Thank the basketball gods: another NBA city has been saved. The Wisconsin State Assembly recently passed a financing deal for a new Bucks arena in which the public contribution could exceed $500 million. Once the governor signs the deal and construction is underway, Milwaukee will have locked in its Bucks for the next 20-30 years. If the people of Wisconsin feel anything like we did in Sacramento in 2013, there ought to be a parade. This is a major coup.
A major coup for the NBA and the very rich people who own NBA teams, that is. A major coup for the builders and developers, for urban landowners and investors, for the politicians riding coattails. Another successful blackmail complete. A job well done.
A $5 billion enterprise with record profits and more money than it knows what to do with has again convinced the public to pony up hundreds of millions in municipal bonds, tax breaks, land grants and loan forgiveness. Given that relocation threats were the impetus to fuel a fast deal, what other way is there to describe it but blackmail? When it happens repeatedly -- in San Antonio, in Sacramento, in New Orleans, in Orlando -- it's laid bare as an institutional strategy. This is how the NBA does business with cities. The ones that play ball keep their teams. The ones who don't -- hello, Seattle -- lose them.
In fact, the NBA has actually institutionalized the scam. When the league's Board of Governors approved the purchase of the Bucks by Marc Lasry and Wesley Edens in 2014, it apparently included a clause that stated the NBA would buy back the team if construction on a new arena did not begin in 2015. The team would then be sold to a different ownership group, perhaps one based in another city that would build a new basketball arena.
The Bucks' team president used this clause to amp up the stakes when first asking the government for money. This type of clause was also mentioned during the 2013 Sacramento arena negotiations. If the city didn't come up with a suitable arena plan with Vivek Ranadive's management group in less than a year, the NBA would force a sale to a previously rejected Seattle hedge funder.
We don't actually know if these clauses exist, how they are worded or if they are enforceable. These purchase agreements aren't public documents, and it would appear the government agencies cutting arena deals aren't so curious as to actually look at that language. For all we know, these threats could be wholly empty. The threat itself benefits the NBA and the handout-seeking franchisee all the same. And because public-funded arenas are largely popular with voters (many of whom are sports fans) there's surely a bias toward accepting the threats at face value. The politicians want reasons to approve the deal, after all.
Rewind it back one sentence: these arena deals are usually popular with the public. I made this argument amid Sacramento's push for public financing. Pretty much across the board in the NBA, when a modest tax to fund an arena goes to the public, it's approved. When politicians get arena deals done on their own, they tend to get re-elected. The public has spoken and enough voters like paying for NBA arenas to make it a tenable solution for the league and its franchisees.
Perhaps it is that some of these deals actually do make financial sense. I remain convinced that Sacramento desperately needed to invest in a major downtown project to spark growth. I think the mechanism they chose -- privatized parking -- is the least worst of all options. I don't think Bruce Ratner and Mikhail Prokhorov needed tax breaks to build a massive development in Brooklyn. I don't think any team should get one public penny for a damn practice facility. I don't think the public should fund a new baseball stadium miles and miles away from the Atlanta infrastructure that can support it. These deals are all different, and each one requires different levels of scrutiny. Some of them can be justified.
It's the system itself, the aggregate commitments of dozens of municipalities that shows what a farce this all truly has become. City by city, vote by vote, the general public has ended up subsidizing a huge portion of the NBA's business. This chart shows just how heavily the public has become in the NBA's business.
What's worse is that the NBA seems completely fine with it. How else do you explain the institutionalized relocation threats? This is now the NBA's model for getting new arenas built on the public's dime: set an arbitrary deadline, threaten relocation, panic the locals and profit. It's brilliant business and horribly gross given that the NBA absolutely has the resources to handle this itself.
If the league is looking for something to do with that extra $550 million coming their way through the new national TV deal -- it's $1.1 billion more than the old deal, and half is earmarked for increased player salaries -- starting a national arena fund would be a good idea. Every other business in America has to account for infrastructure deprecation. Perhaps if NBA teams were paying their own way they'd squeeze more than 30 years out of their gyms.
Dedicating 2 percent of gross profit leaguewide to arena construction and renovation would build up a huge warchest: right around $100 million per year. The NBA Board of Governors could administer the funds at its discretion, and it could help fund overseas venues to help promote the sport.
Of course, that $100 million would be $100 million of profit the 30 bosses of the NBA would be giving up. Why pay for something when you get it for free? There's no space for altruism in the corporate space, and the only thing that will end the NBA's arena scam is a conscience call from the league or a massive public revolt against the practice in all circumstances. That sentiment is certainly brewing, but it's nowhere near strong enough to stop efforts like the one in Milwaukee. So long as there's one city willing to pay for an arena to poach a team -- so long as there's one more Oklahoma City sitting out there at the ready -- the scheme will continue. (There are at least four such Next OKCs out there: Seattle, Vegas, Kansas City and Louisville.)
Until the NBA ends this scam one way or another, the people in charge should be ashamed at how heavily their booming business is subsidized by the general public.