Saturday, May 17, 2014

The Bucks, and the Bucks Alone

The quest for a new Bucks arena has been ongoing for about a decade now, but things seem to be coming to a head.  Non-local owners are officially in charge.  The former owner, a local, has threatened a move.  Three of the five surrounding counties that participate in the Miller Park sales tax have passed (ultimately meaningless) resolutions prohibiting tax money from being used for a new arena.  Milwaukee politicians are on record saying that they will only support tax money for a new arena if the surrounding counties participate.  In short, the team wants about $14 million per year (that's what $220 million costs over 30 years if interest rates on government construction bonds stay at 4.9%) in tax money, nobody wants to give it to them and the NBA is just fine with the team re-locating in three years.

In response to this dire situation, many Bucks supporters and others have tried to tie a new Bucks arena to a broader overhaul of the city.  Some people want money for parks.  The latest proposal is for improvements to the convention center.

There are a few things that the proponents of these larger cultural proposals have in common: none of them want to pay for it and they all are trying to grab more power.  The Wisconsin Center District wants to bring a new arena under their auspices, thus boosting an increasingly irrelevant organization.    A couple of County Board members want money for the transit system, which is managed by the County Board.

The Milwaukee area may well benefit from increased public funding for parks, transit and hospitality (though I'd expect an opposite result), but that's a distraction.  The focus, at least for Bucks fans, should be on the Bucks.  When Bucks supporters try to tie a new arena to larger projects, it's transparent.  It's also counter-productive.  Instead of asking for $14 million per year from the public, the price balloons to up to $86 million per year.  The Miller Park sales tax can more than cover $14 million.  It comes nowhere close to $86 million.

Conventional wisdom is that the Bucks will secure their future in Milwaukee if they get a new arena, but that is not necessarily true.  Indianapolis paid the majority of the cost when the Pacers built what some consider one of the best arenas in the NBA.  After eleven seasons, the team told the city that it would move if the city didn't start paying over $10 million per year in arena operating costs.  (The Pacers hold the lease on the arena; typically leaseholders pay operating costs.)  Now, even with the team in the conference finals, the city of Indianapolis is paying $16 million per year to keep the team because the Indianapolis area's economy can't support high NBA ticket prices.  (For example, the entire upper deck is only $19 (first ten rows) or $12 per ticket for full seasons.)  The could happen to Milwaukee if the economy doesn't improve.

Yours truly worries that a broad public subsidy will dampen economic growth.  Paying millions of dollars to the Bucks owners theoretically helps the economy.  The excitement of NBA basketball could help stop the brain drain from the city and state.  A winning team could cause locals to spend extra money that otherwise wouldn't have been spent (on tickets, at sports bars, at retail locations, etc.), thus stimulating productivity.  (Some people believe that the substitution effect applies to the local economies that surround NBA teams, but I don't.)  Public parks, transit and a convention center -- for the most part --  don't.  A great parks and transit system are nice to have, but ultimately productive people tend to live in metropolitan areas where there are lots of jobs, low taxes, cheap housing and the right kind of culture.  (In other words, central air conditioning is not the main reason that Dallas -- a city that was less populated than Milwaukee in 1960 --  now doubles Milwaukee's population.)  An increase in sales or property taxes to fund parks, transit and a convention center will likely only make it less likely that jobs-producing businesses will start up in or re-locate to the city.  Long term, that would hurt the Bucks.

The talk about the Bucks' future needs a change in focus.  Instead of it being about the community, it needs to be about the Bucks and their fans.  Asking season ticket holders to contribute one season's cost towards SBLs (Stadium Builder's Licenses - formerly known as Personal Seat Licenses, or PSLs) could raise about $15 million.  A five dollar per ticket tax on all arena events could raise about $7.5 million per year (which would pay off about $118 million of the construction bonds).  If Lasry and Edens are serious about their $100 million contribution, that money and Kohl's $100 million adds up to $333 million.  That's probably enough money to build a state-of-the-art arena for a small major league market, especially if the arena is built to what Bucks fans can support.  (#BucksForest believes this to be a 16,013 capacity [to honor Big Dog] with 29 luxury suites [the number of years Kohl owned the team] and 1,183 sideline club seats [the number of games played by another great Bucks player].  Even if an additional $90 million is needed to hit that $420 million target, that works out to only about $5.7 million per year more.

In a sense, Bucks fans are correct that the Bucks are tied to the community.  But the Bucks are the cart, not the horse.  The Bucks are not vital to the community's economy.  The economic growth of the community is vital to the Bucks.  A broad tax increase to an area already overburdened by taxes is too risky.  A targeted tax increase for the specific purpose of building a new NBA arena is better.  Let's make this fight about the Bucks, and the Bucks alone. 

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