Sunday, April 27, 2014

Good Sunday reading from "Save our Bucks" on arena

It's a crappy, rainy week setting up, so you'll have time to read this, and I recommend you do. It's a very deep dive from the "Save our Bucks" blog on the arena issue and NBA economics in general. Not surprisingly, a blog named "Save our Bucks" is pro-arena, but the issues are examined very well, and I agree with this take that the "NBA buyback" clause in 2017 makes it more likely the Bucks would stay instead of not.
The buyback clause was put into the deal specifically to PROTECT Milwaukee from having the new owners make a half-hearted attempt at a new arena and then move the team or flip the franchise to buyers from Seattle or another market. The League and Senator Kohl wanted to make sure the Bucks avoided the Sonics debacle that took place when the Seattle franchise was sold, and their new owner Clay Bennett made a half-hearted attempt to stay before quickly moving the team to Oklahoma City. In contrast, Lasry and Edens now have every incentive to make an arena deal work in Milwaukee — or risk having to sell the team back to the league for a much smaller return.

Certain people around Milwaukee were not familiar with any of these issues, and evidently just assumed that once the Bucks were sold to new owners, the concept of a new arena was “optional” and that the team could remain in the Milwaukee forever, playing in an aging Bradley Center. This was never the case.
That last point is very true- the league can't have non-competitive franchises with apathetic fanbases dragging it down if they want to maximize their profitability for all teams. There are enough of them as it is, which is a reason they changed the revenue-sharing mix in 2011 to give smaller markets a better chance of succeeding (and because the image of players refusing to play in certain small-market, cold-weather cities isn't one the league wants).

The "Save our Bucks" blog also said the team should be considered like any other major Milwaukee employer, and much like how Northwestern Mutual Life got a huge TIF to build their new tower near the lakefront downtown, the city and state should try to hang onto the team because of its significant economic impact.
- What business will replace the $60+ million in annual taxable income created by NBA players competing in Milwaukee at least 41 nights per year? Player salaries annually account for $4+ million in potential income tax revenue that would not be replaced should the Bucks leave Milwaukee, and it’s a number that figures to grow by well over the rate of GDP over the coming decade. And that tax revenue doesn’t include income taxes, property taxes and sales taxes paid by all the other front office employees of the team and people working at a new arena.

Last year Forbes estimated the Bucks revenues at approximately $109 million. Of that, only $21 million was from local ticket revenue. Sure, if the Bucks leave, that $21 million in ticket revenue gets spent elsewhere, maybe at movies and bars. But much of the other revenue, now coming from national and global league sources, will leave Wisconsin for good. That out of State money right now is used to fund payrolls, jobs and taxes here in the State of Wisconsin.
As said before, give it a read. I don't necessarily agree with all of the arguments, but I do agree that losing the Bucks would have a legitimate impact on downtown Milwaukee- the question is who should pay to help prevent that loss (private investors, Super-TIF, general taxpayer?), and whether shelling out to make up for that loss leaves bigger deficiencies for the city and the region that should be taken care of first.

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