With so much at stake politically and financially, the deal that is being negotiated behind closed doors this week to generate $250 million for a new arena in downtown Milwaukee may be one of the most convoluted and complex public financing agreements in professional sports history.
Under the terms of the proposed agreement as it stands now, according to sources:
- The State of Wisconsin would pay $4 million per year – $80 million in all – to cover $55 million in bonding plus interest.
- The state would also absorb $20 million in debt from the BMO Harris Bradley Center.
- The state would be responsible for collecting another $80 million in debt currently owed for Milwaukee County.
- The City of Milwaukee would build a $35 million parking structure and provide $12 million in tax incremental financing from ancillary development near the new arena.
- The Wisconsin Center District would use its existing car rental, hotel and food and beverage taxes to pay off $93 million in bonds.
The public financing would be matched by $150 million from current Bucks owners Marc Lasry, Wes Edens and Jamie Dinan and $100 million from former owner Herb Kohl.
Under terms of the deal being negotiated, the boards of the Wisconsin Center District and the BMO Harris Bradley Center would be merged in to a new “super board” that would oversee the new arena and the Marcus Center for the Performing Arts. The Marcus Center is currently owned by Milwaukee County. The Wisconsin Center District currently operates the Wisconsin Center convention center, the Milwaukee Theatre and the University of Wisconsin-Milwaukee Panther Arena. All of those downtown entertainment assets would be overseen by one board.
But there still are several moving parts that continue to be horse traded behind the scenes. Among them:
- How many seats will be on the “super board”?
- How many seats will the governor appoint?
- How many seats will the mayor of Milwaukee appoint?
- How many seats will the Milwaukee County executive appoint?
- What will happen to current Wisconsin Center District board chairman Franklyn Gimbel?
- Who will sell the naming rights for the new arena, how much will they be valued and who will buy them?
- Who will be required to cover any cost overruns for the construction project?
Sources say Gimbel and the Milwaukee County Board are on the outside looking in at the new arena negotiations.
Sources also say the Bucks are likely to reap the revenues from the sale of the naming rights, with companies such as Harley-Davidson Inc. and Northwestern Mutual Life Insurance Co. Inc. topping the list of corporate targets to buy them.
The arena issue created a political dilemma for Walker, a presumed presidential candidate. Did he want to be known as the governor who could not negotiate a deal to keep the Bucks in town? Or did he want to be known as the governor willing to commit $250 million in taxpayer support for a new arena for a team owned by billionaires?
Given that the Americans for Prosperity Wisconsin, a powerful conservative advocacy group, quickly denounced the proposed public financing plan as a “bad deal,” it was not a simple choice for Walker, who previously tried to shore up his social conservative record by rejecting an offer by the Menominee Indian Tribe and Hard Rock International to contribute $220 million for a new arena in Milwaukee if Walker would only approve construction of a new hotel and casino in Kenosha. Walker, who was under pressure by socially conservative Iowa caucus voters opposed to any expansions of gaming, rejected the Kenosha project.
The Wisconsin Legislature’s Joint Finance Committee is meeting in executive session Friday to discuss the deal. Since the arena deal will be part of the state budget, which is likely to be rejected by most Democrats in the Legislature, the pact’s fate will be determined by the level of support it receives from down-state Republicans, many of whom have shown little regard for the City of Milwaukee.
Stay tuned.
Steve Jagler is executive editor of BizTimes Milwaukee.
