Bucks Subsidy An Issue in US Senate Race

Amid a playoff run by the world champion Milwaukee Bucks, the huge tax subsidy for the team is being criticized by Outagamie County Executive Tom Nelson, who is running for the Democratic nomination for the U.S Senator seat held by Ron Johnson.

“We paid a quarter of a billion dollars for the Fiserv Forum,” a new ad by Nelson declares. “Every dollar spent was taken from schools, roads, tax relief. Things that benefit all of us. Go Bucks, but let’s end these crooked political deals.”

Nelson also did an Op Ed for Madison’s Cap Times where he called out two of his Democratic opponents, Bucks executive Alex Lasry and Lieutenant Governor Mandela Barnes, on the issue. Nelson noted that Lasry “has spent over $5 million of his father’s wealth” on his campaign for US Senator, and some of that wealth came from the tripling of the Bucks franchise value since Fiserv Forum was built with a heavy taxpayer subsidy.

As for Barnes, he “played along” with state legislation authorizing the subsidy “while serving in the Assembly, even though there was stiff bipartisan opposition from both Republicans and Democrats, including some within Milwaukee,” Nelson charged.

Nelson noted the irony of Barnes’ support for the subsidy, saying the latter is now “getting a taste of his own medicine. … He votes for the subsidy, now the Lasry family is giving their son millions of dollars to run for the U.S. Senate.”

In February, a bill sponsored by three Democratic members of the House of Representatives proposed to end a lucrative federal tax break used to subsidize pro sports arenas and stadiums. The bill was partly inspired by a Brookings Institution study which found the federal government had lost $3.7 billion in revenue as a result of tax-exempt municipal bonds used for stadium construction since 2000.

The study found that the $256 billion in bonds issued to pay for the Milwaukee Brewers stadium cost taxpayers $117 million in lost taxes. The Bucks new arena, which was financed with $203 million in “double exempt bonds” (meaning the return for bond buyers is exempt from both state and federal taxes) issued by the Wisconsin Center District, would have a cost somewhat smaller for taxpayers.

When all federal and state and local tax exemptions are included the total subsidy for a team is much greater. The total cost for taxpayers for Fiserv Forum is likely double or triple the $250 million price tag for the arena that is commonly used, as Urban Milwaukee has estimated, while the total cost for taxpayers for the Milwaukee Brewers stadium was recently estimated at $1.56 billion.

Nelson supports the federal bill ending the federal tax write-off, saying “we definitely need to pass H.R. 6806.” Barnes declined to comment on the issue. But Thad Nation, spokesperson for Lasry’s campaign, offered this statement to Urban Milwaukee:

“Alex does not favor ending the use of federally exempt bonds, but he does believe that changes should be made to how these bonds can be utilized.

“As Senator, Alex will work to strengthen requirements for the use of these bonds to mandate project labor agreements, purchasing building materials made in the USA, as well as the utilization of minority, women and veteran owned firms as a hiring requirement. The clear success of the public/private partnership that built Fiserv Forum is a strong case study in how these bonds can be used effectively to spur growth, create good paying union jobs, and help drive development not only in Milwaukee, but across Wisconsin.”

The Bucks arena has been the central plank in the campaign of Lasry, who has heralded “the economic impact of Fiserv Forum.” But sports economists who have studied this have found little economic spinoff from arena and stadium subsidies. Lasry’s ads and campaign literature have repeatedly touted that “under Alex Lasry the Milwaukee Bucks paid a $15 minimum wage.” But that came after a taxpayer subsidy for the arena subsidized the team’s finances. The ads also note that “Lasry led the effort to build the Bucks arena with 80% of materials sourced from Wisconsin.” But the Bucks get a sales tax exemption if the materials are purchased in Wisconsin, so the team has a huge incentive to do this.

Nelson offers a direct contract to this approach, also criticizing “the Foxconn disaster which Sen. Ron Johnson enthusiastically backed...We have to stop Foxconn-Fiserv scams that starve local communities and primarily benefit billionaire plutocrats,” Nelson declared.

When asked for her view, Democratic candidate Sarah Godlewski declined to specifically address the federal tax subsidy for sports teams but said “I believe we must fix the Swiss cheese tax code that too often benefits the wealthy and big corporations. I’ll fight for a wholesale rewrite of the tax system, to create more accountability and transparency for our tax dollars.”

Urban Milwaukee reached out to Sen. Johnson for comment but did not hear back.

Nelson is well behind in the Democratic primary, according to the April poll by Marquette University Law School, which found he was the top choice among 5% of voters, compared to 19% for Barnes, 16% for Lasry and 7% for Godlewski. The issue of the Bucks subsidy puts Nelson on the side of the majority of voters, who typically oppose these deals. A MU poll back in April 2015 found early 80% of respondents opposed the a $150 million package for the Bucks, which is much less than what the team ultimately got.