The deal to provide the Milwaukee Bucks owners with $450 million in city, county, and state subsidies for a new arena in exchange for staying put in the city may be even worse than anyone thought: As it turns out, that whole “staying put in the city” thing is less of a commitment than a breakable promise:
Milwaukee Common Council president Ald. Michael Murphy believes taxpayers should get stronger protections in case the Milwaukee Bucks would leave town before the $250 million public debt is paid off on the arena project.
The arena-funding legislation Wisconsin Gov. Scott Walker signed Aug. 12 allows public entities to sue the team’s owners for damages if the Bucks relocate. Murphy said that doesn’t go far enough.
Yeah, no kidding it’s weak. A really ironclad lease agreement — see St. Petersburg’s deal with the Tampa Bay Rays for example — sets monetary penalties for leaving early, up to and including repaying all the public money that you got in order to stay. Merely allowing the local government to sue for damages is much, much weaker, especially if the owners of the Bucks do like the owners of the former Seattle Sonics did and switch gears to arguing that there’s no way to prove an economic benefit to cities from the presence of a sports team. Which would be ironic, needless to say, but you can’t sue for irony, even in America.
The Milwaukee city council has no jurisdiction over the Bucks arena lease, so Murphy has stuck to expressing his concerns in a strongly worded letter to the chair of the Wisconsin Center District Board. “I’ll be surprised if he signs a lease without tightening the restrictions,” Murphy told the Milwaukee Business Journal. I, for one, will be less surprised, but I suppose there’s always hope.
After reading the lease, it looked to me like if the WCD’s $203M debt is paid off, then the Bucks have the right to leave, free and clear.
Is there ever a truly iron-clad lease? If it gets to the point where a tenant is bankrupt, what sort of remedies should a landlord (so to speak) look for?
Can they force them to stay, thus turning a mere reorganization into an out-and-out liquidation? I doubt they can.
It may not matter how ironclad the contract is when you have a mayor and capital improvement board who choose to ignore the contract. Case in point, the city of Indianapolis revising the current Pacers contract to keep them in Indy another ten years when the original contract had explicit dollar amount the Pacers would forfeit if they left. So when our illustrious leaders crafted a revised contract under the guise of keeping the Pacers in Indy it was all just smoke and mirrors. BTW the new contract awards the Pacers an additional 160 million over the next ten years.
Contracts don’t mean a thing unless they are enforced…
Ben, there is no lease yet. Do you mean state’s arena bill, which has a few clauses.
But there’s good reason for city council to fear how this lease shakes out. Bucks will use their endless pockets for tough negotiators to make sure the Bucks get every last buck and advantage.