10 Key Issues in NBA Arena Debate
Will the new owners get tax support? It all depends on these ten issues.
There were smiles on the faces of countless basketball fans and Milwaukee boosters after it was announced that the new owners of the Milwaukee Bucks would put up $100 million for a new NBA arena, matching $100 million that current owner Herb Kohl also promised to contribute. This suddenly made it look more feasible to get taxpayer support for a new NBA arena, something that’s been discussed since 1999 without any getting any traction.
Still, it won’t be easy. Right now you can bet that civic leaders like Tim Sheehy, Metropolitan Milwaukee Association of Commerce President, and Marc Marotta, chairman of the BMO Harris Bradley Center, are feverishly strategizing to figure out the most attractive plan, with the most insignificant-sounding tax contribution possible, to sell politicians and voters on the project. Their success will depend on many issues, but these may be the ten most important:
Selling the New Owners: That won’t be easy. Co-owners Marc Lasry and Wesley Edens are both hedge fund plutocrats. According to Forbes, Lasry is the 352nd wealthiest American with an estimated net worth of 1.5 billion. Edens was ranked 297th in 2007, with a net worth of $1.6 billion, but his fortune declined significantly in the economic meltdown and his shares of his Fortress Investment Group LLC are now worth in the neighborhood of $468 million, the Milwaukee Journal Sentinel has estimated. Convincing taxpayers to subsidize gazillionaires is generally impossible (Possible ad copy: “After all, only one of the owners is a billionaire”). But it helps that Lasry and Edens so far seem likable, diplomatic and super-positive, not unlike Milwaukee Brewers owner Mark Attanasio, who is very popular with the state’s baseball fans.
Downplaying The San Francisco Model. No sooner did the new owners buy the Bucks then we learned the Golden State Warriors will be building a new arena in San Francisco that will be financed entirely by the team. That’s right, no tax subsidies; the 20-investor ownership group will pay for it all — you know, like it’s a business. Of course, Milwaukee is a much smaller, less lucrative market and that will be used to banish Frisco from your fantasies.
Selling the Economic Impact: By now, you probably know these arguments by heart, all those fabled restaurants and hotels and shoe shine stands a new arena is sure to spin off, not to mention the economic multiplier that jacks up that number into something approaching the GDP of Brazil. I’ve previously noted the utter lack of research proving this or you could consider Milwaukee Journal Sentinel columnist Jim Stingl’s wry take on the “explosion of jobs and investment” sure to come. “Well maybe, but the bar right across the street from the Bradley Center’s front door keeps going out of business.”
Invoking the Intangible Impact: This is where the argument gets into mystical territory, nearly leaving terra firma. Naturally some professor somewhere has done a research paper on this (but should Indiana State count?), helping us quantify the ineffable. To put in layman’s terms, as a Journal Sentinel editorial once put it, “while there may not be direct proof of economic benefit from a new arena, the indirect benefits for marketing Milwaukee across the country… cannot be ignored” — particularly if the publication makes most of its money covering sports. Still, now that basketball has risen into the world’s second-most popular sport, behind only to soccer, it does make the advantage of owning one of only 30 NBA teams seem a good deal more tangible.
Getting Regional Help: The long-running dog and pony show led by Sheehy, complete with a huge regional task force considering ways to support attractions like the Milwaukee Art Museum, Marcus Center and (the real point of it all) a new NBA arena, has also triggered a couple deathlessly sober studies from the Public Policy Forum pondering the financial issues involved. Meanwhile, every surrounding county board from here to (almost) Illinois has passed resolutions saying nyet, not one kopeck for those grasping urbanites in Milwaukee. This won’t be an easy sell, either.
Finding a Stealth Tax: If you can’t convince voters to tax themselves for millionaire owners and ballplayers, you have several possible ways to snooker them. Have state legislators who live outside the area pass a local tax, as was done for the five-county Miller Park plan (call this taxation with almost no representation); that won’t fly this time as Waukesha, Ozaukee and Washington Counties oppose it and have too much clout in the legislature. Or grab a tax outsiders will pay, like a car rental or hotel tax (but it can’t raise enough revenue). Or find a tax no one understands, like the proposed “Super TIF,” which takes the complicated scheme of a property tax incremental financing plan and somehow layers on sales and income taxes. Since this will require legislative approval, it will probably be shrouded in technical jargon, ideally resembling a riddle wrapped in a mystery inside an enigma, to match Churchill’s description of Soviet Russia.
Avoiding Partisan Debate: Uh oh, it turns out new owner Marc Lasry is a flaming Democrat who has done fundraisers for Barack Obama, even holding one in his Upper East Side Manhattan home. Gov. Scott Walker and Republican legislators don’t even tolerate moderate members of their own party and their lap dog Charlie Sykes has already written a story slapping at Lasry (which like everything published at Right Wisconsin cannot be read by mere mortals). Given how hard it is to pass legislation the voters hate (see Miller Park), how hard will it be to help a friend of your enemy?
Getting Media Support: The Journal Sentinel and conservative radio squawkers Sykes and Mark Belling pulled out all the stops to browbeat us into supporting the subsidy of Miller Park. (The Journal company even lobbied legislators to support the plan.) So far the Journal Sentinel has played along by burying the story about Golden State Warriors’ arena plan (though someone may need to stifle Stingl’s sly comments). JS sports writer Michael Hunt is once again writing articles offering his contempt for the “obstructionists” who would dare ask questions about any proposed deal. (Don’t they understand Hunt might lose his job if there’s no NBA team to cover?) But do the white suburban listeners of Sykes and Belling care as much about NBA basketball as Major League Baseball — much less when the team is co-owned by a dastardly Democrat?
Scaring Us With Seattle: Never fear, if nothing else works, the taxpayers can always be cowed with the threat of moving the team to Seattle. That wasn’t possible when Kohl served as senator, and even after his retirement he didn’t have the stomach for the job. But now the NBA has warned Milwaukee there must be a new arena built by 2017 or the league will buy back the team from the owners. And we all know where it will go, to the city that has become the league’s nightmare scenario for non-compliant taxpayers. As Bill Simmons put it, the loss of the old Supersonics team to Oklahoma City “created the league’s first extortion city — Seattle, the NBA’s version of L.A.’s Potemkin NFL franchise. These days, the mere threat of Sonics 2.0 can get a state-of-the-art arena built in other markets and bump up bidding wars by $100 million–$125 million. It’s hard to call multibillionaires ‘tragic’ figures, but frustrated [Seattle] kajillionaires Steve Ballmer and Chris Hansen are the greatest owners the NBA never had. They made a shockingly lavish offer for the [Sacremento] Kings (nearly $800 million if you added everything up) and the biggest offer for the Bucks (more than $600 million, from what I heard).”
The 30 NBA teams make up the “world’s most exclusive club,” as Simmons puts it, and if you want to belong it will simply take $200 to $300 million from taxpayers. As the Godfather might mumble it, it’s an offer you can’t refuse.
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