘no, we can’t do that, it’s going to cost too much, it’ll be too hard’,” said Rich Kirchen, from the Milwaukee Business Journal.

Uh-oh, not Rich Kirchen, he of the prediction that 2013 would be the “launching pad” for a new arena because 48 Chamber of Commerce members turned out to a meeting to decide that nobody knew how to pay for one, and before that the mouthpiece for NBA commissioner Adam Silver’s demands for a new arena. What does Kirchen have to say this time?

“Over the last 15 years, there have been 13 arenas built — anywhere from 3 percent to 100 percent public financing. There were four that were paid for with 100 percent public money, but in between there’s a mix about 50 to 60 percent typically,” said Kirchen.

That’s probably fair enough — I haven’t checked it yet against Judith Grant Long’s figures, which would probably show a few more hidden public costs, if anything, but it sounds about right. It’s also, of course, entirely irrelevant — it’s the “all the other kids are doing it” argument — but who cares about that when there’s an arena to be built, right?

To its credit, the Fox6 report this is all drawn from does note that the new Golden State Warriors arena is set to be entirely privately financed, and that the Brooklyn Nets‘ arena didn’t generate the profits it was expecting. It doesn’t go into much detail about what public funds would likely be tapped to help pay for a Bucks arena, or whether this would be a good investment for taxpayers, or anything like that, but compared to some of the reporting coming out of Milwaukee, it’s positively in-depth. Baby steps, I guess.

Those who forget history are condemned to become sports editors, Milwaukee edition

And as long as I’m making fun of terrible alleged journalism this morning, I can’t pass up sports editor Jim Owczarski’s column telling Milwaukee residents to quit “whining” about the “minuscule” sales tax hike that paid for the Brewers‘ new stadium, because “if you’re buying a $30,000 car, an extra $200 or whatever it comes out to isn’t a big deal in the scheme of it.” It goes on like that for a while, unremarkably enough for columns in this vein, but then Owczarski goes for what he undoubtedly sees as the knockout blow by citing the $200 million that the Bucks‘ owners are pledging toward a new $400-500 million Milwaukee arena:

No city, or state, gets a $200 million down payment on a new, multipurpose complex.

Here, courtesy of Judith Grant Long’s invaluable book Public/Private Partnerships for Major League Sports Facilities, is a list of sports teams whose owners have contributed more than $200 million (in 2010 dollars) toward their new buildings: The New York Jets, New York Giants, Dallas Cowboys, New York Yankees, New York Mets, Philadelphia Eagles, New England Patriots, Dallas Mavericks and Stars, San Francisco Giants, Los Angeles Lakers, Clippers, and Kings, Toronto Maple Leafs, Washington Capitals, Ottawa SenatorsPortland Trailblazers, St. Louis Blues, and Toronto Blue Jays. And that’s after accounting for hidden costs like property tax breaks, which the Bucks owners may yet ask for, and not including projects that were completed since Long’s book came out, like the Brooklyn Nets‘ arena or the Golden State Warriors’ proposed all-privately-funded $1.2 billion venue.

Now, lots of those other cities put in a bunch of public money to those projects as well — but then, Milwaukee is expected to as well, which is the whole ostensible point of Owczarski’s piece. I stopped giving out annual “Dumbest Reasons to Build a Stadium” awards a long while back, but this year I may have to make an exception…

NBA steps in to play role of Bad Cop in Bucks arena drama

As I noted in last week’s coverage of the sale of the Milwaukee Bucks to new owners, there’s been a weird disconnect in the team’s demands for a new arena, which is that both the new and old owners have been trying to spin their promises to pay for less than half the cost of an arena into a commitment to keep the team in town — even while threatening that without a new arena, they’ll leave. It’s a not uncommon dance in these matters, but it’s a far easier one to navigate if you have someone else (a mayor, say) who can be waving the move-threat saber in your stead.

Fortunately for the Bucks owners, somebody has emerged to play the role of Bad Cop, and it’s our old friends, the NBA:

The NBA has the right to buy back the Milwaukee Bucks from incoming owners Wesley Edens and Mark Lasry if a deal to a bring a new arena to the city is not in place by November 2017, according to sources briefed on the situation.

Sources told that the sale agreement announced last week to transfer the Bucks from longtime owner Herb Kohl to Edens and Lasry for a purchase price of $550 million includes a provision that allows the league to buy back the team for $575 million if construction on a new building in Milwaukee is not underway by the deadline.

Although one source said Monday that the league would likely only take that step if it didn’t see “significant progress” toward a new arena in Milwaukee by then, this provision ensures that the NBA would control the fate of the franchise from that point as opposed to Edens and Lasry.

This is, frankly, totally brilliant, in an evil genius sort of way. The NBA would never forcibly seize a franchise without its owners’ consent, so rest assured that this whole buyback clause was arrived at with the full cooperation (if not at the behest of) Edens, Lasry, and Kohl. Now, though, Edens and Lasry are in a perfect position to play Good Cop: We want to stay in Milwaukee, but that mean old NBA will take our team and move it somewhere else if we don’t get a new arena, so you’d better make that happen or else Adam Silver will nail your head to the floor.

This isn’t a totally new gambit — the Toledo Mud Hens, as just one example, used the threat of the league forcing a move as a way to win a public vote for subsidies for a new stadium even though the team was owned by a local non-profit corporation — but it’s an especially well-played one. The trick will be to see whether Edens and Lasry can keep up their plausible deniability long enough to pull this off, or if local reporters look into whether they were co-conspirators with the NBA on this plan — though given the state of local reporting, they probably don’t have much to worry about.

Milwaukee pols have opinions on Bucks arena, even if they don’t all know what they are

Milwaukee politicians are starting to take sides in the Bucks arena debate, at least if standing with one foot firmly on each side counts as taking sides. See, for example Mary Burke, the bicycle corporation heir and former Wisconsin secretary of commerce who is currently seeking the Democratic nomination for governor, and who told the Milwaukee Journal Sentinel on Friday that she’s firmly in favor of knowing what her options are:

“First and foremost, I think we’d get people at the table to figure out what all the options are,” Burke said during an hourlong interview with editors and reporters of the Milwaukee Journal Sentinel…

“Certainly having $200 million [from the Bucks' current and former owners] is a really good start,” Burke said. “But are there other ways of bringing private investment into this, private financing that could over time be paid off? I think all of those should be investigated and supported and pushed. And that public funding of it should be one of the last options that’s looked at.”

That’s all eminently reasonable, if completely noncommittal: Treating public funding as a “last option” could mean that she’s going to hold a hard line on demanding private funding, or it could mean “Nobody else willing to pay for this? Okay, guess it’s on us, then.” It also treats the need for a new arena as a fait accompli, with the only question being how to pay for it — somehow it’s only the private side in these matters that is allowed to walk away from deals if they’re too rich for their blood.

If we want someone who’s really taking sides, fortunately, we have Milwaukee alderman Nic Kovac, who didn’t mince words in a Thursday interview with BizTimes:

“The NBA has been printing free money for 20 years. I’m not asking them not to make money. I’m just asking them to cover the capital investment that allows them to make money. I’m an old-fashioned guy; I still like capitalism,” said Kovac, who represents Milwaukee Third District. “I don’t believe in Vladimir Putin-style corporate socialism, which is what the NBA believes in. And you can quote me on that.”

Kovac added, “The talk of contribution to me should be off the table – any public contribution that does not involve a direct return on investment. I will loan them money, I will bond them money, but in my opinion, we shouldn’t be giving them a dime. It’s a private business.”

And then we have the Journal Sentinel editorial board, which continues its series of “Just build something already!” editorials on the Bucks situation. In the latest, the board argues that “the community shouldn’t lose sight of the need to find a sustainable funding source for all of its cultural amenities,” not just an arena, then goes on to argue that playgrounds and roads are “a different conversation” that could “mean the effort collapses under its own weight.” Call this the Editorial Corollary to the Hunt Doctrine: Additional projects that add support to an arena campaign are good, but those that could lose support for it are bad. American journalism, people.

Everything that’s wrong with sports stadium coverage, in one sentence

I’ve made no secret of how unimpressed I’ve been with the Milwaukee Journal Sentinel’s coverage of the Bucks arena debate, but this, from today’s column by Michael Hunt, really takes the cake:

So now it becomes a matter of trust that the extraordinary financial commitments by Kohl and the new owners toward the building won’t languish on the table in another unseemly political fight.

So, to recap: The owners of a professional sports team offering to pay for less than half of the cost of their new arena is “extraordinary.” Public officials not wanting to pay for the other half, meanwhile, is “unseemly.” Got that?

(For those who would like an alternate perspective, I have a longer piece on the Bucks situation up at Sports on Earth, hot off the presses.)