The sale of the Milwaukee Bucks to hedge-fund managers Wesley Edens and Mark Lasry carries a big clause: the NBA can reportedly buy the team for $575 million if there’s no new Milwaukee arena by 2017. The news, as first reported by ESPN, isn’t surprising — the NBA has been known to buy teams and flip them, most recently with the New Orleans Hornets/Pelicans — and it’s an acknowledgement from all sides involved, including outgoing owner Sen. Herb Kohl, that a new Milwaukee arena is far from a done deal.
The sale calls for the new owners to commit at least $100 million toward a new Milwaukee arena, while Kohl has pledged another $100 million. But that’s not half the estimated price of a new Milwaukee arena, and two task forces have failed to come up with a BMO Harris Bradley Center replacement plan.
It’s pretty much agreed by everyone involved that a new Milwaukee arena is key to the future of the Bucks, but there are some serious politics involved: after a bruising battle to impose a five-county sales tax to fund Miller Park, home of the Milwaukee Brewers, taxpayers and politicos are hesitant to seek more public monies for a sports facility. Gov. Scott Walker would probably oppose any state funding, and Milwaukee County is tapped out. That leaves the private sector.
Now, let’s say an arena can be built for $500 million. Contributions from Kohl and the new owners get you to $200 million. Naming rights can probably get you another $2 million a year for 20 years, but this may be a high estimate. You may get TIF financing for another $30 million or so if you build in the right spot. That leaves $250 million: a pretty high number.
Now, a good developer can probably throw in part of that as part of a larger development. But not $250 million — which means Milwaukee’s wealthy foundations, like the Bradley Foundation, may be tapped to fill in the rest of the equation. The fact that the clause is in the purchase agreement shows everyone involved has run a scenario where a new Milwaukee arena is not forthcoming.