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!
Effective with the 2016-2017 season the NBA begins a new 9 year TV contract worth $2.6 billion per year which equals $87 million per team. The current contract pays $31 million per year. So every NBA team will be getting $56 million more per year starting in 2016-2017. The annual cost to fully finance a $500 million arena at 5% for 30 years is $32 million. So every NBA owner, including the Bucks owner, can easily afford to pay 100% of the cost for a new arena, if that new arena is indeed needed. When are the politicians and citizens of Milwaukee and Wisconsin going to smell the coffee?
the Bucks are more than welcome to come to Seattle where a new arena is approved and shovel ready for the NHL & NBA……..Milwaukee took the Pilots and we’ll take the Bucks (SUPERSONICS)
So at the end of the day, it’s very possible the State could have up to TWICE as much tied up in a new arena as the MULTI-BILLIONAIRE OWNERS. TWICE AS MUCH! So unless they’re willing to raise their stake dramatically, the State needs to RUN, not walk away from this now.
Milwaukee needs a new arena, anyway. Big concert acts are skipping the Bradley Center (Timberlake, Maroon 5 and Taylor Swift being three recent examples) for a variety of back house reasons that are impractical to fix with a reno. (I used to be pro-reno until my Bucks STH rep pointed out some intrinsic limitations on the site where the current arena stands.)
So, the options are either A) go minor league and schlep to Chicago for sports, concerts, etc., B) pay the whole cost for a modern arena, or C) go halvsies with the Bucks.
How much is Maroon 5 worth, though? Aside from the intrinsic value of Milwaukeeans getting to go see Maroon 5 (insert ironic snickers here), are those acts likely to generate enough revenue to make a new arena worthwhile?
If so, then the Bucks owners could finance this themselves and pay it off with concert fees. (Or Milwaukee could if it got a cut of the concert lucre.) If not, then what’s the point?
@shawn douglas: Whoa, pull the reins back, cowboy. We don’t have either an approved arena deal (yet) or a shovel-ready plan (yet) in Seattle. We’re still working on it. If a team were to relocate, that would go a long way toward helping solidify those things. Bells haven’t rung in Milwaukee quite yet, though.
Ben,
Could part of the reason be that Milwaukee just isn’t rich, young, or big enough for these kinds of acts, especially when you have Chicago just down the road?
Concerts primarily follow demographics and demand, not arenas. The United Center is about 6 years older than the Bradley Center. I doubt those six years are that enormous of a difference. What is of a difference is the number of Milwaukeeans who will drive to Chicago as opposed to the reverse, as well as average age, income, etc.
The Bradley Center has Neil Diamond, the Who, and Motley Crue–all of them reasonable acts, but appealing to a certain demographic. I’d guess this may point to the bigger issue and not the size of the locker room.
Well, by my estimates, a new arena in Milwaukee would generate $15B in new economic activity over it’s 20 year life. So it’s completely worth it. A fantastic investment, I have no idea why a private company won’t jump all over that. It’s regular GD money-printing machine.
Just raise parking rates, and watch the cash roll in. Ka-ching.
Maybe Milwaukee can invest in a Jeff Koons sculpture, too. Seems reasonable.
@MikeM – Or how about a Laverne & Shirley sculpture to go with the Fonz statue?
“Ben Miller – Milwaukee needs a new arena, anyway. Big concert acts are skipping the Bradley Center (Timberlake, Maroon 5 and Taylor Swift being three recent examples)”
Sounds more like a blessing than anything.
The reason some concerts tours skip Milwaukee has to do with the cost of staging. If the demand in there it’s just easier to do two dates in Chicago rather than tear down/put back up to do one in Milwaukee. It has nothing to do with the Bradley Center.
Having said that, Pearl Jam (who sold out the Bradley Center), Fleetwood Mac, Neil Diamond and the Who are all making stops.