Walker claims, Abele schemes on Bucks arena not working out

Lots of intriguing recent developments on the Bucks arena issue, and most of them seem to be pointing against the current arena plan going through any time soon. I'll remind you that this is the "new and improved" version of the Bucks arena bill that was announced earlier this month, as opposed to the already-discarded plan of $220 million in state borrowing that was in Governor Walker's budget. But the results of this new proposal seem to be going the same way as the first defeated plan, as the claims made by arena proponents aren't proving true, and the financing numbers keep looking like a massive giveaway to a connected few at the expense of many others.

Over the weekend, State Rep. Dean Knudson (R-Hudson) released a column explaining his opposition to the Bucks bill, and as part of it, he showed figures that blew up Governor Walker's central argument that the arena should be built because it was "cheaper to keep" the Bucks. Rep. Knudson starts out by not buying the claim that if the Bucks left Milwaukee, that the Milwaukee area and the state of Wisconsin would lose millions in revenue, and in doing so, echoes other studies that say people will find other things to spend money on if there isn't an NBA team around.

First, the state currently collects $6.5 million on NBA income each year. Granted this revenue source would be lost, but not all of the revenue. Arena promoters make the mistake of ignoring “that which is unseen”. If the team moves, the dollars spent each season on the Bucks will instead be spent on other forms of entertainment, movies, travel, restaurants, tourism, advertising, etc. This redirected spending will be spread among thousands of businesses in the state, generating sales tax, income tax and property taxes, significantly offsetting the income tax no longer paid by NBA players.

Second, NBA player salary increases are difficult to predict. Governor Walker projects NBA players’ income in Wisconsin will rise to $149 million in 2020, $260 million in 2030, $450 million in 2040 and $610 million by 2046. My skepticism is supported by published reports putting the NBA team salary caps for the 2018-19 season at $100 million. I could be wrong but remember, all spending and income in Wisconsin can be expected to grow significantly over the next 20 years, so again this is fuzzy math at best.

I'd say the promises of huge increases in players' income question is open to debate. The NBA salary cap is expected to go up significantly in coming years due to a new TV deal, with ESPN's Mark Stein reporting 2 months ago that the cap could go from $67.1 million next year, to $89 million in 2016-17, and $108 million in 2017-18. That's a huge increase, but it's still well below the figures that the Walker Administration was projecting. That being said, perhaps the bill will be written to include all Bucks team personnel, which would raise the number to levels around $149 million in 2020. However, there is no guarantee that the league will continue to receive massive increases in income over the next 30 years, and expecting salaries to continue to nearly double every 10 years is a massive gamble. And as mentioned earlier, the tax revenues from Bucks personnel could well be replaced by added incomes from numerous other Wisconsinites in other places who benefit from added spending on their business.

In addition, Knudson released a study from the state's Legislative Council that went over potential major maintenance needed at the Bradley Center. Governor Walker claimed that maintenance would cost $120 million over the next 10 years, but the Leg Council said the cost was actually $16 million. Yes, the Council says another $14 million are scheduled to be thrown in for game-experience amenities like a better scoreboard, seating improvements and WiFi for fans, but a lot of those aren't going to be as needed if there's not an NBA team taking up 45 dates a year in the BC.

In addition, Milwaukee County's portion of the arena bill is looking quite tenuous. The County Board's Economic and Community Development Committee held off on approving the sale of 10 acres of land for $1, which would allow developers to build near the Bucks arena. And the reason for the delay is that the numbers for the County's side of the Bucks deal don't seem to be adding up.

Under a plan negotiated by [County Executive Chris] Abele, the county would cover a $55 million share of the proposed $250 million public financing component for a new Bucks arena. The county would pay off the debt over 20 years through collections of unpaid debts, primarily on property taxes and court fees. Including interest in the $55 million, the plan means the county would dedicate $80 million of its debt collections to the project.

Abele’s plan would have the state of Wisconsin take over the collections, a move that is envisioned to increase the amount of debt the county recovers. As pitched, the plan would generate the additional $4 million needed for the arena debt, while still recovering the county’s usual share of the money.

[County Comptroller Scott] Manske analyzed the numbers over the weekend and said the plan would definitely gather the $4 million needed annually for an arena. However, long-term, it could mean a reduction in the amount of money the debt collections send into the county budget.

There is enough money to make the $80 million payment,” Manske said. “The second question becomes is there enough money, however, excess that comes in so there is not an impact to the county’s tax levy. That is the question where I am coming up and saying I don’t believe there is enough money, and we are going to have to find other sources to cover that."

This is similar to the skepticism Bruce Murphy at Urban Milwaukee had about the County's side of the Bucks deal, as his numbers indicated that the County's "debt recovery" plan wouldn't work out. And if the money does indeed run short, then which taxes go up or which cuts have to be made at the County level as a result of this arena? In addition, which areas near the arena are (or are not) getting breaks on their property taxes, causing more revenues that have to be made up by local taxpayers? Abele or Walker won't say, and since we haven't seen the bill in written form, we have no idea.

And maybe we won't see a bill at the state level for a while. Joint Finance Committee co-chair John Nygren (R-Marinette) says the Bucks arena bill could well be separated from the state budget, as not enough GOP legislators will vote for it if it's in the budget, and no Milwaukee-area Dems would vote for Gov Walker's budget under any circumstances because of all the regressive crap that's in it. And if it is a standalone, Urban Milwaukee's Steven Walters indicates that it might not pass anyway, because too many non-Milwaukee legislators don't want to be associated with giving taxpayer money to the Bucks when they run for re-election in 2016.

So it seems that the Bucks arena issue will be dragging out well beyond the July 1 start of the state fiscal year, with big decisions that still need to be made at the state, county, and city level in the coming months. And with the numbers not adding up to support the claims of arena proponents, that seems to be making a "yes" decision at all of those levels less and less likely.