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Wednesday, July 01, 2015

The Myth Of Matching Funds In The Bucks Arena Deal

The press conference held by Gov. Scott Walker a couple weeks ago on his plan for hooking taxpayers with half of the cost for a new playpen for the Milwaukee Bucks, in my view, held a treasure trove of his ideological schisms on how he sees his fiduciary responsibility in office and the role of government.

But also among his statements was the promotion of a 50/50 match in funds for the new arena between taxpayers and the team's owners.

The problem with that from a taxpayers point of view is Kohl's "gift" of $100 million for a new arena is wrongly assumed to be part of the current ownership's share for a new arena.

JS Online Excerpt: April 17, 2014
Kohl announced in December he was searching for additional investors to take the franchise into the future. He made a condition of a sale that the team would remain in Milwaukee. [ ... ] This is a major step forward in my goal in keeping the Bucks here," said Kohl ...

In my view, Kohl's condition on the sale not only changed the direction of pursuit between any parties interested in keeping the team in Milwaukee, his gift created a third party fund exclusive of the new owners and government.

That is to say, without knowing the precise wording of the sales contract between the seller, former Bucks owner Herb Kohl, and the buyers, the onus of keeping the team in Milwaukee falls entirely on the new owners ...because if they don't, the sale is null and void and team ownership would revert back to Herb Kohl. Again, that is my interpretation taken from media reports and not from a reading of the actual sales contract. So I am not 100% sure about that claw-back feature or the triggers of the condition. Then of course, there is also the NBA's franchise licensing in the mix to consider.

But if anything matters it should be that Kohl's sale condition does not "run" with the team or the new owners because IF the NBA takes control of the team and they move it out of Milwaukee, the NBA or its current owners would LOSE Kohl's $100M for an arena to be built elsewhere. In other words, Kohl's gift runs with the land (a MKE location) as a prime condition of the sale.

In short, Kohl's generous $100M gift operates like a state incentive for the team to stay in MKE. It also lowers the $500M arena tab to $400M. In this interpretation, the Bucks owners $150M stake then becomes 37.5% of the $400M balance against the government taxpayers 62.5% share. My point is Kohl's gift or any other third party cash donors for the arena should countdown the total cost of the project with the balance remaining shared equally (50/50) with the owners and taxpayers, if, IF the narrative to make a deal with matching funds is a key sales point as Scott Walker seemed to imply.

The question to ask is where are our elected leaders to challenge any of those numbers or basic assumptions on behalf of the taxpayers? As usual, I don't think anyone is looking out for the taxpayers, and particularly more so when it involves these nefarious big-money public/private partnerships.


Think Progress - Wisconsinites Blast Scott Walker’s Stadium Deal As ‘Outrageous’

CapTimes - John Nichols: Don't just hand Walker arena bailout

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