MMAC Plays Hardball on Bucks Arena
A misleading poll, pressure on legislators and more misinformation are all used to sell the NBA arena.
It’s no secret the Metropolitan Milwaukee Association of Commerce favors the proposed subsidy to create a new NBA arena. The group’s president Tim Sheehy estimates that “80 to 90 percent” of the MMAC’s 75 board members favor the subsidy.
But it’s no easy task convincing legislators to support a project that’s opposed by 79 percent of state voters, as a recent Marquette Law School poll found. So the MMAC commissioned its own poll, in which the pollster, before asking the respondents their opinion, helpfully explained that if the arena wasn’t built, the state would lose more than $700 million in tax revenue from players in the next 30 years and would be forced to pay $100 million to repair the BMO Harris Bradley Center. Showing some restraint, the pollster did not predict a plague of locusts if we lost the Bucks.
Rich Kirchen of the Business Journal did a story in which polling experts with UW-Milwaukee and St. Norbert’s condemned this sort of polling. But it’s worth noting that the MMAC was echoing a line also being used by Republican legislators, that the state will be on the hook for $100 million in repairs to the Bradley Center, as Urban Milwaukee contributor Steven Walters has reported.
And if the Bradley Center does need any repairs, that is because of a deliberate policy by its board members to neglect maintenance while funneling every dollar possible to the team. (The Bucks, after all, have been pushing to replace the Bradley Center since 1999.) The board managed to convince Gov. Jim Doyle to approve a $5 million state payment for the Bradley Center in 2009 but spent most of it on a new scoreboard for the arena the Bucks wanted. As the Bradley Center board minutes of January 28, 2010 note, the board allocated $4.2 million for a new scoreboard “to put the Center into the mainstream when compared to other NBA arenas.”
The year before that, minutes show the board borrowed $1.1 million from the Bradley Center’s plant fund for maintenance to be used to meet a revenue payment due to the Bucks. And back in 2008, the Bradley Center added a ticket fee, which raises $1.45 million annually and in theory is for maintenance, but also helps the Bradley Center afford the exorbitant payments going to the Milwaukee Bucks.
The Bucks pay not a dollar in rent for using the Bradley Center, while getting 27.5 percent of all concession sales and 13.75 percent of food and beverage sales in the arena suites, as well as 30 percent of merchandise sale, 19 percent of net suite revenue and a suite revenue share of $2.1 million annually.
Other tenants, like the Marquette Golden Eagles and Milwaukee Admirals, have had their rent payments adjusted upward over the years to help finance all this revenue getting funneled to the Bucks. Meanwhile the board was also spending money that could have gone for maintenance to buy up land around the Bradley Center to pave the way for the Bucks to expand its operations.
So if the Bucks left town and the Bradley Center was left to survive without them, it would no longer be funneling millions every year to the team. The center would have 41 more dates open to sell to concerts and other events. It would have the annual ticket surcharge money, the extra rent payments from MU and the Admirals, and money it could raise by selling the prime downtown land it owns — all of which could be spent on maintenance. And if all that fell short, there’s not a chance in hell the state would offer any subsidies; that would be a problem for Milwaukee and Marquette.
Besides the poll it commissioned, the MMAC has pushed its members to lobby legislators. State Rep. Jonathan Brostoff, whose Milwaukee district includes a chunk of Downtown, says he got deluged with emails, from 130 or more business people associated with the MMAC, urging him to support a state bailout of the Bucks. “Obviously, they (the MMAC) have a lot of influence in this town,” he notes. But there is zero chance he will vote for it, Brostoff notes, because it’s contained in the state budget that he considers a “horror show.” Odds are, few if any Democrats will vote for the budget.
That doesn’t mean there isn’t a potential risk for Democrats. A Sunday story by Milwaukee Journal Sentinel reporter Don Walker showed what happened in Kansas City when the city guaranteed bonds used to finance an arena and entertainment district, but the projected tax revenue to repay the bonds fell way short.
What’s interesting about the situation is that Kansas City’s downtown entertainment district is centered around an arena and has a plaza connected to restaurants and bars that looks something like what the Bucks have proposed. Walker reports that the debt service on the bonds is $20 million annually but the district is generating less than $5 million in tax revenue, leaving taxpayers a $15 million annual subsidy. The problem occurred, Walker suggests, because a “consultant’s report” overstated the potential revenue to be gained.
But there is much more to the story than Walker reported. The district’s developer, Cordish Companies, got public subsidies, including tax abatements, for two major apartment complexes it built in the district. The second development received a 25-year, 100 percent tax abatement. This was even better than “the standard tax abatement for residential projects” for blighted property, which the Kansas City Star reports is “100 percent for 10 years and 50 percent for the next 15 years.” All those tax abatements (this part of downtown was considered blighted before this development occurred) might help explain why the district isn’t collecting enough revenue to retire those bonds.
No, the city won’t be issuing bonds for the Bucks arena. But as I’ve previously written, everything the Bucks owners have proposed to build in its much ballyhooed downtown sports and entertainment district is eligible for a property tax exemption. This means a huge loss of tax dollars for the city and county, and leaves bars and restaurants outside the district that are taxed competing with district businesses that don’t pay taxes. Indeed, all other businesses and residents in the city will have to pay more in taxes to provide the city services (police, fire, sanitation, roads, snow plowing, etc.) for the district. Tax exemptions, as Kansas City has learned to its rue, are not free.
Update 5:50 p.m. May 6: Sheehy takes issue with this column here: