How Will NBA Arena Benefit the City?
NBA Commissioner Adam Silver promises a new arena will launch a Downtown renewal. Is he right?
The Adam Silver show came to town just before Thanksgiving holiday and the NBA Commissioner did his best to sell Wisconsin taxpayers on giving the Milwaukee Bucks a Christmas gift of about $200 million or so. This is a challenge akin to the proverbial selling ice to eskimos.
Here was Silver, who has an estimated net worth of $20 million and earns $10 million annually as NBA Commissioner, telling us we need to dig into our pockets to help out Milwaukee Bucks’ owners Wesley Edens and Marc Lasry, who have a combined net worth of some $3 billion, and the team’s players, whose average salary is about $3.9 million.
In an age when the wealth gap in America is the greatest it’s been since at least the 1920s, and greater than in any developed nation in the world perhaps nothing personifies this ugly gulf more than the taxpayer bailouts of pro sports teams, wherein low and middle income taxpayers pay most of the money to subsidize a business that is often a glamorous recreational sideline for the plutocrats who own sports teams.
The idea that a new pro sports arena or stadium will have spin-off economic benefits for a community has been disproven by countless studies and may be the only issue on which the liberal Brookings Institution agrees with the right-leaning Heartland Institute. Both conclude that new pro sports facilities have little impact or even a negative impact on net personal income of residents in the surrounding area. Given that the plans largely work through a broad tax that all pay to help the wealthy, perhaps that’s not so surprising.
Silver, however, insists the league is not looking for a handout, as he told Walker. As proof, the commish also trotted out the thread-bare argument that replacing the Bradley Center would be about “far more than NBA basketball” because “the vast majority of the events in the area will be non-NBA related.”
Yes, the Marquette Golden Eagles and Milwaukee Admirals play in the Bradley Center, but it works just fine for them. Only the Bucks have demanded a new arena. Ah, but what about those concerts the Bradley Center books? Walker offered Silver some help with that argument, noting that the Bradley Center, built in 1988, “is viewed by new-arena boosters…as an aging and antiquated arena” which Bradley Center officials say “is getting increasingly difficult to attract top names in entertainment to perform there.”
Yes, Bradley Center officials do say this, but they are also the ones leading the charge to get more revenue and a new arena for the Bucks, which you might want to mention to readers. As for the idea that a 1988 facility is too old for entertainers, why are the Pabst Theater (built 1895), Riverside Theater (1928) and Turner Hall (1883) so successful at attracting top entertainers to Milwaukee? Maybe the Bradley Center is too new.
Salesman Silver also lauded the proposed state “jock tax,” which would take the amount in income taxes paid by NBA players, and devote that to subsidizing the new arena, the argument being that without an NBA franchise, this tax revenue could be lost. Warming to the task, Silver noted that with new TV contracts taking effect in 2016 and 2017 and a higher salary cap for NBA players, the amount of income taxes that could be diverted toward paying off bonds would increase significantly. Mayor Tom Barrett agreed, noting that the potential taxes paid by players, estimated at $10.7 million in the 2012 tax year, could rise to $25 million a year in the future.
But if the players are paying nearly two-and-a-half times more in taxes, that would mean their salaries have risen to nearly $10 million per player, which makes a tax subsidy for them more than twice as indefensible.
This suggests the Bucks owners want a lot of land, and seek to build a big complex. The logical ancillary development might include various Bucks-themed retail: bars, restaurants, a sports apparel store. I have also heard they might build some residential housing — apartments or condos. All of which raises lots of questions that need answers for the taxpayers:
-Do they want the Bradley Center torn down? I’m guessing the answer is yes; otherwise, there is another arena out there that could compete for concerts, Marquette Golden Eagles and Milwaukee Admiral games. Currently the MU and Admirals teams subsidize the Bucks and I’d think the new owners would want to continue this. So who pays for tearing down the Bradley Center, the Bucks or city taxpayers?
-Will the Bucks absorb the remaining $27.5 million in debt from the cost of turning the old Auditorium into the Milwaukee Theatre, or will the taxpayers?
-Will taxpayers pay for the costs of tearing down the newly renamed UWM Panther arena? And will they have to make up any net revenue it may contribute to the Wisconsin Center District and convention center? WCD Board Chair Frank Gimbel has insisted the loss would be significant; certainly the taxpayers deserve a full accounting of this.
-Will the Bucks pay any property taxes on their new arena? In the case of Miller Park, the majority of the facility was paid for by taxpayers so most of the facility is exempted from taxes. That’s a double whammy for taxpayers: they pay to subsidize a stadium or arena and then pay again to make up for property taxes lost on it. It sounds like taxpayers could pay for as much as 40 percent of the new arena; will that percent be exempt from taxes?
-Will the Bucks pay any property taxes on the ancillary development, whether its a bar, restaurant or residential housing? If not, that’s not only a loss to taxpayers, but means you will have tax exempt retail competing with other downtown retailers.
-Will the ancillary retail be enclosed within the Bucks complex or built as part of the city proper? The former captures all revenue for the Bucks, the latter could add to the urban fabric of Downtown and give other restaurants and bars (all of which pay taxes) a chance to compete for spending by Bucks fans.
-Will the Bucks pay for any environmental costs associated with the Journal Sentinel building (which some believe could be significant for a building that long housed a huge printing press) or will the taxpayers?
I should note that the Bucks owners say they are still keeping their options open as to the final location for an arena. But wherever they build, some of these questions will still be relevant and others will also arise. And the press generally declines to raise them.
If this is truly a good deal for the Bucks, as Silver maintains, there should be no fear of a full transparency. As Silver put it, “ultimately for the citizens of Milwaukee and Wisconsin, they have to decide if a new state-of-the-art arena is in their interest… I would be asking the same question if I was a taxpayer here.”