Bruce Murphy
Back in the News

Bucks Owners Continue to Cash In

Team's value now $2.3 billion, a 5-fold increase in value in 8 years, with big help from taxpayers.

By - Nov 28th, 2022 01:46 pm
The seating bowl at the Fiserv Forum. Photo by Jack Fennimore.

The seating bowl at the Fiserv Forum. Photo by Jack Fennimore.

Pro sports owners never lose money. Even if there are occasional seasons that lose money, that’s soon made up by the incredible escalation in the value of the team.

Case in point: the Milwaukee Bucks. When principal owners and hedge-fund billionaires Wes Edens and Marc Lasry bought the team for $550 million in April 2014, some thought they had paid too much. Just three months earlier, Forbes magazine had estimated the team’s value at $405 million. And nearly a year before this, the Sacramento Kings, in a larger market, were sold for $535 million.

The Bucks, after all, were the least-valued team in the National Basketball Association according to Forbes.

In fact, the sales price for the Bucks was really $450 million because former owner Herb Kohl promised to pay $100 million for a new arena as part of the deal, which put the net purchase price just a bit higher than the Forbes estimate.

But all that was chump change compared to how much the value of the franchise has grown since then. The latest ranking by Forbes shows the Bucks team is now worth a cool $2.3 billion.

That’s a 21% increase in value in one year. That’s a five-fold increase in value since the team was purchased. And much of that increase is due to the building of a taxpayer-subsidized arena, Fiserv Forum, which opened in 2018. This has helped the Bucks team jump from the least valuable franchise to 15th place, ahead of 10 other NBA teams, including those in far bigger metro areas, like Atlanta, Detroit, Denver, Portland and Cleveland.

But what all the teams have in common is how rich they make their owners. “The NBA is golden,” Forbes reported. “Buying a team today means an owner can quickly begin to pocket cash and never have to put in another dime.”

And a key income generator is each team’s arena. The leader in this is the only one that isn’t subsidized, the Golden State Warriors’ arena, which “made league financial history by raking in $150 million from arena sponsorships and advertising, double any other team, and by pulling in more than $250 million from premium seating.” But even at half the level of the Warriors, that’s a lot of income generated by your arena.

Then consider the impact of the league’s revenue-sharing formula: “low-revenue teams split nearly $500 million that was pooled from funds that came from a combination of high-revenue teams and luxury-tax payments last season,” the story noted. And some of that big-market income comes partly from the taxpayers in those metro areas, as every other arena beside the one in San Francisco is subsidized.

‘The full cost of the subsidy for Fiserv Forum was estimated at more than $800 million by Urban Milwaukee, paid for mostly by metro-area taxpayers with some state funding. But it turns out the Bucks are also subsidized by taxpayers in other cities, through league revenue sharing from bigger-market teams.

That subsidy helps subsidize the millionaire ballplayers for the Bucks, but most of the resulting profits go to the principal owners: Wes Edens, whose net worth is estimated at $5.1 billion, Marc Lasry, at $1.8 billion and Jamie Dinan, who came aboard as a major investor just a few months after the team was purchased, with a net worth of $1.9 billion.

In short, all three could have afforded to build Fiserv Forum without a handout from the taxpayers and would still have seen a huge increase in the value of their investment.

The owners have also been savvy about bringing aboard minority investors (to build their acceptance in the city’s power structure), including about a dozen or so current or retired corporate executives, all wealthy, led by multimillionaires like Gale Klappa, Jeff Joerres and Ted Kellner. Also added was multi-millionaire athlete Aaron Rodgers.

Then there are those lucky folks who are minority investors in two tax-subsidized teams, both the Bucks and the Milwaukee Brewers: Marc Stern, the chairman of the Los Angeles-based TCW Group, Inc., and Adam Stern, CEO of XO Capital LLC in California.

None of these investors, it seems fair to say, are in need of welfare from the taxpayers.

7 thoughts on “Back in the News: Bucks Owners Continue to Cash In”

  1. Polaris says:

    Given all this, I had to chuckle last month reading a Milwaukee Business Journal article on the financial tale of woe Bucks Gaming (the team’s esports concern) has relative to funding a public-facing esports venue.

    In part:

    “Coming off an NBA 2K League championship, the Milwaukee Bucks esports team Bucks Gaming has ambitious plans for its next season, including claiming a back-to-back title, but Patrick Glogovsky, the esports manger, hopes for sustainability in the team, including increased funding and a dream of a public-facing venue.

    “Glogovsky’s greatest dream for Bucks Gaming is to find a dedicated home for the esports team. That, however, requires the necessary capital to help capture the dream.

    “’You have to have the money and the funds to be able to do so. That’s not something we have right now,’ he said. ‘The goal is to move into a public-facing venue, ideally in the Deer District because that’s the home of the Milwaukee Bucks. We want to be a part of that home.’

    “Glogovsky said it is hard to put a financial framework on what it would cost to build a facility, mostly because there are so many variables. The facility for Wizards District Gaming, part of the NBA’s Washington Wizards team, “allegedly cost around $4 million,” he said.

    “His goal for a Milwaukee facility would most likely be smaller than the Wizards’ 14,000-square-foot venue, so he said a rough estimate could be between $1.5 million and $2.5 million.

    “The easiest way to achieve the goal of a public-facing venue is sponsorship, he said. Glogovsky said the team would need presenting sponsors and premiere corporate sponsors for the venue, funding and investments into Bucks Gaming.”

    LO (f-ing) L! How about a $2.5 million “Edens Esports Arena?!” Or at least a $1.5 million “Marc Lasry Esports Stadium?!”

    The rich get richer using other people’s money…

  2. blurondo says:

    The moment that the agreement was made to send taxpayer funds to the Bucks, was the moment that I vowed never to set foot in their building. It’s been incredibly easy to do.

    Billionaires getting money from the taxpayers. Disgusting.

  3. David Coles says:

    While I am no fan of taxpayers subsidizing corporate sports stadia and arenas, I think this piece of journalism omits a crucial factor in the rise in the valuation of the Bucks franchise: the team has become one of the NBA’s elite. You can and should criticize the owners for bilking the public, but you also have to give credit where credit is due. The owners helped make the Bucks champions for the first time in 50 years, and the Bucks have consistently remained at or near the top of the standings for years now. Winning makes franchises more financially valuable.

  4. mkeumkenews09 says:

    So, shouldn’t there be a financial return to the taxpayers / government entities for the $800 million dollar subsidy investment?

  5. Mingus says:

    In the future, if a Government entity provides significant financing for an arena, the professional team could give the Government entity some stock options that they can use if the team significantly increases in value like 50% over the purchase price. Then these options could be sold for the Government entity to get back the money given away. This will never happen. As previous comments indicate that this is a form of welfare for the wealthy.

  6. RRPs says:

    Very interesting , reporting. Risk reward is involved —- the test is who wants to buy it for that amount.

  7. DAGDAG says:

    These “gifts” of taxpayer money should always come with some sort of a payback system. People always defend million dollar “gifts” to corporations because they claim that it brings jobs, business, etcetera, etcetera, back into the community. And I’m sure it does. But Mr. MURPHY brings up a good example. Perhaps it is time to require these businesses (yes, the BUCKS and the BREWERS are businesses) to open those books and show those profits. Even something as simple as paying back 1% of those profits each year should not be too much to ask. After all, taxpayers not only gave them that first financial “gift,” but in the case of the BREWERS, paid for it with every purchase made in the counties that did for 20 some years. Fair is fair! The taxpayers take a risk…pay for streets…give tax breaks, but do not profit while the business does. And remember, the City and County are short on cash.

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