Friday, December 12, 2014

Bucks arena update- BC losses and new site changing?

The Bucks arena issue hasn't had any formal legislation to fund it or a even a site finalized as of this time, but that doesn't mean there weren't some intriguing events that have been going on to get things lined up with this half-a-billion-dollar project.

Don Walker of the Journal-Sentinel had an interesting article up today going over the Bucks current facility at the Bradley Center, and noted that the facility had an operating loss of $1.9 million for fiscal year 2013-14. The operating losses come at a time when the facility’s debt is near $20 million, and that debt will have to be paid off with any deal that comes with a new arena.
The net loss, which includes depreciation of $3.3 million, was a decline of $3.1 million compared with the prior fiscal year. Total operating revenue was $18 million, compared with $20.7 million for fiscal 2013.

Steve Costello, president and CEO of the BMO Harris Bradley Center, said the arena continues to be in a stable fiscal position. And there is hope, he said, that a reinvigorated Bucks franchise and an uptick in concerts will translate into a better year in the current fiscal year.

Costello acknowledged the debt the arena owes to banks and the Bucks in the form of tenant-shared revenue was "significant but manageable."
The article mentions that the biggest culprits in the 13% loss in revenue was a horrible 2013-14 that led to the lowest home attendance for any NBA team, and a season when the Bucks had the worst record in the league. In addition, the facility only hosted 7 concerts, as opposed to the 10-12 it would usually host. It would have been even worse, if not for the facility hosting March Madness with the Badgers being part of 2 of the 3 sessions, leading to sellouts and obvious upticks in concessions and revenues for those days.

But things may look slightly better for the Bradley Center in 2014-15. The improved fortunes of the Bucks are certainly playing a role, as the Deer have played at or near .500 ball for the first quarter of the NBA season. While they are still 4th from the bottom for home attendance at this point in the season, one would think that the Bucks staying in the playoff hunt (a strong possibility in the very weak Eastern Conference) would encourage some people to check them out the last 3 months of the year.

The vibe definitely seems different than the empty-arena death march the Bucks had in 2014 on their way to a league-worst 15-67 record. ESPN’s Zach Lowe had an impressive, in-depth article breaking down the Bucks plans this week, and how their future seems brighter than what it offered two years ago. The team is also investing in new positions to improve the team’s product, as well as its visibility in the Milwaukee area.
The Bucks think they have two franchise players, Giannis Antetokounmpo and Jabari Parker, super-young combo forwards with preposterous arms, a determined work ethic, and varied skill sets they’re only discovering. Any team built around 19- and 20-year-olds is a half-decade from anything like contention, and the Bucks under new ownership aren’t going to rush the process as they did in chasing the no. 8 seed under Herb Kohl….

Antetokounmpo and Parker are the only sure bets to be on this roster in five years. The franchise is content in the meantime to measure its other young players, especially Brandon Knight and Larry Sanders, and watch Jason Kidd imprint his identity. The team’s new owners, Marc Lasry and Wesley Edens, have spent millions building the infrastructure that must be in place if the Bucks hope to chase big things.

They’ve already hired about 50 new people, including a bundle of sales associates and a new sports psychologist. They’ll beef up the medical staff over the next few months, Lasry says, and they purchased a speedy new server for the team’s analytics department. They even hired the first director of merchandising in franchise history after Lasry became disenchanted at how difficult it was to buy Bucks gear.
Also in Lowe’s article is a discussion of the Bucks’ arena situation, which Lasry says he plans to build in the next two years, as he doesn’t want to be part of the team if it moves.
The need for a new arena and practice facility looms over everything. The BMO Harris Bradley Center is dull and outdated, and the Bucks practice 15 minutes from downtown in the back of a Catholic archdiocese. The NBA holds an option to buy the team back at a cheap price if the Bucks haven’t started construction on a new arena by fall 2017, and there will be a vigorous debate if the new owners request public funding.

Lasry is confident the Bucks will secure a deal, if only because the buyback clause and the looming Seattle threat have everyone backed into a corner. “The reason it’s gonna get done is that no one has a choice,” he says. He and [Bucks co-owner Wes] Edens are based in New York, and they will not entertain the idea of moving the Bucks to a West Coast market as long as they own the team. “I have no interest in being far away,” Lasry says. “The fun of owning the team is being part of the community. You can’t do that if you’re four or five hours away.”

Edens and Lasry have pledged $100 million to an arena project that could cost more than $500 million. Kohl made an identical pledge on his way out. It’s unclear where the rest of the money might come from, and any plan to divert funds from the coffers of a Rust Belt city into the hands of wealthy financiers will draw justifiable scrutiny. That is a real issue; sports are silly in comparison.
Speaking of the arena, Don Walker’s article on the Bradley Center also has an update on where that proposed arena might be sighted. Originally, the land that Journal Communications owns across from the Bradley Center was mentioned as a possible spot, but that option seems to be bogging down, and other sites in downtown Milwaukee are looking more likely, including the area just north of the BC, which heads out toward the Park East land on N. 6th Street near Juneau.
[Bradley Center president and CEO] Costello declined further comment on the arena land. Much of it is already vacant and could conceivably be the easiest path for the Bucks, which face an NBA-imposed deadline of the fall of 2017 to have a new arena in place.

Talks between Journal Communications, which owns a square block near the BMO Harris Bradley Center, and the Bucks have hit a snag. Sources say it is now unlikely Journal Communications, publisher of the Milwaukee Journal Sentinel, and the Bucks will be able to reach agreement on sale of the property as part of a new arena site. (Hey, I guess they’d know, right?)

For months, the Bucks targeted the Journal Communications land, plus the land now occupied by the UW-Milwaukee Panther Arena and possibly the Milwaukee Theatre, as the preferred site. With that site now in doubt, the Bucks have focused on the BMO Harris Bradley Center land, as well as city-owned land at the corner of N. 4th St. and W. Wisconsin Ave., and land at the corner of N. 2nd and W. Michigan streets.
And of course, the financing is the other issue. I’ve previously discussed the mechanism of a “jock tax” to pay for the estimated $150 million of public financing a new Bucks arena is expected to cost, and I’m still very skeptical of the idea because it’ll take away those revenues for general usage throughout the state over the next 20 years. Wisconsin already has major fiscal issues from prior tax and voucher school giveaways to sort out before we can think about adding to those problems with a Bucks deal, and we should probably be dealing with other fiscal and social concerns in the state’s largest city and economic engine ahead of helping one specific company (the Bucks).

But the wheels are definitely still churning, and the Don Walker article indicates a site for a new Bucks arena is likely to be known in the next 3 weeks (!). Then it becomes crunch time with a new Legislative session in Madison and new state budget that will be part of these discussions, whether in the form of another subsidy from state taxpayers (as has been done under gubernatorial tenures of both Jim Doyle and Scott Walker), and/or a new funding mechanism for the arena project. If a deal does not get worked out, then we get to find out what might happen with the team’s future in Milwaukee.

Lots of things are going to heat up in 2015 when it comes to the Bucks, and it’s worth it to stay on top of the twists and turns, which will go well beyond the team’s development on the court.

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