Virginia Small, a volunteer teacher at the Dominican Center for Women and a researcher on public-interest issues, writes that the state Assembly and Milwaukee’s Common Council can still forge a deal that does not fleece citizens and reward only the Bucks.
New-arena boosters are high-fiving since the state Senate passed a funding bill on July 15. Nonetheless, it’s not even half-time. The Assembly must still approve the arena deal, and may revise it. Also, Milwaukee’s Common Council must okay a separate package, which primarily subsidizes a proposed Milwaukee Bucks-owned, for-profit entertainment mall.
Nevertheless, some media reports have declared the deal done — apparently viewing those legislators as mere rubber-stampers. There’s no need to call this game long before the buzzer. State and city officials can—and should —make this deal much better for taxpayers. Neil deMause, a journalist covering sports-venue deals for decades, found little to cheer about: “The economically sensible move would have been to call the Bucks owners’ bluff and see if they truly walked — or, at least, to offer them a significantly less lucrative handout and see if they’d accept it.”
The state’s Legislative Fiscal Bureau reports the deal will cost taxpayers $400 million in cash and interest. The city and county will pay $320 million and the state $80 million. Tax exemptions, free public property and other subsidies worth millions make this deal even richer for the Bucks.
Taxpayers’ tangible return will be zero. The Bucks will receive all revenue from the arena and ancillary development including naming rights income, which the Journal Sentinel estimates could reach $120 million.
A vote by Assembly members is scheduled July 28. There will be no public hearings. Taxpayers have had no chance for direct input at the state level and all negotiations have been secret. Even the Wisconsin Center District (WCD), a state-chartered nonprofit ordered to bear a huge share of arena financing, was, incredibly, denied any say about the deal, including at a five-hour informational hearing July 6 before the Joint Finance Committee.
The Milwaukee County Board held a public hearing June 9 on the proposal to give the Bucks owners 10 county-owned acres for private development for $1. About 400 people attended, with expressed opinion evenly divided. However, an 11th-hour provision in the state budget since neutered the board’s power. Thus, County Executive Chris Abele would solely authorize the county’s arena obligation of $4 million annually for 20 years, plus the Park East land giveaway.
Abele also engineered the scheme forcing the WCD to borrow $93 million. The WCD manages the city’s convention center, UWM Panther Arena and Milwaukee Theatre, and supports Visit Milwaukee, the county’s tourism bureau. Abele also got state lawmakers to put the new Bucks-controlled arena under the WCD umbrella. This restructuring enables arena funding to be siphoned from that existing taxing mechanism—and lets politicians deceptively say “no new taxes” will be levied. It will allow the for-profit Bucks to influence decisions about the WCD’s nonprofit facilities.
Many predict this set-up will hobble Milwaukee’s convention and tourism business, with the Bucks becoming the WCD’s alpha dog. (The WCD reports its economic impact as $500 million a year, much greater than the Bucks.) The goal of this bill is to keep the Bucks here, even if it gouges Milwaukee County taxpayers and hurts tourism.
A state-chartered corporation manages the Bradley Center and funnels a hefty “revenue share” to the Bucks (41.6 percent of 2014 income from suites, concessions and merchandise). This arrangement led Bradley to being $20 million in debt, even after $10 million in state bailouts since 2006. In contrast, the WCD reportedly pays all operating expenses with earned income and does not defer any maintenance. Hospitality taxes cover only construction debt.
Even more bizarrely, the Marcus Center for the Performing Arts would be tethered to this cobbled “Franken-District.” This county-owned downtown cultural venue would become an orphaned ward of the state. Much-needed improvements would be postponed until “the twelfth of never.” Now that all state parks are defunded, the Marcus Center would fare no better.
Abele claims this unwieldy mash-up of disparate institutions will increase “efficiencies.” Marcus Center’s main tenants are the symphony, ballet and opera, and it hosts community events and Broadway shows. It’s hardly inefficient. It receives modest county funding and has dedicated donors. The Assembly should strike this meddlesome jerry rigging.
The Assembly should demand that no merger of the WCD and new arena take place until a competitively hired management expert evaluates pros and cons and develops a transition plan.
Subsidized arenas benefit for-profit sports franchises owned by billionaires. Nonetheless, sports cartels frame them as “public infrastructure,” like roads, bridges, schools and parks (which are all being drastically cut). Politicians rationalize that “other cities are doing it.” They’re manipulated by lobbying, campaign cash and fear— the Bucks repeatedly threaten to leave.
Independent economic research invariably shows no concrete payoffs from subsidized arenas. However, boosters counter cautionary data with baseless claims of positive economic impact. Wisconsin decision makers thus far acquiesced to the Bucks’ major demands and tinkered around the edges.
There’s little hope this deal can get scuttled or that taxpayers will get the “equity share” they deserve for their $400 million. Nonetheless, targeted revisions could lessen its harm to taxpayers.
Demand that naming rights income be used to pay off taxpayer borrowing. That reportedly is worth at least $120 million, and there’s no reason that should not help to offset $400 million in public arena debt.
Set aside several acres of taxpayer-owned land for a public park. Rarely mentioned as part of the deal, politicians at all levels will outrageously hand over 30 acres of free land to the Bucks—21 acres solely for private development. Unless mandated by the state’s bill, taxpayers will have no say about future uses.
Reduce the Wisconsin Center District’s oppressive burden. The Common Council should subsidize only the arena — not a for-profit mall designed to create a massive Bucks entertainment monopoly. Mayor Barrett wants to underwrite this mall by donating/razing the city’s 4th Street parking complex (built in 1988 for $30 million) and building a new $35-million facility close by. Instead, the city should retain its lucrative garage and $1 million in annual income. Apply that $35 million in savings to decreasing WCD borrowing to $58 million.
Don’t subsidize an “entertainment mall” and government interference in the marketplace. That will help keep some 40 hospitality businesses on Old World Third and Water streets from being overrun by an unneeded, block-long, multi-floor mall. Direct and indirect public subsidies (mostly to Bucks owners—not the arena) would total over $100 million—with no public benefit. Predictable outcomes are that existing businesses will suffer, mall vendors could flounder, or both. It’s a sure loser for taxpayers.
Keep North 4th Street between Highland and Juneau an open roadway. This would eliminate costs to reroute traffic along this much-used connector. The city can spend the proposed $20 million in infrastructure for other projects including a truly public park, not a restricted-access courtyard in “the country’s biggest outdoor sports bar.”
Require meaningful community benefits agreements. Advocates for good jobs want an arena bill to address this need. Lawmakers and the Bucks must ensure this arena project serves citizens — not just the Bucks.
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