This should be a happy time for Milwaukee Bucks fans. They're coming off a massive turnaround, vaulting from an NBA-worst 15-67 record in 2013-14 to a .500 mark at 41-41 and a shocking playoff berth last season. New head coach Jason Kidd and assistant Sean Sweeney led a complete point-prevention overhaul in Year 1, lifting Milwaukee from the NBA's second-worst defensive efficiency mark in '13-'14 to its second-best last season.
General manager John Hammond bolstered an intriguing and long-limbed young core featuring the tantalizing Giannis Antetokounmpo, 2014 No. 2 overall pick Jabari Parker, former Rookie of the Year Michael Carter-Williams and rim-protecting big man John Henson by re-signing restricted free agent swingman Khris Middleton and pulling a somewhat shocking coup by landing unrestricted free agent big man Greg Monroe.
Suddenly, the Bucks are getting referred to as "an 'it' team" and "a destination" for talented young players who want to contend. There's new talent, new logos, new threads, a new court, a brand new level of excitement about a long underwhelming franchise. And yet, there's still the same old problem — the one related to the building that will house all those fancy new flourishes.
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When they bought the Bucks from former U.S. Sen. Herb Kohl for $550 million in the spring of 2014, hedge-fund billionaires Marc Lasry and Wesley Edens said they were "committed to the success of the Bucks and the identity of the team as a part of the city of Milwaukee." They opened up their tenure by putting more of their money where their mouths were, committing an additional $150 million on top of the franchise's purchase price toward the development of a new arena in Milwaukee; Kohl, determined not to see his decades-long stewardship of the franchise end in relocation, pledged $100 million on his way out the door, too.
There's just one problem: the Bucks' proposed new gym, part of a planned $1 billion downtown development project, is expected to cost $500 million. That means the owners' commitments only get the Bucks halfway home, and that means the Bucks are reaching out to John Q. Taxpayer to bridge the gap in a "public-private partnership" that amounts to the franchise asking state, city and county governments to find $250 million ... or else.
Two and a half months after telling local realtors and shopping center executives that "the Bucks will be gone from the state of Wisconsin" if politicians don't approve legislation that will fill in the $250 million gap, Bucks president Peter Feigin reiterated his doomsday stance on Monday. He told lawmakers that if the public arena funding package doesn't pass soon, "the NBA will move the team to another city," according to Mark Kass of the Milwaukee Business Journal:
At an informational hearing held by the state Legislature's Joint Finance Committee, Feigin said the Bucks owners' purchase agreement for the team includes a provision that construction of a new arena start in 2015. If that does not occur, he said the NBA will buy back the team for a $25 million profit and move them to "Las Vegas or Seattle." [...]
"The window is closing," Feigin said. "We can't wait months, even weeks to start the public process." [...]
Feigin said the team needed to start construction by October or November to avoid the NBA starting a process of seeking buyers for the team. The team's lease at the BMO Harris Bradley Center expires in 2017, he said.
"The NBA does not want the Bucks to extend the lease in an inadequate facility," he said.
Initial reports suggested that the NBA can buy back the Bucks for $575 million, just $25 million more than the Edens-Lasry group paid for the franchise, if a new arena deal wasn't in place by November 2017. Subsequent reporting reflects an important shift in that language, suggesting that the league mandates the Bucks "having an arena in place or at least have it nearing completion by 2017," and Feigin's Monday insistence seems to support that latter interpretation of the timeline.
Hence ownership's interest in locking down the funding to get construction started as soon as possible; hence Feigin's saber-rattling. Todd Richmond of The Associated Press has more:
Feigin told the Legislature's budget committee that construction needs to start this year or the NBA will move the team, possibly to Las Vegas or Seattle, though he didn't elaborate. He also said the project could create thousands of construction jobs, lead to the Bucks hiring 50 to 100 more people, and draw attention to the state as the team improves.
"An NBA team, the Bucks, is a worldwide attraction," Feigin said. "The NBA is an international beacon. You'll never be able to replace the revenue if the Bucks leave."
John Koskinen, chief economist for the state Department of Revenue, told the committee that the Bucks contribute about $130 million to Wisconsin's gross domestic product annually. He also said income taxes on Bucks personnel generate $6.5 million per year. By 2019 those taxes should grow to $10.4 million annually.
Still, Rep. Dean Knudson wasn't buying the idea. The Republican was the only committee member who voted against holding a hearing on the legislation. He said the economic predictions were exaggerated.
"It's all kind of hocus-pocus," said Knudson, who lives in Hudson. "It's just wild-eyed optimism about what might happen."
There are also more pessimistic views of what the most recent iteration of the funding package could mean for Wisconsin taxpayers, according to Jason Stein of the Milwaukee Journal Sentinel:
Of the principal coming from taxpayers for the arena, $47 million would come from the City of Milwaukee providing a parking structure and tax incremental financing.
The rest — $203 million — would come from: bonds issued by an arena and entertainment district and paid off by state taxpayers; a mechanism to let the state collect on certain debts owed to Milwaukee County; and the extension of existing local hotel room, rental car, and food and beverage taxes being collected by the Wisconsin Center District. That district runs the Wisconsin Center convention facility, Milwaukee Theatre and UW-Milwaukee Panther Arena.
There would be at least an additional $174 million in total interest costs to the public on the arena deal.
That's $174 million in accrued interest on top of the initial $250 million, with the bonds issued by the Wisconsin Center District racking up interest for 13 years before repayment would start.
"Who has a loan for 13 years and you don't pay anything, but you let the interest run? Who does that?" asked state Sen. Lena Taylor, D-Milwaukee, according to Kass of the Business Journal. "You wouldn't let your kids do it. And you sure as heck wouldn't do that to your constituents."
While the funding debate will continue to play out in the legislature, the big question raised by Feigin's public comments is just how real the threat of relocation might be, and whether the team president's invocation of Seattle (two years removed from a failed bid to lure the Sacramento Kings up to the Pacific Northwest and rebrand them as the SuperSonics) and Las Vegas (a long-rumored destination where developers last fall started construction on a new $1.4 billion retractable roof arena) amounts to much beyond adding definition and shading to the Bucks' preferred bogeyman.
The buyback clause is obviously there for a reason, and Seattle is both a TV market twice Milwaukee’s size and the home of a guy willing to both build a $500 million new arena and pay $625 million, plus relocation fees, for an NBA team to play in it. (Las Vegas is a tiny market, and its main association with the NBA is of an All-Star Game that everyone involved would seemingly rather forget.) That would represent a $50 million profit for the NBA if it bought the team off Lasry and Edens for $575 million (which would in turn be a $25 million profit for Lasry and Edens), and if that’s a crazy amount of money for Chris Hansen to be putting up for a team and arena — or more accurately, for an as-yet-unidentified Steve Ballmer 2.0 to be putting up — that would be Hansen’s problem, not the NBA’s.
On the other hand, this is the same decision that the NBA faced two years ago with the Sacramento Kings, and the league decided then to give Sacramento some more rope to get an arena deal finalized, even though that deal wasn’t any more approved at the time than Milwaukee’s is now. Plus, that was before Chris Hansen was revealed to have secretly funded a petition drive to keep the Kings from getting their Sacramento arena, which undoubtedly didn’t win any friends in NBA offices.
All told, then, we're not in a much different place on Tuesday than we were on Sunday. Someone still needs to come up with $250 million if this particular Bucks arena proposal is to come to fruition, and the Bucks president is still clearly willing to invoke the prospect of the team being yanked away if the money doesn't come from the people of Wisconsin. Now, we've got the fun added elements of Bucks brass casting the NBA itself as the bad guy and basketball fans in several cities getting positioned as pawns in a half-billion-dollar game of municipal chess.
The NBA: It's faaaaaaantastic.
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