Sunday, April 20, 2014

The Bucks sale pt. 1- Is the price tag worth it?

As someone who grew up in the Milwaukee area and a big sports fan, the recent sale of the NBA's Milwaukee Bucks from former Sen. Herb Kohl to two hedge fund billionaires is intriguing to me on many levels. The first thing that jumps out is the $550 million price tag, a whole lot more than the $18 million Herb bought the team for in the '80s. Why would someone pay so much for the team with the worst record and attendance in the NBA? ESPN's Bill Simmons (who had broken the news earlier this month that Kohl and the investors were working on a deal) discussed why the price tag for NBA franchises is skyrocketing in a great column for the Grantland site.

In addition to a booming economy among the rich people who can afford to buy big-price NBA tickets and sponsorships and a more favorable collective bargaining agreement that gives a better split of revenues to the owners and lessens the amount of bad long-term contracts that tie teams' hands (and hurts quality of play due to players who don't give a shit), Simmons also mentions that the spectre of people wanting to bring the NBA back to Seattle means that the value of every franchise goes up due to higher demand.
Remember, 30 months ago nobody on the planet wanted [to buy] New Orleans. This month, we had multiple bidders chasing the league’s worst team — as many as six, according to my sources — with the winners prevailing thanks to deep pockets and a pledge to keep the Bucks in Milwaukee (even earmarking an extra $100 million towards a new arena). So the league flipped its supply-and-demand situation: Right now, it has a slew of potential buyers and nobody for sale. This has never, ever, EVER happened before.

In general, the disparity between the haves and the have-nots seems to be closing fast. Milwaukee fetched $100 million more than Golden State four years ago. The belatedly appreciated Spurs drew a 10.4 rating for 2013’s Finals against Miami, comparable to Lakers-Celtics in 2010 (10.6) and nearly 150 percent higher than Cavs-Spurs in 2007. And what about Dwight Howard jumping from the Lakers to the Rockets? Would that have ever happened 10 years ago? It doesn’t matter where you play anymore. Stars are more likely to gravitate toward great owners and great situations than great cities. That’s a good thing.

So, are 30 franchises enough? The NBA could command $800 million easily for Seattle’s expansion team — awarding about $27 million to each owner — but there’s concern within Adam Silver’s circles that there isn’t quite enough talent to support a 31st team. Did you follow Tankapalooza 2014? If you watched the Lakers defend pick-and-rolls with Bob Sacre and Kendall Marshall, or you ever uttered the words, “I kind of like Henry Sims,” you know what I mean. We don’t need MORE basketball teams, at least anytime soon. That means Seattle will remain Extortion Ground Zero for the foreseeable future.

Speaking of Silver, I liked how he handled a legitimately complicated situation. Within two weeks of becoming commissioner, Silver pressured the Bucks to settle its arena situation by 2017. But these weren’t the same life-or-death stakes like in Sacramento: Without the Kings, Sacramento would have transformed into Just Another City In California; without the Bucks, everyone in Milwaukee would move on to the Packers, Brewers and Marquette basketball without blinking. That’s a big difference. Silver also had the Seattle kajillionaires lurking, and he never knew if the 79-year-old Kohl might change his mind. Remember, Kohl splurged for O.J. Mayo, Zaza Pachulia and Gary Neal last summer. All bets are off with that guy.
The point Simmons makes about "it doesn't matter where you play anymore" in order to be a big name in basketball and paid accordingly is an interesting one. I'm not sure that's entirely true, as Milwaukee has some of the worst in-season weather of any NBA team, and isn't the only game in town in Wisconsin like the Thunder are in OKC or the Blazers are in Portland (for example). But the league is grabbing enough domestic and international media money that I don't think the Bucks have the same "small market/ lack of revenue" worries that the Brewers had when Miller Park was being debated nearly 20 years ago, and I certainly think that with the right GM moves and a few fortunate draft picks, the Bucks could be the type of contender that a team like the OKC Thunder or Indiana Pacers are. And the fans would care and show up to see them, as they did in 2001, when the Bucks got within 1 game of the Finals.

But certainly the question about the Bradley Center's future is the next step in determining the Bucks future, because it'll determine if they do stay in Milwaukee after 2017, where a new arena would be, and if that would help their competitiveness in the league. Sen. Kohl promised to put up $100 million toward the new arena, and the new owners pledged $100 million more, but that's not going to be all a new arena would cost, so the rest of the funding for a new arena would have to come from somewhere. I'll discuss the funding situation and options in a future post, but there is certainly a question as to what can be done with the already-sizable number of sports and entertainment facilities in downtown Milwaukee. UWM is still playing home basketball games at the U.S. Cellular Arena, a facility that is slated for $3 million in seating and scoreboard upgrades (it also hosts the Milwaukee Wave indoor soccer team was, but the Wave may be folding). If the Bradley Center isn't going to be the home of the Bucks and Marquette in coming years, and there are fewer events in downtown in general, is that an expense that should be made, or might the Arena/MECCA site be part of the project for the new arena? These are the questions Milwaukee Common Council President Michael Murphy is now asking, and he wants those upgrades at the Cell put on hold till the Bucks question can be decided.

And what becomes of the Bradley Center site itself? Will it be demolished in favor of new development if the new Bucks arena is located nearby (much as County Stadium was knocked down when Miller Park was built in its parking lot)? Is it still used for concerts and the Admirals and the many non-Bucks events that it holds each year, even if there is a new Bucks arena? And what do you do with it if there isn't a new Bucks arena, and the Bucks stay? Can the Bradley Center be modernized, or is it already obsolete after 25 years, and does that turn the Bucks into a less valuable, uncompetitive franchise? I don't think the Bucks would automatically be second-rate (again, they'd have to have a lot of things fall their way), and given my experience in watching the BC rock with Badger fans at March Madness this year, it still can be made into a great in-game experience for fans.

Lastly, if the Bucks do leave, what ends up replacing them as an entertainment option in Winter and Spring in Milwaukee? It would be unlikely a market like Milwaukee would land another NBA team if the Bucks ever left, but would it open up the option of an NHL team locating in Milwaukee (there's even a website promoting the idea of an NHL team in Wisconsin). I would guess the Chicago Blackhawks would have some say on a potential Milwaukee expansion team, given its closeness to Milwaukee would allow them to claim that the Milwaukee market is already part of their territory and that a new team would eat into their profitability. But the BC was originally built with the idea of having the NHL in town, so it would be interesting if the potential loss of the Bucks would lead to that.

Of course, maybe the Milwaukee market is already saturated with high-cost big-time sports and doesn't have enough fan following to support the Brewers, a sizable amount of the Packers (including 3 home games reserved to ticket holders from the County Stadium days), Marquette basketball, UWM basketball, and a lot of following for Madison's Badgers. That's not a question a lot of Milwaukee boosters want to ask themselves, because they view Milwaukee as a big-league town on the level of a Twin Cities, Cleveland, or St. Louis. But maybe they're more like Cincinnati, Indianapolis, or Kansas City- Midwestern cities who only have 2 franchises in the major team sports. And is that necessarily a bad thing if that's who they are, if it means the Milwaukee area can use resources in another fashion to make it a desirable, destination city?

I'll look into the funding and governmental role that's coming up for the Bucks arena question in the near future, but it's pretty obvious that with the recent sale of Milwaukee's NBA team, the discussion of the Bucks' future plans just got greatly accelerated, regardless of whether they land the top pick in next month's Draft Lottery.


  1. I will be interested in reading your comments on the financial and the national aspects of the Bucks staying in place, but as an architect whose office is withing sight of the BC, I do have to chime in.

    The Bradley was built at a time when it was considered to be fortunate that the Bucks were staying in state at all, and the original plan was to locate it near County Stadium, as Micheal Horne recently reminisced.

    When Mayor Maier managed to prevail in a downtown location, the design seemed to be downgraded to the internally-focused, pedestrian unfriendly scheme that would have been more appropriate for a parking lot circled site as would have happened on the County Stadium site.

    The building as built is unpleasant for pedestrians, and provides not softening for neighbors; the height and shape of the building exacerbates the harshness of winter winds and inclement weather.

    It is the kind of thing that Norquist and Peter Park would never have allowed in such a prominent position; it encourages patrons to think of it only as a destination, that they would drive there for an event, and drive home again right afterward, with little connection to the urban activity in the vicinity.

    I believe that this 'turning he back' on the urban neighborhood is at least a fair part of the reason that the facility is not aging well. Although the interior is probably still quite serviceable, the blocky granite walls and the dark-tinted atrium make the building harsh and foreboding.

    Times have changed; I am pretty sure the City will work with the developers of a new Bucks arena to make it an urban amenity. I also think that it should be possible to remodel the BC to be more pedestrian friendly and responsive to its environment. But I am not sure it will be worth it, when the Arena is already a better building in context, and already slated for renovation.

  2. A new arena on the shore of Lake Michigan with a new Milwaukee Art Museum addition, a new 40-story hotel, a new 40-story NML building and a 38-story new office building? Well 4 of those 5 projects are in their final planning stages. A new arena as a centerpiece would put Milwaukee back on the map.

    BTW, I rarely read about the tax benefits from the team. State income tax on the players, employees and related workers, and the sales tax generated by the hundreds of thousands of fans that attend those 41 home games.

  3. Bombadil- I agree that keeping the Bucks would be preferable to them leaving. I just wonder if there's enough demand for 3 major sports in the state along with several other entertainment options in Milwaukee. Do people really care about the Bucks if they aren't winning 50 games? Doesn't seem like it.

    Again, I'd rather see the Bucks stay, but it's not like all that business would disappear from the city if they left. It's not like Bucks games are a major tailgate and tourist event like Brewers and Packers games are

    1. Jake.
      Agreed; however, there is a ~$60MM Bucks payroll that contributes ~$4MM in state income tax and Sen Kohl's ~$500MM+ capital gain on the sale should contribute another $35MM of income tax. A new stadium campus could bring the excitement that we both agree is missing, and, if done right, could bring millions in additional sales tax revenue. A Calatrava inspired sports arena on the shore of Lake Michigan? That would be worth an interim 1% sales tax bump IMHO.

  4. I think overall, I woul dmuch prefer to see a new stadium located on some of the Park East land, rather than the lakefront. The lakefront should follow the lead of our Socialist Mayors, and remain largely for public uses.

    The Park east location is available, and handled well, can provide a nice link to the Pabst complex, as well as being in the middle of much of the entertainment district.

    And I'd be happy to avoid a Calatrava inspired design decision also; let's find a designer that has a less problematic relationship to leaky roofs and such.

    1. Z
      I'm just throwing out a vision. With three new buildings and a museum rehab on the horizon I think there might be room for a grand plan. Park east could be great too...and I did say Calatrava inspired.
      IF we lose the NBA it will never come back.

    2. I certainly agree that we should aim high from a design standpoint. The blank granite box that we got last time looked horrible from the day it opened.

  5. I'm also partial to the Park East site. It connects well to the north end of downtown (and the current BC site), and could be a good site for revitalization.

    Interesting development just came out. Apparently the NBA could buy the Bucks if there's no arena deal in place by 2017. Good deal for the hedge-funders, but could be an interesting twist.