Monday, March 16, 2015

Bucks arena update- slow progress?

With some of other items going on at the Capitol and in the country, we haven't talked about the Bucks arena situation recently. And there have been a couple of items over the last week that are noteworthy developments, one involving the NBA's side of the equation, and one involving events at the Capitol.

T Last week, the NBA Players Association rejected the idea of "smoothing" out an increase in the league's salary cap for the 2016-'17 season. This will result in a major one-time jump in the cap after next season, which went against the wishes of the league.
"Smoothing would have avoided a substantial Salary Cap spike in 2016-17," NBA executive vice president of communications Mike Bass said. "Under the league's smoothing approach, the salary shortfall resulting from more gradual Cap increases would have been paid directly to the Players Association for distribution to all players, and thus the total compensation paid to players in any given season would not have been impacted."

However, the NBPA has rejected this proposal in favor of a major spike to the salary cap in 2016. Experts believe the salary cap could rise to $90 million or more that year; it's at just $63 million this year. As NBA cap expert Larry Coon points out, this is a decision that should negatively affect a lot of rank-and-file union members who would have received bonus compensation under the proposed "smoothing" plan:...

The big factor here is the league's maximum salary, which is determined by the salary cap and should rise substantially in the summer of 2016. That means top free agents will be able to command significantly more money than ever before, and the vast majority of the new salary cap space will go to those players. Any leftover money will go to players who are set to be free agents that year and not to players who are already under contract.
This likely means that the Bucks would have a larger amount of "jock tax" revenue to kick in towards an arena, especially since the NBA also has a salary floor that is linked to the amount of the salary cap. This could conceivably speed up the timetable for the jock tax to pay back its share toward a new arena, while also raising the amount of foregone revenue that could be used for other needs in the state budget, since the Walker plan for the Bucks arena is supposed to divert all money to the arena project past a certain amount.

At the Capitol, Assembly Speaker Robin Vos says that his house of the Legislature might not give Gov Walker all $220 million in borrowing that Scotty wants toward the arena, but he might give him more than half of that.
Vos said he views $120 million as a base figure for the arena bonds. That is because if a new arena is not built, the state would be on the hook for $100 million in needed maintenance and improvements at the BMO Harris Bradley Center, plus a $20 million bond balance at the facility.

The Bradley Center Sports and Entertainment Corp. is an instrumentality of the state and the governor appoints a majority of the nonprofit corporation's board.

"We're going to spend $120 million to keep (the Bucks) here or to see them leave," Vos said. "That is a bottom line number I think is reasonable.

"Is there a number beyond that? $120 (million) to $150 (million) — maybe a little bit north of that. But I think our caucus is comfortable in that range because that's what we'd spend anyways."
Lowering the amount of borrowing won't have a huge effect on the current-year budget, since there is only $2.8 million set aside for net debt service in the current budget, but it certainly would lower the amounts to be paid in future years to pay off the smaller debt.

We still don't know a site for the arena, so it becomes quite difficult to figure out what local government assistance would be toward it...or if a TIF of related local tax incentive could even be part of the equation. That's because the LFB's summary of the Bucks arena bill indicates that the facility and its related buildings wouldn't pay property taxes.
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.
So the City and County of Milwaukee would likely be losing out on tens of millions of dollars of tax base from this new Bucks arena, which seems like quite a contribution before we even start talking about any extra streets or related infrastructure that those levels of government could give toward the arena development.

Of course, if the budget numbers implode in the coming weeks, then all bets are off in terms of what's available for this and future years. But even though the Bucks have been struggling as they try to hold on to a playoff berth, it does seem that the arena is making slow but sure progress toward being fleshed out into reality.

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