Tuesday, August 11, 2015

Bucks bill debate over, but commentary is not

Tomorrow, Gov Walker will sign the Bucks arena bill into law, and while there is a bit of drama involving what Walker might veto/change in the package (Mayor Tom Barrett and other Milwaukee-area officials have asked Walker to have the $2 ticket tax go entirely to the Wisconsin Center District, instead of having $0.50 of it go into the state's coffers), otherwise, it should be relatively straightforward. This would leave the Milwaukee Common Council and a neutered Milwaukee County Board as the only two entities who could throw any kind of change or delay into the arena, and while there may be some debate over the next 3 months as those places do their 2016 budgets, it is likely that things are set for the arena to start construction this Fall.

But that doesn't mean others still aren't talking about the bill, especially in light of Gov Walker's presidential candidacy. To start, I'll give you a piece from Bloomberg News, who notes that some Republican activists have an issue with an alleged "small government" conservative favoring a massive government subsidy to billionaire owners - owners that were already set to make major profits, given how the NBA's broadcasting revenues are set to explode in the next few years.
“I don’t think taxpayer money should be used for things like that,” said Tom Thomson of New Hampshire, who is son of a governor and organizer of an effort to get candidates to take a no-tax-increase pledge.

“Why should you burden all the rest of the taxpayers?” said Thomson, whose state holds the first primary Feb. 9. “Let the private sector in Milwaukee work on that.”

The state would put $250 million toward the arena, with interest adding up over decades. The subsidy, approved last month with bipartisan support in Wisconsin’s Republican-controlled legislature, wasn’t addressed in the first presidential debate Thursday. That might change in future forums -- or attack ads.
Next, I'll bring you a piece that ran in Urban Milwaukee today. While Urban Milwaukee has been consistently anti-arena through this whole debate, that doesn't mean that author Pat Small doesn't make an interesting point, asking what's stopping the new Bucks owners from selling the team at a huge profit to another owners and having the leave in a few years for a better market anyway? Yes, the Bucks bill forces new owners to pay back the remaining debts other governments have on the arena, but if NBA revenues keep exploding in the next decade, that may be a cost worth taking on for an owner who might have a new sweetheart deal elsewhere.
Conservatively, let’s say a new owner pays $1.1 billion for the franchise in 2025 — the present average price [for an NBA team]. However, current Bucks owners would not have to require the team to stay here. That promise was only between Kohl and Edens/Lasry because of Kohl’s insistence.

What about the clawback clause in the public-funding deal? It offers some relief for taxpayers, but it basically defines known costs for breaking the arena lease/construction contract. Present and future owners would simply factor into a sale the remaining debt.

Here’s a ballpark tally of what Bucks owners would have to pay taxpayers if the team is sold and moves in 2025: Roughly half of the total principal borrowed by county and state–or $55 million—would be due. With prepayments and other costs, that could reach $60 million. Wisconsin Center District bonding of $93 million would still be outstanding, although ticket surcharges would have covered some accrued interest. Payback for city borrowing could be about $20 million. That’s around $173 million.

Perhaps I’m underestimating. Say they have to pay $200 million. That still gives them a $450 million gain from a $1.1 billion sale that involves the team leaving Milwaukee. That’s a nice return on investment.
And that's not counting any of the profit the Bucks owners might get from any new development around the arena. Pretty cool deal, eh?

Lastly, I'll give you the thoughts of Charlie Pierce, who took a break from his typical Esquire Politics blog to do a guest column at ESPN's Grantland.com. Pierce writes a long discussion of the arena debates going on throughout the country, including the way Los Angeles is being used as a potential moving threat for the NFL's Chargers, Rams, and Raiders. But Pierce brings special attention to the Bucks arena, where he has extra insight both as a Marquette grad and a longtime sportswriter. Pierce starts out by also bringing up the ironies of how the Bradley Center was gifted by the same Bradleys whose foundation that wants to destroy much of what used to make Wisconsin a great place to live, and how Walker's pro-arena stance flies in the face of his disinvestment of other public goods like education. And then he ties the two together by noting that while it's a sign of progress for these arena debates to be talked through with much public skepticism, Milwaukee still is going to pay up to the billionaire Bucks owners....as the Bradleys' boy run for president.
...Pure civic jingoism doesn’t have that old magic anymore. Citizens generally have gotten wise to the fiscal palaver and fast-talking from the people who want to get into their pockets. They aren’t as easily conned by politicians, and they aren’t as easily flattered by local Babbitts, and they aren’t as easily bamboozled by any unholy combination of the two. Unfortunately, there is still blackmail, and the jury is still out on whether that tactic still works.

It certainly seems to be working in Wisconsin, where Walker is trying to get the ransom money transferred as best he can. It remains to be seen whether it will work on behalf of the St. Louis Rams, or the San Diego Chargers, or the Oakland Raiders, a team that has spent almost its entire history playing Oakland and Los Angeles off each other. The problem the NFL had was not that the Raiders were gaming the system but that the Raiders were gaming the system without permission. They were the functional equivalent of the people who go into casinos and count cards. You can see how it’s supposed to work by watching how Kroenke plays off St. Louis and Los Angeles, and how the Chargers and Raiders play off two proposed stadiums against the cities where they presently play.

In this new Gilded Age, nothing should surprise us anymore. In Wisconsin, where Walker is moving heaven and earth to get a couple of Democratic sugar daddies a new playpen, his campaign named one Michael Grebe to be its chairman. Grebe’s day job is as chairman and CEO of the Bradley Foundation, founded with the same money that once built the Bradley Center, which is obsolete because other money says so. Mark Twain was right. Those peaceful islands look very good right now.
And let's not forget who another key member of Walker's campaign is- Jon Hammes, whose son gave $150,000 to Walker's SuperPAC in late May, one day before the updated Bucks arena deal was formally announced. And the Hammes family would be a leading contender to get a nice fat contract from the arena's construction, and owns several land parcels near the arena. But I'm sure that's all coincidence.


  1. We need to create a blogging award for you. Also, I thank the stars every day for Charles Pierce. The man's historical memory, especially on things like Iran Contra, should be considered a public good.

    1. THanks Chuck. What I do.isn't that special- I just gather and summarizr. But Charlie is indeed a national treasure, and a must-read on any subject

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