Wisconsin Gov. Scott Walker says he will include $220 million in state-issued bonds to back new Milwaukee Bucks arena funding in the next budget, to be paid off by taxes on players and visiting teams.
The specifics of the arena funding is still in the air, but the $220 million in bonding — which will be included in the budget Walker submits to state lawmakers next week — would come only after the first $300 million of an arena funding plan is in place. A final price tag for a new arena hasn’t been finalized, but it looks like $500 million is as good as any for a working number. The new Bucks owners have committed at least $150 million, while former owner Herb Kohl has pledged $100 million. With the state money (which includes $20 million to pay off existing BMO Harris Bradley Center debt), you’re looking at $450 million committed to a new arena — provided state lawmakers go along with the bonding. From the Milwaukee Journal-Sentinel:
There’s absolute security for the taxpayers,” Walker said. “No new taxes, no drawing on existing revenues, no exposure to the future…”
The catalyst for the debt service is the anticipated increase in player salaries, due in large part to huge increases in the amount of money television networks are willing to pay the NBA and its member teams — and by extension, to the players themselves.
No current base revenue would be used to pay the bonds; that base has been estimated at $6.52 million and will continue to go to the general fund. In 2015, that figure is expected to grow by more than 8% and increase by as much as 25% in 2017. The length of the bonds will be determined by a number of factors, including the language in the final legislation and market conditions.
The key: expected NBA revenue hikes because of new TV contracts coming online in coming years. Those increases are responsible for a totally new economic model for the NBA, one where teams sell for record profits and one where a team like the Milwaukee Bucks can sell for far more than anyone expected.
Politically, it will be hard sell: the Wisconsin Legislature is already looking at addresses a $2.2 billion budget shortfall in the next biennium, and while a bonding request doesn’t directly play into that shortfall, the metrics of Republicans — who control both legislative bodies as well as the governor’s office — slashing funding to the University of Wisconsin and other state agencies while approving $220 million for a new Bucks arena may be too much for some of the more conservative members of the caucus.
