Menominee offer for Bucks arena needs to be put on paper

Well it looks like the Menominee Tribe and the Hard Rock Casino folks have just thrown an interesting curveball into the Bucks arena discussions, as the Menominee is now offering to replace the $220 million in state funding that Gov Walker offered up in the state budget. Instead, the Tribe is now saying that they’d be willing to pay that $220 million themselves, if Gov Walker will reverse his earlier decision, and sign off on allowing the casino in Kenosha.

In addition, Menominee Tribal Chair Gary Besaw said that the Menominee would pony up more money to cover for any losses that might result from the Potawatomi Tribe or other tribes not paying the state, as retribution for breaking earlier gaming compacts limiting the amount of gaming that could be permitted.

Besaw also said the Menominee will increase to $275 million the bond it would post to cover any potential, but very unlikely, state losses from other gaming agreements. The $220 million arena contribution and the $275 million bond would be on top of the $1.2 billion in Kenosha casino gaming proceeds the Tribe has already committed to the State of Wisconsin, making for a total contribution to the State of $1.7 billion.

(Ed. Note : The gaming proceeds “payback” to the state was previously reported as $1 billion over 25 years, and it was included as one of the last-ditch offers from the Menominee 2 ½ weeks ago, as noted in this article from Rich Kirchen of the Milwaukee Business Journal.)

“Gov. Walker has claimed many, many times that he will not leave taxpayers on the hook for $100 million or more in supposed losses due to gaming agreements with the Forest County Potawatomi. Candidly, his position is puzzling because no one – including the governor’s own outside counsel that he specifically hired to examine our project in detail – believes such losses are possible. Nonetheless, we’ve put a strengthened proposal to indemnify the state on the table,” he said. “Menominee guarantees that if the State has to refund all of the money the Potawatomi gave the State in the past, Menominee will cover that. If the Potawatomi refuse to honor their obligations and pay the State any more money going forward, Menominee will cover that. And if the Potawatomi try to sue the State – even though legal and policy experts have said such a lawsuit would be unsuccessful – Menominee will even pay for the State’s lawyers.

“Gov. Walker, the fact of the matter is that taxpayers are off the hook,” Besaw added. “They’re off the hook for any costs related to the Kenosha casino, and now they are off the hook from any burden related to a new NBA arena in Milwaukee.”

On its face, it sure looks like a no-lose situation when you’re talking about state finances, as the Menominee’s cash offer reduces the need for borrowing the $220 million, or for any kind of a “jock tax” which would divert Bucks employee income taxes from the General Fund and designate it for the arena. In fact, the state’s budget problems were mentioned in the Menominee’s release, with the intimation that allowing for the Tribe to pay into the arena would free up funding for other services that Gov Walker is planning to cut in his current budget.

That’s a good side benefit from the Menominee, but the catch is that it doesn’t help Wisconsin’s budget issues in the short term. Very little of the state money “saved” would be made up over the coming 2-year budget (meaning Walker’s cuts and deficits are still there), but instead the savings would hit in later years, because there would be no debt to pay off. In fact, in the immediate time period, there’s a chance that the Potawatomi would want their $49 million back from the state if the Kenosha project were to go through, as the Potwatomi had held back two years of payments as Walker was debating this casino, and only paid it last month when Walker turned down the Hard Rock project. Yes, the Menominee have offered to make up the difference for those payments as well (gives you an idea how successful they think this casino is going to be), but this also could drive up some state litigation expenses as that issue gets decided.

Putting that point aside, there is a lot of detail to clear up from the Menominee’s proposal.

1. This Menominee “offer” sure resembles a bribe to get Gov Walker to change his mind on allowing the project (although they insist it's not a bribe). Officially, you can call this “negotiating” because it's being done in public, but there’s a crassness to this that kind of takes me aback (well, from the tribe’s side, anyway. With Walker you expect it.) And how this would be paid in is a bit confusing.

The $220 million would be paid over 25 years and the total cost to the Kenosha casino including interest would be close to $300 million, Allen said. He said that would "basically mirror" the funding mechanism Walker has proposed for the arena.

Apparently, the money basically repurposes a "community needs" fund that the Hard Rock people had put in their October 2014 offer to Walker, so their argument is that it's not much more that's being shelled out. But would this money be sent to the state, or the team, and would there still be a need for a jock tax, but Menominee's money would replace whatever goes out of the state's coffers? I need to see this part.

On the flip side of this, it’s also no different than a corporation ponying up millions to get naming rights for a sports facility, like the giant brewing company in Milwaukee did to have the new baseball stadium be called Miller Park. This sort of back-scratching is regular everyday business in 21st Century pro sports, so I suppose when viewed through that lens, it’s not that big of a deal.

2. Who oversees this new arena, and who will have a say in its operations? Would this mean the Menominee now has a large voice in future plans for this, since they shelled out a lot of the money for it? Related to that, would the state get any say in this at all, if they’re not putting up any taxes or administration for it? Remember, in Walker’s budget bill there is also a provision to have a 9-person board administer the jock tax revenues and oversee operations of the new Bucks arena, similar to the Bradley Center Sports and Entertainment Corporation that oversees the current Bucks arena.

So would there have to be a similar governing structure set up, or would the arena be “given away” to Bucks ownership once it is built? This is something that would have to be fleshed out with the Menominee’s proposal, although that could conceivably be done after approving a new casino in Kenosha.

3. There still hasn’t been the answer as to where this arena would be built, and what other development would be part of it. This is the piece I’ve been waiting for before giving my final “yea or nay” thought on this arena deal, because I think it works better as a larger development that includes more than just the arena. Kirchen mentioned last month that the “favored site” now seemed to be just north of the BC, around 4th and Juneau, near land that was the site of the former Park East expressway.

I like the idea of locating the arena there, as a lot of that land is vacant and/or underdeveloped, and it could create a nice visual "welcome to downtown Milwaukee" as you get off of Highway 43. But I want to know if this is linked into other developments and businesses, and what kind of funding the City and/or County would be expected to contribute as a result. This could be in the form of the county selling some land it owns in the area, or with the City offering a TIF or some other incentive, but I do want to see where all of these pieces fit in. We keep hearing "soon enough", but the site decision has already been put off from its original plan of late January.

Obviously, there is a lot more that needs to come out with the Menominee's offer and the overall plan involving the Bucks arena. Maybe we see Kenosha and Racine-area politicans propose a bill in the coming days which will show how all of this financing would work from the state side. Of course, this is all moot if Walker doesn't reverse his intentions to disallow the Kenosha casino by the 19th (and it would make him look even less "Unintimidated" than he already did when he bowed to goofball Iowa fundies by turning this thing down). But it's yet another wrinkle in this multi-layered debate that makes me want to see where this is all heading. Not just for the Bucks arena, but for the casino and the budget.