MKE in NY Times: An Arena Fairy Tale With Blurred Morals

[wisportsfan4]

Link: http://www.nytimes.com/2014/10/17/sport ... .html?_r=0

MILWAUKEE — This fairy tale began with two Prince Charmings.

Last spring, a pair of New York hedge fund owners came to this grand old dame of a city by Lake Michigan and bought the Milwaukee Bucks, a once-proud basketball team fallen on hard times. The N.B.A. and many residents celebrated; what’s not to like about billionaire love?

The league made a demand of its new princes: Within three years they had to build a new downtown arena, with luxury boxes, artisanal this and that, and digital everything. The princes nodded. They put up a combined $100 million toward the half-billion-dollar cost.

“We have a moral responsibility” to Milwaukee, one of the owners, Marc Lasry, had said months before in a statement quoted by Bloomberg News.

Prominent business leaders applauded and lined up to buy their own small pieces of the team. The team’s former owner Herb Kohl — who purchased the Bucks in 1985 for $18 million and sold the franchise this year for $550 million — put up another $100 million.

Then, as wealthy sports owners are wont to do, our princes turned to the people of Wisconsin and spoke of civic obligation: The public must ante up $200 million or so for this arena. Otherwise, it would go unbuilt, and the N.B.A. had a right to buy back the franchise and cart it off to a more welcoming, not to mention pliable, city.

So the fairy tale glow faded, and the princely smiles offered a hint of steel.

Facts intrude here. A new arena might spur revitalization of downtown Milwaukee, as the chamber of commerce insists. But the Bucks remain a private enterprise, and at least modestly profitable. The N.B.A. itself leaks money out its pores. Its new labor contract is remarkably friendly to the owners, and the league just signed an extension to its television contract worth $24 billion, which by the roughest reckoning gives the new Bucks owners a revenue stream of $89 million a year.

Some years back, N. Gregory Mankiw, a professor in Harvard’s economics department, drew up a list of 10 things on which (almost) all economists agree. No. 7 on that list? Local and state governments should eliminate subsidies to professional sports franchises.

Fortunately, Milwaukeeans brim with ideas for restoring the magic to their relationship with the princes.

I got the Milwaukee Common Council president, Michael J. Murphy, on the telephone, and he acknowledged that investing precious dollars in an arena triggered his gag reflex.

“A lot of people forget these owners make out like bandits because we pick up much of the cost,” he said.

Perhaps, he said, the city should make a loan. Or demand an ownership share. If the team triples in value, the taxpayers could share in the riches.

The Bucks’ new owners, Lasry and Wesley Edens, have in fact promised to work in “partnership” with the city. They did not make clear if their notion extended to letting the public take a dip in an N.B.A. owner’s many revenue streams.

Alas, when I called Timothy R. Sheehy, president of the Metropolitan Milwaukee Association of Commerce, which has taken the lead in pushing for the arena, his interpretation was constrained. “Partnership gives us a chance to invest in retail and housing,” he said. “Wes Edens has a history of thinking big on real estate.”

I’m sure he does.

Then there’s another proposal. Southeastern Wisconsin Common Ground — a splendid coalition of churches, community groups, mosques and synagogues — stifled the temptation to shout “No!” to the prospect of funneling precious tax dollars to billionaire owners and millionaire players and coaches.

We like pro hoops, they said. But our children’s playing fields and recreation centers and schools are in dreadful shape. (The Milwaukee school system projects a $32 million funding cut this year). If we’re to invest in an arena, let’s insist on a roughly similar amount for our recreation centers and public school playing fields.

Keisha Krumm, an organizer for Common Ground, offered brutal realism. “They are going to get their arena — I don’t have any doubt about that,” she said. “So let’s get something out of it.”

They took me on a tour. Milwaukee has a glorious art museum and river walk. But too many of its neighborhoods are wounded beauties, the homes neatly tended but the streets as cracked and rutted as dirt roads.

The N.B.A. insists, de rigueur, on replacing its arenas every 25 years; one of Milwaukee’s best-known high school buildings is a century old.

Earl Ingram, a baritone-voiced man and the head of a youth football league, led us out into Lincoln Park playing field. Every step threatened a turn of ankle. The end zone curved up a hill. The restrooms, which 1,500 young football players would use the next day, consisted of dilapidated old stalls.

Where, I asked, were the goal posts?

“Goal posts?” He snorted. “Goal what?”

The scene was no better at a nearby elementary high school, where the baseball diamond was a rock-hard field of weeds and the backstop was near collapse. Or at Washington High School, where the running “track” was cracked and potholed concrete.

“Our children are twisting their ankles, hurting their knees playing here?” Ingram said. “And they want us to build an arena for the N.B.A. athletes even as they say they can’t afford this?”

When Common Ground released its proposal last month — based on a careful study of recreation centers and fields in the city and surrounding suburbs — the owners told the press they would happily talk with the group.

That has not happened. Common Ground members spoke of receiving heated phone calls from Ted Kellner, a prominent business leader and minority owner in the Bucks, wondering why they were complaining. In the schools, a woman spoke of having her contract dropped after officials complained she was working with Common Ground.

I asked Kellner about the Common Ground proposal. He was not enthusiastic. He noted that a few of the organization’s members sat on a task force and would at least get heard. “For the public to have a seat at the table is appropriate,” he said.

Word filtered back to the group’s leaders that they could perhaps have a talk with Lasry’s son Alex, a newly minted Bucks vice president. When a Twitter user last April wrote, “Stop whining and pay the arena freight,” the younger Lasry posted his own approving note: “Not much to disagree with here!”

Common Ground’s leaders have held out for a meeting with the owners.

I found myself confused. Could these billionaires and millionaires really not afford to build their own hoops ziggurat? Less than three months before Marc Lasry bought the Bucks, he snagged a handsome $33 million penthouse on Central Park West.

The Bucks insist that the arena, if built with private dollars alone, will “not pencil out.” I requested dollar figures.

A short while later, Sheehy, of the chamber of commerce, replied with an email.

“It does not pencil out,” he wrote. “If the estimates are accurate, there is not enough cash flow to support the cost. That’s how real estate works.”

Or, as the case might be, how real estate does not work.

In an earlier conversation, Sheehy had spoken of the intangible benefits of an N.B.A. franchise. He noted that the league set inviolable rules for cities desirous of retaining franchises.

“The way I look at this, I don’t write the rules,” Sheehy said. “The marketplace writes the rules.”

That marketplace, not surprisingly, prefers public risk and private gain.

[Fresh_Prince12]

This article disgusts me. I couldn't even get half into the article and just read the past sentence.

[ReasonablySober]

I haven't followed the arena thing at all. Interesting article.

[BobbyLight]

It lost me whining about the high school field and dilapidated roads. They act like those are problems that are unique to our city and also infect the entire city, neither of which are true.

I am sure other recently built arenas, which have had public funding, had areas with bad roads and high school football fields that need serious upgrading. Milwaukee is not any different.

I actually think the public should have some investment in the project because, guess what, it does bring tax dollars to the state and having a new arena has a much better chance of revitalizing downtown vs. letting an NBA team leave the downtown, which would turn the area into a ghost town. I honestly believe Milwaukee's downtown will regress if we let the Bucks go somewhere else, and it would regress big time.

[MartyConlonOnTheRun]

I just don't get why common grounds act like they are tied to the arena. Yeah it's a decent idea but so would 100 different causes. Are the new owners supposed to fly in from New York every time a non profit proposes a partnership that doesn't benefit them the new arena cause at all?

[MartyConlonOnTheRun]

I agree stadiums are normally a bad idea but depending on the actually amount of public support, paying 200m for a 475 m stadium (200 from kohl/billionaires, 75 from naming rights) should at least be an economic wash. There's a lot of money coming in from the salaries/jock tax, jobs from construction of the building, and tourism. Add in the intangible of being one of 28 cities that are nationally advertised on a nightly basis.

[Ron Swanson]

A pretentious and broad-stroke generalization of a Midwestern city's infrastructure by a NY Times writer......I'm shocked

Seriously, if this guy thinks that "dilapidated public school athletic facilities" and the subsequent audacity of billionaires asking for public funds to support a professional sports arena is a problem unique to Milwaukee, then he seriously needs to take a step outside and look in his own backyard (if they even have grass outside Central Park).

I'm not saying that this whole situation isn't a pressing moral issue, but he must be incredibly naive to how this entire process works if he legitimately believes what he writes. Would he rather us be Odessa, TX and spend millions of dollars on a state-of-the-art high school football and track field while slashing math, science, and music classes?

He probably thinks that all us Wisconsin folk are a bunch of country bumpkins that don't value education. All the while ignoring that Midwestern education and universities constantly rank as the best in the country.

[Matches Malone]

Did one of the JSOnline posters get a job as a journalist with the New York Times? What a pitiful article of drivel.

[steger_3434]

Between this and the Simmons deal I'm pretty nervous this won't get done. Someone help calm my nerves

[averageposter]

I think it boils down to whether or not you see community benefit to a stadium. If you use it to take your kids to the game any of the games by any of the tenants, if you have enough of an open mind to see concerts, shows, conventions, weddings, and whatever else fits into whatever else they build. If you see value in the bigger picture of the jobs created, the money poured into the stadium and what development follows around it. If you see those things as community positives and you realize a building such as that is hugely expensive and a 30 year fixture than I think you should come down to some partnership between public and private. The big picture is that the main tenant generates a lot of the public tax money itself, money that clearly goes elsewhere if they move.

I think what bothers me most about Common Grounds is their list. When you start using missing goal posts as a reason I just don't get it. I have been engaged in putting disc golf courses in and raising funds to make park improvements the last decade. From equipment, to parking lots, to bathrooms, to benches and trash cans, all of that is attainable without the cities help. Small projects can be handled without taxpayer involvement. Is it fair to handle them that way, I don't know, but its actually possible. No amount of Bake sales, Brat Frys, and tee sign sponsorship comes close to denting an arenas cost.

Its pretty clear going to that level as your list of examples is to touch as many people as you can. Who hasn't seen a dilapidated park bench?

[Matches Malone]

Between this and the Simmons deal I'm pretty nervous this won't get done. Someone help calm my nerves

Yeah, it's pretty weird. All of a sudden all this buzz about Seattle and the Bucks potentially moving, has been brought up a lot in the last 48 hours and it's nauseating.

[DanoMac]

That's a piss poor piece of journalism

[BobbyLight]

I think we need to put the tinfoil hats away. Bill Simmons was talking out of his ass for entertainment value and this article is questionable in the picture it paints of the situation. Lasry and Edens haven't said "if" when they talk about the arena, they've said "when". Look at all the work they've done to bring out WI business people in as partial owners. Look at all the lobbying they are doing with local councils/task force.

Look at that stuff. Not a poorly written NY Times article or Bill Simmons' flippant conspiracies.

[Max Green]

Between this and the Simmons deal I'm pretty nervous this won't get done. Someone help calm my nerves

This all started when Simmons pulled some multi-layered conspiracy out of his ass, then other "journalist" started piggybacking off it. Lasry & Edens have done nothing to make me believe that they both aren't all in on getting a new arena built and keeping the team here in Milwaukee. They just added a bunch of new investors and said they plan to have the location for the arena announced by the end of the year I believe.

[LUKE23]

I'll be honest, I have never really been concerned about an arena getting done since Lasry/Edens bought the team.

[crkone]

Between this and the Simmons deal I'm pretty nervous this won't get done. Someone help calm my nerves

Yeah, it's pretty weird. All of a sudden all this buzz about Seattle and the Bucks potentially moving, has been brought up a lot in the last 48 hours and it's nauseating.

When it's all said and done, the owners can lose billions of dollars in future revenue if the arena isn't built.

[ReasonablySober]

I figured this would set some people off. I don't think they're singling Milwaukee out, though. I didn't get that from the piece at all. If you do a simple google search of publicly funded stadiums and ny times you'll come across many articles over the years, including one a couple weeks ago about the Vikings. Included is a quote:

“They’re running circles around us like we’re rubes,” former Gov. Arne Carlson said. “You have children living outside in parks and tents. We don’t have the money to take care of that problem. But we have hundreds of millions of dollars to pour into Zygi Wilf?

“It’s an embarrassment, really.”

Like I said, I haven't been paying attention to the issue. I personally would pay taxes or whatever if it meant that the Bucks would stay and Milwaukee would get a new arena. But I say that because I have no problem paying for stuff I enjoy. But I also don't have a problem paying taxes for stuff that I feel needs my money, like roads and parks and museums and school referendums. I don't have kids and I may never set foot in a park and museums aren't really my thing, but I grew up benefiting from great schools and parks and I would like future generations to do the same.

I get all the sides and I'm fine with whichever opinion someone may hold. I could see how someone flat doesn't want to spend another penny on something that doesn't directly impact them. I could see how someone is fine with public funding going towards schools or roads or parks and prefer that the billionaire owners pay for their own arena. I get that fans want to see the team stay and will talk themselves into whatever benefits may come of public support in the form of cash and jobs and economic growth, regardless of what studies have revealed over the last decade.

Like I said, I personally would pay my share to keep the Bucks around. That said, it is hard for me to fathom that a group of owners as wealthy as they are couldn't completely fit the bill, given the NBA's insane growth. I find that impossible to believe.

But ¯\_(ツ)_/¯

[Wooderson]

I'll be honest, I hae never really been concerned about an arena getting done since Lasry/Edens bought the team.

Same, especially after the $25 mil clause and the Clippers sale. Edens/Lasry made their fortune squeezing the most of out assets, I'll be really surprised if it doesn't get built.

[BobbyLight]

When it's all said and done, the owners can lose billions of dollars in future revenue if the arena isn't built.

This is the best point to argue against any of this. They could probably get an arena built and flip the team for $1billion +. Or they could not build it and let the NBA take it back for $575mil. These guys aren't dumb, that's not going to happen.

[MartyConlonOnTheRun]

When it's all said and done, the owners can lose billions of dollars in future revenue if the arena isn't built.

This is the best point to argue against any of this. They could probably get an arena built and flip the team for $1billion +. Or they could not build it and let the NBA take it back for $575mil. These guys aren't dumb, that's not going to happen.

Is the team worth a billion dollars if in milwaukee? Unless they build a 400m arena just to have the team relocate. I think people underestimate the worth of the clippers being in la and at the staples center. They are an outlier that shouldn't be compared to other teams worth.