Taxpayers Score With New Bucks Deal

One of the proposals that received significant attention in the Governor’s budget was a $220 million plan to help construct a new arena for the Milwaukee Bucks. This initiative has garnered much discussion and debate, as legislators have sought a better deal for the state by bringing all the stakeholders to the table to negotiate.

While the initial level of bonding was not something that I could support, I also felt strongly that the proposal should be removed from the state budget bill and considered separately by the State Legislature. Given the complexity of reaching agreement on a plan that included private financial support, city and county governments, and the state, I was pleased when this plan was pulled from the budget and introduced as a separate bill.

As with most debates relating to sports venues, this issue arises from the interest in replacing the aging Bradley Center, which is one of the oldest facilities currently in use by a National Basketball Association (NBA) team. When former U.S. Senator Herb Kohl sold the Bucks to their current owners, the NBA required a provision in the contract that set a deadline for a new arena. If that deadline is not met, the NBA would repurchase the team from the current owners and would look at moving the franchise to another city, such as Seattle or Las Vegas.

In response to the NBA’s condition included in the Bucks’ sale, Senator Kohl committed $100 million and the current owners committed $150 million towards the cost of a new arena, covering $250 million of the estimated arena cost of $500 million. While the Governor’s initial proposal sought to address the state’s portion with borrowing, there have been significant negotiations and revisions resulting in a much improved plan for building a new arena, including significant contributions from Milwaukee County and the City of Milwaukee, as well as a $2 surcharge on tickets for events at the new arena. The updated plan calls for a $4 million annual contribution from the state over the next twenty years for a total of $80 million, which will be partially offset by $500,000 the state will receive annually from its portion of the ticket surcharge.

Given the fact that professional athletes pay income taxes based on where they play, rather than where they live, and that the state collected $6.5 million in players’ income tax revenue in 2013, if the Bucks were to move the state would experience a $6.5 million loss in tax revenue. The potential loss of that income tax revenue would exceed the state’s commitment of $4 million towards a new arena. Additionally, the amount of income tax revenue the state collects due to the Bucks is expected to increase in upcoming years, as new television contracts are reached and players’ salaries go up. The $6.5 million figure does not include the economic impact of the team on other businesses or the revenue generated through sales or other taxes.

In addition to the state’s financial interest in ensuring the Bucks remain in our state, those of us in western Wisconsin recognize the value of a vibrant metropolitan area to a state’s economy, as seen in the impact of the Twin Cities on Minnesota. The new arena is envisioned to be part of a larger entertainment district, which is expected to spur additional investment in an underutilized area of Milwaukee and hundreds of millions are anticipated to be invested in new commercial and residential development. Due to the compelling combination of protecting state taxpayers from a loss of revenue and the potential for revitalizing part of Wisconsin’s largest city, I supported the new arena plan as it was passed by the State Senate on a bipartisan vote of 21-10. The bill is now pending before the State Assembly.

Please feel free to contact me to share your views on the Bucks arena plan by calling my office at 1-800-862-1092 or 608-266-7745 or by sending me an e-mail at Sen.Harsdorf@legis.wi.gov.