By Jon Hartzell, NBA.com
MILWAUKEE — The Milwaukee Bucks need a new arena, and they need it soon. New NBA commissioner Adam Silver has said so. The Bucks’ owner has said it. Everyone across the league acknowledges the need to replace what has become maybe the NBA’s most dismal arena.
How the Bucks plan to pay for one is a different story, and one which recently intensified as reports indicated owner Herb Kohl may be close to selling the team, with an announcement possible at the NBA Board of Governors meetings later this week in New York.
The 79-year-old Kohl has stated his willingness to sell, but he also has said he’s dedicated to finding an owner who will keep the team in Milwaukee. A new downtown arena is the quickest way to secure the franchise’s future in Milwaukee.
“In order to keep the Bucks, we have to have a facility,” Kohl said during Bucks media day in October. “And in order to get a facility, we have to keep the Bucks. So it’s like a two-fer: We’re either going to get both in the years ahead or we’re going to have neither.”
Kohl has stated he is willing to contribute a significant personal financial investment to replace the current BMO Harris Bradley Center. The “Fortress on Fourth” was a privately funded gift built in 1988 with funds donated by philanthropists Jane Bradley Pettit and her husband, Lloyd Pettit. In addition to housing the Bucks, it is home to the Marquette University men’s basketball team and the Milwaukee Admirals of the American Hockey League.
But it has gradually fallen into disrepair, with a leaking atrium and a refrigerant system that’s no longer permitted in the United States. The Bradley Center struggles to generate the revenue needed to make fixes due to a lack of suite space and no year-round, on-site restaurant.
Kohl might be willing to fund an arena by himself if he could afford it. But with a reported net worth around $264 million, according to the Center for Responsive Politics, Kohl may not have the desire or the means. Especially after he contributed $25 million to the Wisconsin Badgers’ arena in Madison, now named the Kohl Center, in 1998.
VIDEO: Kohl on Potential Investors
A pricey proposition for Kohl, Milwaukee
This is where a sale of the team could solve the Bucks’ problem. Recent reports from Grantland’s editor-in-chief Bill Simmons suggest the sale price for the franchise will be upward of $550 million, far greater than the $405 million that Forbes valued the team at in January. (Kohl paid an estimated $18 million for the franchise in 1985.)
Some speculate that given an arena price tag like that, Kohl might be willing to make a big investment in a new building after the team is sold. Others suggest that the sale of the franchise will depend largely on a commitment from the new ownership group to make a major contribution to an arena. These two sources could get the Bucks close to the $500 million necessary to construct an arena (the Sacramento Kings’ new arena is projected to cost $448 million), though Kohl has said he believes funding should come from a combination of public and private funds.
It may be difficult to raise enough private funds. But one of the groups reportedly interested in the Bucks, New York-based hedge-fund billionaires Marc Lasry and Wes Edens, have an estimated combined net worth around $3 billion, according to Forbes. They reportedly were close to closing a sale on the Bucks less than a week ago for $550 million, but a “late flurry of offers” drove the price up and re-opened negotiations, according to Simmons. Grantland also reported that Kohl refused to sell to a Seattle ownership group led by Chris Hansen and former Microsoft CEO Steve Balmer (who is worth approximately $20.1 billion, according to Forbes).
The other names to emerge as possible investors are nowhere near as wealthy as Lasry and Edens. But they all have at least some connection to Milwaukee, or the Midwest, which would ease the fear that a new ownership group would attempt to relocate the team. The most likely of these local investors are Chicago-based businessman Richard Chaifetz, who donated $12 million to build an arena at his alma-mater (Saint Louis University), former Bucks player (and one of Wendy’s largest franchisees), Junior Bridgeman, Wisconsin-based consultant Jon Hammes and current Milwaukee Brewers owner Mark Attanasio, who previously stated he would be interested in investing in a new arena. It seems likely Kohl would remain involved with the team in some capacity if he decides to sell to a local ownership group, and he could even remain the majority owner.
While a local ownership group sounds like a smart way to keep the team in Milwaukee, most believe that to go that route with the potential investors whose names have surfaced, significant public funding for a new arena would be needed. And local governments do not seem too keen on that idea.
VIDEO: Kohl on Arena (2012)
Tax-for-arena argument won’t help cause
Southeastern Wisconsin residents continue to have a sour taste in their mouth over the five-county, 0.1 percent sales tax enacted in 1996 to fund the development of the Brewers’ Miller Park, which opened in 2001. The tax initially was to expire in 2012. But it was delayed to 2014 and now 2020 as tax revenues in the region have declined.
The battle over that tax was fierce in 1995. It passed by just one vote, cast by Racine County State Senator George Petak, who was quickly recalled nine months later because of the vote. Racine County already passed a resolution in July stating it would not support a tax for a new arena, and the other three local counties have made similar statements. Some have suggested extending the Miller Park tax to cover the new arena, but that seems unlikely at this point.
Local apathy is a huge hurdle in getting public money for a new arena. The perception around town is that a new arena would be only for the Bucks, rather than for the community. And the Bucks, the third-winningest team in the NBA during the 25 years prior to Kohl, have not gained many fans during the Kohl era. They’ve advanced past the first round of the playoffs just once since 1989 and are in the midst of their worst season ever.
All public funding hope is not lost, however. The private contributions from Kohl, Attanasio and a new ownership group would at least lessen the burden placed on the public to fund the arena. So the tax would not need to be as large as it was for Miller Park, which received $290 million in public funds in 1996 (equivalent to roughly $437 million in 2014). There are also emerging ideas about a “cultural tax” which would not only fund a new arena, but also parks, museums and the Milwaukee County Zoo. The concept was successfully used in Oklahoma City to fund the construction of the Thunders’ Chesapeake Energy Arena.
New public funding ideas will continue to emerge (“Super TIF,” anyone?). Still, it seems clear most Milwaukeeans are not enthusiastic about helping rich owners fund a new arena.
Bucks on-court product has some hope
All of this hullaballoo comes at the end of a season in which the Bucks will finish with the worst record in the NBA, after an offseason which saw them add 11 new players and coach Larry Drew in hopes of making another exasperated run at the playoffs. The Bucks will have a top pick in this year’s NBA Draft, joining a young core of Larry Sanders, John Henson, Brandon Knight, Khris Middleton, Nate Wolters and 19-year-old Giannis Antetokounmpo. The future of the franchise and the arena may be cloudy, but the roster’s future is arguably bright.
Silver is pleased with Kohl’s efforts to keep the team in Milwaukee, where it has been since 1968. But Milwaukee will force the NBA’s hand if there is no plan in place for a new arena when the Bradley Center’s lease expires in 2017. Current signs point toward Kohl selling the team. But many thought current Charlotte Bobcats owner Michael Jordan was going to buy the franchise in 2003 before Kohl pulled out late in the negotiation.
It’s been a horrible season for the Bucks, one that mercifully ends tonight when they host playoff-bound Atlanta at the Bradley Center (8 ET, League Pass). After that, with the franchise on the selling block, an unsettled arena situation and a critical top four pick in the Draft, the Bucks will step uncertainly into what may be their most important offseason yet.