Bucks arena pt. 2? How to pay for it? (EDIT: with more info 7:40pm)

1. $200 million for Bucks arena, but other funding will be needed. Metro Milwaukee Association of Commerce President Tim Sheehy talked about the arena issue on Mike Gousha's show this weekend. New owners Mark Lasry and Wayne Enders committed to putting up $100 million toward a new arena, and former owner and U.S. Senator Herb Kohl said he'd contribute another $100 million. But more than half of the money for a new arena will likely have to come from public sources.

The cost of a new arena is estimated at $400 million to $500 million. Sheehy said more work remains in courting private investors and said he anticipates the project will need public funding. He said a tax incremental financing [TIF] district that would include retail and restaurants could help the investment pay off for the new owners as well as downtown Milwaukee.

Sheehy said taxpayers would need to take an interest in the funding in order to maintain the basketball franchise long term, adding there are cultural assets that need to be a priority as well, such as the Milwaukee County Zoo.

Sheehy hopes the city and county work together to push for funding on the state level if it is required.

But Sheehy also told Gousha that getting an acceptable package to build a new arena would be "challenging", and a hint to the discussion that's to come was showcased in an article that the Milwaukee Business Times printed last week. In that article, Milwaukee Ald. Nik Kovac made it clear where he stood.

"The NBA has been printing free money for 20 years. I'm not asking them not to make money. I'm just asking them to cover the capital investment that allows them to make money. I'm an old-fashioned guy; I still like capitalism," said Kovac, who represents Milwaukee Third District. "I don't believe in Vladimir Putin-style corporate socialism, which is what the NBA believes in. And you can quote me on that."

Kovac added, "The talk of contribution to me should be off the table – any public contribution that does not involve a direct return on investment. I will loan them money, I will bond them money, but in my opinion, we shouldn't be giving them a dime. It's a private business."

Kovac said taxpayer funding could be better spent on other priorities.

"Will I be glad [the Bucks] didn't leave? Yes," Kovac said. "Do I want to spend $200 million on you not leaving when I could have spent $200 million on public transit, on public education, on stabilizing our housing stock? It's not even close. When you actually look at the things the public expects you to invest money in, this is not one of them. (Owners of professional sports teams) have managed to create, frankly, an extortion racket, in which the public pays them or else. And they do that through a legal monopoly, which shouldn't be legal in my opinion, especially given that they're extorting municipalities that clearly have other needs."

And it's not like Ald. Kovac is an anti-sports TeaBagger. He has a weekly podcast called "Packerverse" (click here to listen) that Michael Horne has described as "the only Socialist-themed sports talk show in the nation." (Disclaimer: I have actually been a guest on Packerverse) I disagree with the socialist part (as evidenced by Kovac's comments above where he doesn't begrudge the profitability of an NBA franchise), but his type of opposition to a straight public subsidy of a business worth $550 million to a new Bucks arena is certainly significant and will have to be addressed.

Kovac did say he was open to the idea of a city-backed loan or TIF district, which ultimately means that the Bucks owners would be paying back funds to the city. Which leads to these questions when it comes to funding a new Bucks arena.

1. Do you do it through some kind of loan or TIF, as is often done for other private-sector business developments, and have it be a city-only project? This would be an internal, Milwaukee-only measure, and would likely be linked to where the site of the new arena would be. I'd favor a spot around vacant land around the Park East Corridor (currently owned by Milwaukee County), which is within a few blocks of the current Bradley Center site, and an area that could be connected into the already-built area on the northwest side of downtown Milwaukee. But both of the site and funding issues would be a combined deal if you did a TIF or loan?

2. Do you look at new sales taxes as the method of public funding, as was done with the 0.1% Miller Park tax and 0.5% Brown County tax that helped pay for Lambeau Field renovations in the 2000s (that Packer tax may be going away next year, by the way). Another option would be a ticket tax, as is used in Nashville for the Predators' hockey arena, as well as other cities.

Which leads to what I'll discuss in the third part of this arena issue. Which government entity would be overseeing this new arena, and who will get to vote to approve this deal, or could block it and turn it down? Lotta sides to look at here, and with the spectre of the NBA taking over the Bucks from Lasry and Edens if there's no arena deal in place in 3 years, this thing's going to heat up faster than either candidate for guv or most other elected officials want to admit.


EDIT: And if your response is "Why not just keep the BC as it is?", Don Walker of the Journal-Sentinel has your answer. He interviews Bradley Center CEO Steve Costello, who says $100 million is a realistic figure that will be needed to run the BC over the next decade.

The short list of needs includes the roof; new technology demands; its heating, ventilation and air conditioning units; seat replacement; and work on the arena's parking structure adjacent to the building. All of those issues will need to be addressed over the next 10 or 12 years, he said.

Second, there is debt. "Three or four years from now when our lease with the Bucks ends, we will still be sitting on $15 million worth of debt," he said. "Over a decade or two we can manage that, but there won't be an immediate plan to pay off that debt."

Third, there is the potential loss of corporate support if the Bucks leave the building and go to a new arena, or elsewhere. The Champions of the Community program, in which major corporations committed financial support to the BMO Harris Bradley Center, provides about $3 million a year, Costello said

Costello also notes that losing the Bucks would likely mean many fewer corporations wanting to shell out funds to sponsor, and would jeopardize events such as March Madness returning to the Bradley Center. So it's certainly a cheaper option to keep the BC vs. build a new arena, but it also carries a real risk of losing a lot of revenue for the area, especially if the Bucks are taken over and/or leave.

The Bucks sale pt. 1- Is the price tag worth it?

As someone who grew up in the Milwaukee area and a big sports fan, the recent sale of the NBA's Milwaukee Bucks from former Sen. Herb Kohl to two hedge fund billionaires is intriguing to me on many levels. The first thing that jumps out is the $550 million price tag, a whole lot more than the $18 million Herb bought the team for in the '80s. Why would someone pay so much for the team with the worst record and attendance in the NBA? ESPN's Bill Simmons (who had broken the news earlier this month that Kohl and the investors were working on a deal) discussed why the price tag for NBA franchises is skyrocketing in a great column for the Grantland site.

In addition to a booming economy among the rich people who can afford to buy big-price NBA tickets and sponsorships and a more favorable collective bargaining agreement that gives a better split of revenues to the owners and lessens the amount of bad long-term contracts that tie teams' hands (and hurts quality of play due to players who don't give a shit), Simmons also mentions that the spectre of people wanting to bring the NBA back to Seattle means that the value of every franchise goes up due to higher demand.

Remember, 30 months ago nobody on the planet wanted [to buy] New Orleans. This month, we had multiple bidders chasing the league’s worst team — as many as six, according to my sources — with the winners prevailing thanks to deep pockets and a pledge to keep the Bucks in Milwaukee (even earmarking an extra $100 million towards a new arena). So the league flipped its supply-and-demand situation: Right now, it has a slew of potential buyers and nobody for sale. This has never, ever, EVER happened before.

In general, the disparity between the haves and the have-nots seems to be closing fast. Milwaukee fetched $100 million more than Golden State four years ago. The belatedly appreciated Spurs drew a 10.4 rating for 2013’s Finals against Miami, comparable to Lakers-Celtics in 2010 (10.6) and nearly 150 percent higher than Cavs-Spurs in 2007. And what about Dwight Howard jumping from the Lakers to the Rockets? Would that have ever happened 10 years ago? It doesn’t matter where you play anymore. Stars are more likely to gravitate toward great owners and great situations than great cities. That’s a good thing.

So, are 30 franchises enough? The NBA could command $800 million easily for Seattle’s expansion team — awarding about $27 million to each owner — but there’s concern within Adam Silver’s circles that there isn’t quite enough talent to support a 31st team. Did you follow Tankapalooza 2014? If you watched the Lakers defend pick-and-rolls with Bob Sacre and Kendall Marshall, or you ever uttered the words, “I kind of like Henry Sims,” you know what I mean. We don’t need MORE basketball teams, at least anytime soon. That means Seattle will remain Extortion Ground Zero for the foreseeable future.

Speaking of Silver, I liked how he handled a legitimately complicated situation. Within two weeks of becoming commissioner, Silver pressured the Bucks to settle its arena situation by 2017. But these weren’t the same life-or-death stakes like in Sacramento: Without the Kings, Sacramento would have transformed into Just Another City In California; without the Bucks, everyone in Milwaukee would move on to the Packers, Brewers and Marquette basketball without blinking. That’s a big difference. Silver also had the Seattle kajillionaires lurking, and he never knew if the 79-year-old Kohl might change his mind. Remember, Kohl splurged for O.J. Mayo, Zaza Pachulia and Gary Neal last summer. All bets are off with that guy.

The point Simmons makes about "it doesn't matter where you play anymore" in order to be a big name in basketball and paid accordingly is an interesting one. I'm not sure that's entirely true, as Milwaukee has some of the worst in-season weather of any NBA team, and isn't the only game in town in Wisconsin like the Thunder are in OKC or the Blazers are in Portland (for example). But the league is grabbing enough domestic and international media money that I don't think the Bucks have the same "small market/ lack of revenue" worries that the Brewers had when Miller Park was being debated nearly 20 years ago, and I certainly think that with the right GM moves and a few fortunate draft picks, the Bucks could be the type of contender that a team like the OKC Thunder or Indiana Pacers are. And the fans would care and show up to see them, as they did in 2001, when the Bucks got within 1 game of the Finals.

But certainly the question about the Bradley Center's future is the next step in determining the Bucks future, because it'll determine if they do stay in Milwaukee after 2017, where a new arena would be, and if that would help their competitiveness in the league. Sen. Kohl promised to put up $100 million toward the new arena, and the new owners pledged $100 million more, but that's not going to be all a new arena would cost, so the rest of the funding for a new arena would have to come from somewhere. I'll discuss the funding situation and options in a future post, but there is certainly a question as to what can be done with the already-sizable number of sports and entertainment facilities in downtown Milwaukee. UWM is still playing home basketball games at the U.S. Cellular Arena, a facility that is slated for $3 million in seating and scoreboard upgrades (it also hosts the Milwaukee Wave indoor soccer team was, but the Wave may be folding). If the Bradley Center isn't going to be the home of the Bucks and Marquette in coming years, and there are fewer events in downtown in general, is that an expense that should be made, or might the Arena/MECCA site be part of the project for the new arena? These are the questions Milwaukee Common Council President Michael Murphy is now asking, and he wants those upgrades at the Cell put on hold till the Bucks question can be decided.

And what becomes of the Bradley Center site itself? Will it be demolished in favor of new development if the new Bucks arena is located nearby (much as County Stadium was knocked down when Miller Park was built in its parking lot)? Is it still used for concerts and the Admirals and the many non-Bucks events that it holds each year, even if there is a new Bucks arena? And what do you do with it if there isn't a new Bucks arena, and the Bucks stay? Can the Bradley Center be modernized, or is it already obsolete after 25 years, and does that turn the Bucks into a less valuable, uncompetitive franchise? I don't think the Bucks would automatically be second-rate (again, they'd have to have a lot of things fall their way), and given my experience in watching the BC rock with Badger fans at March Madness this year, it still can be made into a great in-game experience for fans.

Lastly, if the Bucks do leave, what ends up replacing them as an entertainment option in Winter and Spring in Milwaukee? It would be unlikely a market like Milwaukee would land another NBA team if the Bucks ever left, but would it open up the option of an NHL team locating in Milwaukee (there's even a website promoting the idea of an NHL team in Wisconsin). I would guess the Chicago Blackhawks would have some say on a potential Milwaukee expansion team, given its closeness to Milwaukee would allow them to claim that the Milwaukee market is already part of their territory and that a new team would eat into their profitability. But the BC was originally built with the idea of having the NHL in town, so it would be interesting if the potential loss of the Bucks would lead to that.

Of course, maybe the Milwaukee market is already saturated with high-cost big-time sports and doesn't have enough fan following to support the Brewers, a sizable amount of the Packers (including 3 home games reserved to ticket holders from the County Stadium days), Marquette basketball, UWM basketball, and a lot of following for Madison's Badgers. That's not a question a lot of Milwaukee boosters want to ask themselves, because they view Milwaukee as a big-league town on the level of a Twin Cities, Cleveland, or St. Louis. But maybe they're more like Cincinnati, Indianapolis, or Kansas City- Midwestern cities who only have 2 franchises in the major team sports. And is that necessarily a bad thing if that's who they are, if it means the Milwaukee area can use resources in another fashion to make it a desirable, destination city?

I'll look into the funding and governmental role that's coming up for the Bucks arena question in the near future, but it's pretty obvious that with the recent sale of Milwaukee's NBA team, the discussion of the Bucks' future plans just got greatly accelerated, regardless of whether they land the top pick in next month's Draft Lottery.

More on March jobs- with nationwide comparisons

Yesterday had the monthly state-by-state jobs release from the Bureau of Labor Statistics, and it had a number of interesting data points that show us where Wisconsin is at.

First, let's go with the Walker Administration's spin on things. Not surprisingly, Walker campaign worker DWD Secretary Reggie Newson was out with another "it's working" news release, which failed to mention the downward revision of 3,700 jobs for February.

Department of Workforce Development (DWD) Secretary Reggie Newson today issued the following statement on today's U.S. Bureau of Labor Statistics (BLS) report. The report shows Wisconsin had statistically significant growth year-over-year in private-sector and total non-farm jobs and the state's unemployment rate fell to 5.9%, the lowest rate since November 2008:

"The release today of the latest U.S. Bureau of Labor Statistics report shows that Wisconsin has added tens of thousands of private-sector jobs, while Wisconsin's unemployment rate continues to decrease with a 'statistically significant' drop between March 2013 and March 2014," Secretary Newson said. "With Wisconsin's unemployment rate at a five-year low, Wisconsin is well-positioned to increase opportunities for working families."

That makes it look like Wisconsin is some kind of standout, but a look at the state-by-state report shows we're not very special at all. It shows half of the states in America had a "statistically significant" drop in unemployment rates the last 12 months, and that doesn't even include places like Minnesota and Iowa that already had unemployment at an extremely low rate last year, so it couldn't fall much further. 26 of the 50 states had a "statistically significant" increase in jobs, and Wisconsin's case is especially noteworthy because the BLS was counting the 8,500 GOVERNMENT jobs added in Wisconsin over the last 12 months (the same government jobs that used to be evil and wasteful in 2011 Fitzwakerstan but apparently are OK now).

When private sector job growth for the last 12 months is compared to the rest of the Midwest and especially the nation as a whole, Wisconsin's numbers for the last year look quite mediocre.

Private sector job growth, Midwest and U.S., Mar 2013- Mar 2014
U.S. 1.99%
Ind. +1.83%
Minn +1.77%
Ohio +1.35%
Wis. +1.24%
Iowa +1.19%
Mich +0.67%
Ill. +0.61%

It's an equally subpar performance when you look at Wisconsin's track record in job creation the last 2 years.

Private sector job growth, Midwest and U.S., Mar 2012- Mar 2014
U.S. 3.91%
Minn +3.77%
Mich +3.20%
Ind. +2.85%
Ohio +2.51%
Wis. +2.40%
Iowa +2.23%
Ill. +1.59%

In fact, Wisconsin's March-to-March job growth for each of the last 2 years is worse than the rate we had from March 2010 to March 2011- which happens be 12 months leading up to Act 10.

Private sector job growth, March 2010-March 2013
March 2010-March 2011 +1.50%
March 2011-March 2012 +1.89%
March 2012-March 2013 +1.14%
March 2013-March 2014 +1.24%

So much for the ideas that Act 10 and retaining Walker in the 2012 recall election removed "uncertainty" and caused job growth to take off. In fact, it looks like it did the exact opposite, making us stagnate instead of continuing to grow.

Now if there's a bright spot for the Fitzwalkerstanis, it's that Wisconsin wasn't the only state whose job numbers suffered from the polar vortex winter. The tepid job private sector job growth of 900 total jobs in Q1 2014 don't look so bad when you realize only 2 of other 6 Midwestern states added jobs over that same time period (Ohio and Minnesota). Maybe all of this pent-up demand gets unlocked as Spring finally appears in these parts (unless you live north of Hwy. 29), and then job growth bounces back accordingly. But I also see that Wisconsin had over 10,000 new unemployment claims in the last week listed, and only 7 other states had more. That's not a good stat when you're 20th in population.

Bottom line is that the Walker campaign is trying to spin that Wisconsin's economy is turning around and going in the right direction. I see no evidence of that from the recent jobs reports, and in fact, any job growth seems to continue to be a product of the Obama Recovery dragging us ahead IN SPITE of Walker/WisGOP policies, not because of them.

Quick March jobs analysis

Today's Wisconsin jobs report in a nutshell.

Jobs up 6,400 in private sector for March.

BUT jobs revised DOWN 3,700 in February, which means net is +2,700 jobs, which is below the national rate, and the Walker jobs gap grows by another 1,000.

And only 900 private sector jobs added for the first 3 months of 2014. Flat-out awful.

BUT household survey shows 21,500 more Wisconsinites are working, which is how the unemployment rate can fall from. 6.3% to 5.9% in those 3 months.

Which means either pretty much every job a Wisconsinite got since the start of the year was in the Twin Cities or Chicago, or one of these surveys are wrong.

I'll have more analysis when I have the time, but them's the numbers.

"Right direction" Wisconsin? Part II

I see our fair governor is going to try a "Morning in Wisconsin" theme, based on the script of his latest ads (I won't try to watch that crap, as I value my digestive system too much). Well, that ad should prompt you to ask "Are we really going the right direction under this guy?" And stories out this week indicate the answer continues to be an emphatic NO.

1. Let's go with one of the claims of that ad to start.

Families are planning vacations and more are going to sleep knowing they have access to health care.

As proof of that claim, the Walker campaign claims that his "work makes you free" health care plan extended access to all people making the poverty line or below. But of course what isn't mentioned is the fact that BadgerCare was also cut back for families that were barely above the poverty line, with Walker choosing to throw those people onto the federal Obamacare exchanges, in the hopes that it would cause so much chaos and overloading of that type of coverage that he and his fellow GOPs could show Obamacare "wasn't working."

Well, that strategy has backfired on two fronts, and proven the Walker ad to be lying. The first is that the number of Wisconsinites that are uninsured have at best stayed the same, if not gone up. As this picture shows, the Census Bureau listed Wisconsin as the only state in the Midwest that had an increase in the percentage of people that were uninsured between 2010 and 2012, illustrating the BadgerCare cuts that Walker and the WisGOPs signed off on in their first 2-year budget. Wisconsin is the light red line near the bottom.

% of population uninsured, 2010 vs. 2012


And if there was any cut in the uninsured rate in 2013, it sure wasn't due to anything Scotty and WisGOP did. In fact, a Gallup poll released today showed that states which took the expanded Medicaid funding in Obamacare did much better in reducing the amount of uninsured than states that decided to TeaBag the expanded Medicaid (such as Wisconsin).

Uninsured rate, Gallup poll April 2014
Took Medicaid funding 16.1% in 2013, 13.6% in 2014 (-2.5%)
Didn't take Medicaid funding 18.7% in 2013, 17.9% in 2014 (-0.8%)

And oh yeah, Wisconsinites are paying higher taxes as a result as well, since the state is picking up 42% of the Medicaid costs instead of having the Feds pick up those costs for us. It's a lose-lose situation all around, and won't get better as long as a bubble-worlder like Walker is in office.

2. If Wisconsin families are planning vacations, as the Walker ad says, we should be seeing it with increased travel out of the state's largest airport. But instead we saw a report released this week say the exact opposite.

The 13-percent drop in traffic at General Mitchell International Airport in 2013 was the steepest drop for any of the top 50 U.S. airports.

That’s according to an analysis of Airports Council International data in the most recent issue of Airline Weekly.

Of the 50 largest airports, 17 had declines in passenger traffic in 2013. The next steepest drop came at Cincinnati/Northern Kentucky International Airport, which lost 6 percent of its traffic.

Two factors contributed to Milwaukee’s traffic drop, said Seth Kaplan, managing partner at Airline Weekly: the major loss of flights from Frontier Airlines, which finished a series of cutbacks in Milwaukee in mid-2012, and the merger of Southwest Airlines and AirTran Airways. The combined Southwest/AirTran saw a 12 percent decrease in passenger traffic at Mitchell between Oct. 1, 2012, and Sept. 30, 2013, according to Southwest.

So Mitchell Field's drop was more than DOUBLE anywhere else among the top 50 airports in the U.S. Doesn't exactly reflect a lot of consumer or business confidence, now does it? The actions of real Wisconsinites should speak louder than Governor Walker's campaign.

3. The NOAA just released the climactic data for March, and it showed that Wisconsin just went through its coldest January-March stretch in over 100 years (that polar vortex wasn't fucking around!). Along with major snowstorms in Northern Wisconsin (with another foot falling today), there have been massive heating and road maintenance expenses that state and local governments have had to take on that are well past what they would have budgeted. But instead of holding off on tax cuts in favor of seeing what the fallout from this extraordinary winter would be, Walker and the WisGOPs plowed full-speed ahead and handcuffed the state's finances for the future. They didn't even add to the rainy (or snowy) day fund, in order to cosmetically cut the structural deficit in the 2015-17 budget to only $658 million.

And of course, this doesn't include count the $1 billion in Transportation Fund needs that also haven't been paid for by the Fitzwalkerstanis, and even though Walker won't talk about it, DOT Secretary Mark Gottlieb and staff are meeting with the public to discuss which taxes to change and/or raise to deal with this shortfall (they're in Wausau in 2 weeks, and Green Bay and Oshkosh the week after that). With the winter we just had, those $1 billion in needs probably got higher, but you won't hear Walker talk about that on the campaign trail, as it's too much of an inconvenient truth of his "steal, borrow and spend" mentality.

4. Oh, and we have another jobs report for Wisconsin due out tomorrow. We've already lost 1,800 private sector jobs in the first two months of the year while the country continued its slow and steady growth of jobs, so the Walker jobs gap has ballooned to 55,000 private sector jobs. If we fall short of 4,000 jobs added in March, that gap will grow more, although I'll predict these numbers will be OK, as unemployment claims weren't THAT bad last month. But so far in April the unemployment claims have stayed high and there is little landscaping or other Spring weather jobs to be done, so I anticipate that one to be slow, at least as it stands now.

So despite the sunny talk from Scott Walker and the WisGOPs on the campaign trail, the real Wisconsin continues to fall behind the pace of the rest of the nation, and our state's fiscal picture is getting darker with fewer options available to fix it (WisGOP have already shot their bullets with Act 10 and shared-revenue cuts). So as I asked earlier this month, are we going in the right direction, or just the right-WING one?

DOT funding questions continue

I see that DOT Secretary Mark Gottlieb was interviewed by Mike Gousha over the weekend, discussing the meetings the DOT is holding around the state to discuss transportation needs and funding for the future. I've mentioned that the lurking $1 billion Transportation Fund deficit is a huge lurking issue that hasn't been talked a lot about in this election cycle so far, and I credit Gottlieb with doing the interview and raising awareness of it. It's also worth noting in the story that the Secretary mentions added General Fund money as an option for finding more Transportation funding.

The problem with grabbing more General Fund dollars is 1. We already have a $650 million General Fund deficit for the next budget, so any additional money being sent over drives up the deficit further and 2. This assumes General Fund dollars will be there to be taken. With two rounds if tax cuts kicking in and a decent possibility of another recession and/or stock market drop in the next 3 years, revenues already look to be very limited.

In addition, the 9 inches of snow forecast up North this week remind us yet again of the larger-than normal costs that state and local governments have had to take on from this winter. The tab from this has yet to be made. apparent, but it could limit any carryover or cushion that might have existed. So barring the release of federal disaster funds to help pay for the high costs of this long winter, there are going to be higher-than expected expenses beyond any new construction projects and highway expansions.

So with that in mind, is it possible that RTAs, wheel taxes or some other locally-based tax is the solution to this issue of underfunded roads and transit? This would be a very Walker-like move, shoving off the extra borrowing and needed costs onto the local communities, and not having to raise gas taxes or other state fees as a result.

Regardless, this is becoming a very big issue outside of the political world, and as we spend this Spring dodging potholes and construction barrels, many will be asking "Can we get these things fixed, and can we afford to?" We should start looking at the numbers, looking at the options, and seeing how we can. Before our revenues are so constrained that we can't.

Could be a slowdown at the Funhouse

7 beeps on a laptop is usually not a good sign, so it's time to get it looked at. Don't worry, I can still post in and react to stuff. Pictures might be a bit tough, however. No big whoop.