Monday, April 27, 2015

MMAC tries BS poll to sell magic Bucks arena

If you've ever wondered what a push-poll is, the oligarchs at the Metrpolitan Milwaukee Association of Commerce gave a great example today, with a pile of propaganda designed to imitate support for the Bucks arena project. Check out this release from today.
When voters are given the facts surrounding a new downtown Milwaukee sports and entertainment arena and public financing plans surrounding the development, they express broad support for both the arena and current funding options under discussion, according to a new poll released today by the Metropolitan Milwaukee Association of Commerce (MMAC).
Hmmm, that seems quite a bit different from the Marquette Law Poll from 2 weeks ago, which showed overwhelming disapproval of the idea of borrowing $150 million in state funds toward the arena. Let's find out more.
According to the statewide survey of voter attitudes conducted by The Tarrance Group out of Alexandria, Virginia. When voters are given a complete description of the Milwaukee arena proposal, significant majorities agree the Bucks should stay in Wisconsin, support the proposal to build a new arena, and agree that the state borrowing money is a good investment.

o Sixty-four percent (64%) say it is better for Wisconsin if the Bucks stay in Milwaukee.
o Sixty-seven percent (67%) support building a new arena, given a full proposal.
. Sixty-four percent (64%) agree that Wisconsin borrowing money to help fund the area is a good investment for the state.
Hmm, something doesn't quite match up with these two polls. Let's look at what the MMAC actually asked those people, and compare it with the reality that's part of the arena bill and the associated project.
As you may know, the [NBA] says that if a new arena is not built in Milwaukee, they will force the Milwaukee Bucks basketball team to leave by 2017. If the team leaves, the state of Wisconsin will lose more than $730 million in revenue over 30 years, and will be forced to pay $100 million to keep the Bradley Center open, hurting Wisconsin's ability to fund other priorities like education and economic development.
Sounds like a dire situation. Too bad it's not even close to true.

1. The number of "$730 million in revenue over 30 years" is repeated throughout the poll, and it seems to be what the MMAC implies is the added tax revenues from the Bucks arena and related development. There is a major fallacy with this thinking. IT ASSUMES THERE WILL BE NO OTHER ACTIVITY IN AND AROUND THE PROPOSED SITE FOR THOSE 30 YEARS. This is of course absurd, as it is highly likely something else gets built on the vacant land at the Park East site and nearby areas in coming years if the Bucks arena plan goes by the wayside. It also refuses to take into account that individuals in Wisconsin would likely choose other areas of the city and the state to spend their entertainment dollars if the Bucks weren't there, raising those revenues to offset some of the "loss" (and possibly offsetting it entirely).

2. The "$100 million in Bradley Center repairs" is another repeated claim throughout the poll, and it comes from last year, from then-Bradley Center Board Chair Marc Marotta, who was projecting the expenses for the building over the next decade.
The $100 million figure is an estimate, Marotta said, but local taxpayers would have to pick up at least part of the tab. The state has provided funds in recent years under both Gov. Scott Walker and former Gov. Jim Doyle, Marotta noted, but it would not cover the entire cost for what will be needed.....

The $100 million would go for repairing the building’s internal systems such as heating, ventilation and cooling as well as other projects like replacing the original seats, Marotta said. Also on the horizon will be maintenance costs for the BMO Harris Bradley Center’s parking structure, he said.

“These seats have never been replaced — they’re the same as when the building started,” Marotta said. “At some point you’ve got to replace those seats. At some point we have challenges with our parking structure...There will have to be a fair amount of work there.”
So not only would the state not be the ones paying all of that alleged $100 million (which goes against the impression that the MMAC wants to give), but these are not needs that have to be met tomorrow. If the Bucks do move, then there aren't 45+ NBA games a year for the Bradley Center to host as the anchor tenant of the building, and I'm guessing some of those projects can be put off for another few years. So that's Fallacy #1 for this poll.

Here's another one of the slanted questions from the MMAC poll.
The Milwaukee Bucks and Herb Kohl have committed to spend $250 million of their own money, half of the cost. The city, county, and the state would raise the other half. As part of this 50/50 public/private partnership, there would be no new statewide taxes, and revenue generated by the NBA team would more than repay the public investment. Do you support or oppose a new arena in Milwaukee?
There's a whole lot missing from reality in that question.

1. Since when are public entities agreeing to pay $250 million? This is why there were all those meetings between state and local officials in Milwaukee last week. State Sen. Scott Fitzgerald is only offering $150 million in borrowed money (down from Gov Walker's budget proposal of $220 million), and published reports only put the City's and County's in-kind donations of land and infrastructure at around $50 million. There's no finalized deal for $250 million in public financing toward the Bucks arena- heck, there isn't even a new bill that's been formally proposed.

2. There may not formally be a new tax imposed by the state, but there certainly will be debt payments that have to be paid back, which can crowd out other needs in future years (oddly, this is the same point the MMAC tried to make in the previous question about "$100 million for the Bradley Center", but they leave that out in this one. Funny that). In addition, the argument that the taxes and revenue would "more than repay the public investment" is based on an assumption of growth in the league and its salaries, and doesn't mention that the current arena bill makes the income of the "sports and entertainment District" exempt from paying Wisconsin corporate taxes. It also doesn't mention that it would take 20-30 years to realize the increased tax revenues from players and other Bucks personnel, and doesn't mention the offsetting costs of reduced services that may result due to sinking resources into this. Strike 2.

Now let's go with one more deceptive question.
Total public investment of $250 million dollars for a new arena would attract up to $500 million dollars in additional development beyond the arena itself, creating a sports and entertainment district in the heart of Milwaukee. The total development would create over 10,000 jobs over the next decade, many of them permanent. All of the development and jobs will generate tax revenue for the state that benefits everyone statewide. Knowing this, would you support or oppose building a new arena in downtown Milwaukee.
1. PIE IN THE SKY BULLSHIT. Just because Bucks officials came up with a vision of what to do with the area next to the arena with an estimated $500 million in development doesn't mean something like that would actually come to fruition, and it would likely be years if not decades before it would anything look like this.

To portray the future building that may happen in a few years as a guaranteed part of the arena project is dishonest, and not giving the full story to those being polled. If much of that is still vacant in 2020, with nowhere near the $500 million in projected development finished or even planned, somehow I don't think the people will be able to get their money back because it wasn't what was promised.

2. While there might be some jobs generated from the development as it happens, many of those are short-term construction, and could merely be displacing activity that would happen elsewhere in the city. It is also absurd to think that the currently-existing bars and restaurants on 3rd and 4th Street would not be at a disadvantage with some of their potential customers heading further north toward the new Bucks arena site. This is especially true when you consider this portion of the Bucks arena bill.
Property Tax Exemption. Current law [s. 70.11(36) of the statutes] provides a property tax exemption for property consisting of or contained in a sports and entertainment home stadium of a professional athletic team that is a member of a league that contains teams with home stadiums in other states. The exemption includes parking lots, garages, restaurants, parks, concession facilities, entertainment facilities, transportation facilities, and other functionally related or auxiliary facilities or structures.
This indicates that the new development could skip property taxes while the existing businesses would not- which makes it nearly impossible for places like Major Goolsby's and Buck Bradley's to compete. Bruce Murphy of Urban Milwaukee estimates that this provision could cost the Milwaukee area $629 million in property tax revenue over the next 30 years, with no ability for the city or county to make up the difference.

Not surprisingly, none of these very possible ramifications are mentioned in the MMAC's poll. It just assumes the added development will grow like a random beanstalk, without any side effects that could permanently handcuff a number of other Milwaukee businesses, raise property taxes for Milwaukee-area residents (since they'll have to make up the difference for the arena district's write-off), and likely lead to the closing of other, more established businesses in the area due to unfair competition.

With these realities in mind, it is magical thinking (or just flat-out bullshit) to believe that the Bucks arena and related arena/entertainment district would be "all gain, no pain," but that's how the MMAC portrayed it in this absurd push-poll. I guess I shouldn't be surprised that the right-wing oligarchs that infest that group would think that way, and try to pull off something like this, since they've always been about scamming local and state government to line their own suburban pockets instead of actually investing and creating in stuff. But pulling this seamy routine to spread propaganda in the pro-arena Journal-Sentinel (whose most recent CEO served on the MMAC Board of Directors) and to lie about what would really happen in the wake of an arena deal means STRIKE THREE for me. This dishonest poll from the MMAC just sunk any chance I had of supporting this plan, or pretty much any other arena plan, barring major changes to protect Milwaukee taxpayers. And hopefully you feel the same way.


  1. Hey, maybe instead of garbage polls and boondoggle packages, perhaps the pro-arena folks should prop up the Bucks team instead. Shocking win tonight to stay alive, with a young team going in the right direction

  2. Thanks for your fact-based analysis! The City's Legislative Reference Bureau should do an update of their 2103 report on sports venues (which said there's no evidence of economic net gain). But I think mayor or someone might have to request it, and they don't want anyone to be confused by facts. They also don't want the finger pointed at them in case the deal falls thru (only because Bucks are not happy with all the freebies already being handed to them and expect an insane boondoggle..)

    Could you, as an academic, request City LRB to crunch specific numbers, or find info on numbers of existing downtown bars/restaurants, what it would take for this Arena District to succeed as a state-owned facility. Or other econ-related facts...What about impact of a state-owned "entertainment complex" competing with other tax-paying existing establishments?

    1. I can't make that request, and I don't even live in Milwaukee. But you can contact an alder or County Board member, and see if they will do it

  3. Jake,

    Glad you are bringing this material up, although the weight of public opinion seems to be firmly against the plan and it doesn't look like the MJS can beat the drum loudly enough to excite people about giving taxpayer dollars to subsidize millionaires who work for billionaires.

    I have admit though the pictures sure are pretty, although I am struck with the fact that the pictures depict an audience dressed in shorts, t-shirts, mini-skirts and tank tops. Is there an extended NBA season that goes through the summer? I don't follow sports so I have to ask the question. Otherwise, this must be part of the crowd for one of the FOUR events that the Bradley Center normally attracts during the summer. Now that is impressive business plan if ever there was! So the pictures with the crowds and spot lights are going to happen four nights, one each month, during the summer…nice.

    So really this just boils down to: give money to build a sports venue for rich people so that they can impress their friends, sorry, I meant important customers (who will be getting "marketing expense" tickets that will be taken as deductible business expenses on their corporate tax returns).

    Also I decided to check on the vast entertainment complexes that have sprung up around other sports venues in Wisconsin. And sure enough there are two motor inns and a Buffalo Wild Wings near Lambeau Field (we'll talk about the Bret Farve steakhouse after the big kiss-and-makeup party in November), but Miller Park seems to have had little, if any, development (unless you count the class B office/industrial buildings south of the ballpark). So let's see the Brewers and Braves played there since the 1950s and there are industrial buildings, and the Packers have been there since the 1930s and there are two motels and some restaurants. Well these things take time (just ask Art Laffer).

    Dr. Morbius

    1. Doc- All good points. I will note that Lambeau and Miller Park aren't the best examples for testing the "new stadium = development" theory because both sites have been around for 60+ years , and because both have the advantage of a huge parking lot for tailgating. Neither would necessarily apply here.

      But as you mention, that reality also puts the whole idea of (tax-exempt) "entertainment district" into jeopardy, as the majority of bball and hockey season is in the coldest months of the year, so outdoor events really don't work well in conjunction to when the games will be happening. When the Brewers suck, you can at least tailgate at Miller Park (this seems to be the plan for this year), and that draws me in to Milwaukee from out of town during Summer. In mid-January when it's 10 degrees and snowing? Maybe not so much.

    2. Hi Jake, sorry, the comparisons were pretty satirical actually. I was just pointing out (perhaps a little too obliquely) that the "developments" that accompany sports venues never pan out well. If there is parking provided (because it is a huge revenue producer for the operator) then the developments are displaced to the far margins--no atmosphere or excitement--it limits development linked to the venue. If there isn't parking (like downtown basketball and hockey) the development would have come naturally, or is already present. So back to your point, tax-exempt status for the land is just a blatant windfall grab by those with political influence.

  4. Jake, you got cited in the Field of Schemes website as: "the Jake’s Economic TA Funhouse blog notes in an excellent summary of the conflicting polls,". Good job, you deserve the recognition.

    1. Thanks for the kind words, Doc. I gave the editor of that site a heads-up on this, and I'm honored he printed it.

      Field of Schemes in general I s a really cool site if you want to look at the issues surrounding new stadiums for sports teams. It has a perspective (the writers usually don't like the idea of public funds for stadiums), but it has a lot of interesting factoids and cuts through the BS very well