Sports and Politics
During the 2014-2015 Milwaukee Bucks’ season, LeBron James of the Cleveland Cavaliers played 3 games at the Bradley Center. James paid about $66,000 in “jock” taxes to Wisconsin for the 3 combined games. The state directly collects $6.5 million per year from all the NBA players and team employees who contribute to the “jock” tax.
Indirectly, hotel rooms are rented. Restaurants are visited. Sports bars and neighborhood taverns are filled with fans rooting for their team. Franchise apparel and memorabilia are sold throughout the year. A report by the Metropolitan Milwaukee Association of Commerce dated March 2012 attributed $8.8 million in local and state sales taxes being generated annually from the Bradley Center’s economic impact.
Former Senator Herb Kohl sold the Bucks in April 2014 to Marc Lasry and Wesley Edens conditional on the team remaining in Milwaukee. However, the NBA imposed a stipulation requiring a new arena be built or under construction by 2017.
Involvement in sports venues by the state legislature isn’t unprecedented. Wisconsin’s 1999 Act 167 established a local professional football stadium district, and appropriations of $9.1 million were allotted in the 2001-2003 budget for the Packers. Miller Park was built because Wisconsin’s 1995 Act 56 developed the Miller Park Stadium District.
Wisconsin’s 1985 Act 26 created The Bradley Center Sports and Entertainment Corporation. Following a $90 million construction donation by the Pettits, the Bradley Center opened in October 1988.
A memo dated June 9, 2015 by the non-partisan Legislative Counsel stated the corporation was established under 232 State Statues and; “Among other duties, the corporation must own and operate the Bradley Center facility (including auxiliary structures and facilities) for the benefit of the citizens of the state. It also must adequately provide for the long-term maintenance of the Bradley Center facility.”
Section 13.48 (41), stats., authorizes the State Building Commission to aid the Bradley Center Sports and Entertainment Corporation with grants for capital maintenance and repair. State tax payers provided $5 million in 2009, $5 million in 2012, and an additional $10 million has been authorized in this biennium’s budget towards the maintenance costs of the aging Bradley Center.
Both the Senate and Assembly bipartisanly passed SB-209 which provides for financing and agreements relating to the development and construction of a new basketball arena and related facilities in the City of Milwaukee.
Details of the bill are as follows: Bucks owners Marc Lasry and Wesley Edens will contribute $150 million and former Senator Herb Kohl will donate $100 million. Milwaukee County will provide $4 million per year for 20 years of the county’s shared revenue from the state. The City of Milwaukee will be responsible for building a $37 million parking garage and $12 million in cash from the TIF district.
An additional $93 million will be collected through the Wisconsin Center District via $1.75 of a $2.00 ticket user fee on all events hosted at the arena along with a food and beverage tax already in place from the Milwaukee Convention Center bonding.
The state will be bonding $55 million which will be paid back in 20 years at $4 million per year for a total payback of $80 million including interest. However, the total amount will be lowered by $10 million to $70 million by the state collecting the additional 25 cents of the $2.00 ticket user fee.
Taking the $6.5 million in “jock” tax collected from the Bucks, and subtracting $3.5 million per year for 20 years debt repayment, Wisconsin will maintain a net gain of $3 million plus an additional $8.8 million in sales tax revenue annually. The tax gain will increase with a new 9 year NBA television contract and expected player salary increases starting in 2016-2017.
Senate Bill 209 gets Wisconsin out of the arena business. Operating costs of the new facility including construction overages, demolition of the Bradley Center, equipment, improvements, and maintenance will be the responsibility of the Bucks’ ownership.
Furthermore, the bill provides a non-relocation provision for the Bucks which remains in effect regardless if the team is sold or transferred. In other words, if the Bucks were to relocate to a different location during the 20 year lease, the owners would be obligated to pay back the entire public investment.
Regardless whether you follow sports or not; sports and politics are tied together because the Packers, Brewers, and Bucks are all components of Wisconsin’s economic engine.