Bucks need to break ground soon

MILWAUKEE -- The Pabst and Schlitz breweries were once productive and iconic. Now they're closed and in redevelopment, presently serving mainly to frame a collection of bare blocks and parking lots near the river in the northern section of Milwaukee's downtown -- underused parts of an underappreciated city.

It is in this gap that the Milwaukee Bucks and their ambitious out-of-town new owners want to lead a massive effort in urban revitalization -- an arena-focused development funded with a blend of private and public money. Or, if they fail to raise adequate public political support, it is here that this city's fraught relationship with professional basketball will end, with the Bucks moving on to Seattle; Las Vegas; Louisville, Kentucky; or some other city with more ready cash for stadiums.

After months of progress, promises of hundreds of million in investment and the release of mock-ups of an architectural gem, the Bucks' future in Milwaukee is looking shaky. The battle for the team's future is coming to a head quickly.

If the Bucks are to stay, they must meet an NBA-imposed deadline of having an arena in place or at least have it nearing completion by 2017. To make this happen the shovels need to be in the ground by this fall and the funding secured by June, when government budgets are due. Some local politicians and business leaders in the city have been saying it is just a matter of time before everything is aligned and a deal to keep the Bucks in Milwaukee for decades to come will be done. Other politicians, however, have turned skeptical, with local and statewide polling numbers showing only tepid support. Many are reminded of the drama that unfolded in the struggle to build Miller Park, home of the Milwaukee Brewers, in the 1990s. The stadium was completed and opened in 2001.

This just isn't like most stadium deals.

Examine the priorities of governments in almost any American locale, and it's easy to see that vast taxpayer contributions for sports stadiums are a tough sell. Dollars are scarce for school boards, police forces and everything else. The Bucks have, in recent years, had to fight hard to get an annual $175,000 payment for upkeep of the aged Bradley Center. And now they're asking for hundreds of millions, and if the taxpayers won't foot the bill, there's every chance the league, which has other cities standing by, will move the team away.

This is the essential conundrum of being a local politician bargaining with a national sports league. The options are all difficult. And in this case, the answers have to come almost immediately. When a New York-based group led by Wesley Edens and Marc Lasry bought the Bucks from former U.S. Sen. Herb Kohl in April 2014, the deal included both a carrot and a stick to encourage local politicians to put the Bucks at the top of the political priority list.

The carrot was hundreds of millions of dollars toward the stadium. A nice benefit, but not enough to get the building completed. The stick was a clause stating that if an arena is not in place in Milwaukee by the start of the 2017-18 season -- an ambitious schedule -- the NBA has the right to buy the team. League insiders suggest a sale and relocation is the next logical step. The team would be worth more, by most analyses, in another city. NBA commissioner Adam Silver visited Milwaukee last November and made it clear at the time he wasn't carrying a big stick, saying "I didn't come here to announce deadlines." But, according to league sources, the NBA office -- having learned through the years that pledges and promises have little value until ground is broken -- has made it clear to all parties it will enforce the out clause if shovels are not digging quickly. The NBA has communicated it could give on the schedule a bit, but only in the case of true progress. The league isn't threatening consequences; it's guaranteeing them.

"When do we need to get started? Yesterday," said Michael Fascitelli, a member of the Bucks' ownership group who is leading the arena development. "The arena is a two-year process. Every day is critical. Our goal is the 2017 season." The politics are beyond complicated. Funds could come from the state, county and city, and in each case there are hurdles. Republican Gov. Scott Walker, who is expected to join the race for the White House soon, is a noted adversary of Milwaukee mayor Tom Barrett, a Democrat. They have run against each other twice in the past five years -- Walker won both times -- and are apart on many issues. Their fraught relationship is the latest chapter of a long-running saga dividing the right-leaning state government and the left-leaning city. Appealing to state power brokers is essential, but the Bucks' new owners come to the conversation with long-standing ties to the Democratic Party.

Lasry, for instance, is a longtime friend of Bill Clinton and Barack Obama. He once hired Chelsea Clinton to work at his New York hedge fund, Avenue Capital. In 2012 when President Obama was running for re-election, Lasry held a $40,000-per-person fundraiser with Presidents Clinton and Obama at his home on the Upper East Side of Manhattan. Lasry's son Alex, who is now the Bucks' vice president of strategy and operations, previously worked as an aide in the White House during Obama's first term. None of this is lost on the largely Republican lawmakers with the purse strings in Wisconsin's state capitol. Last fall Robin Vos, the Republican leader of the state's general assembly, questioned in a television interview why he should facilitate a deal for the Bucks' Democrat-supporting ownership. "I mean, I want to bring those jobs and keep them in Wisconsin, but having us give hundreds of millions of dollars to big-time donors who give to Democrats but also have billions of dollars of their own?" Vos told WISN TV. "That's a hard sell."

Lasry, Edens and co-owner Jamie Dinan are indeed worth billions from their various hedge fund and private equity holdings. But they also have made significant investments in the project. As part of the $550 million purchase of the Bucks last year, Kohl promised to match two-thirds of any money the new owners came up with toward arena construction. Edens and Lasry put up $150 million (running their investment to $700 million including the purchase price of the team) and Kohl added $100 million of his own.

Kohl -- a Democrat who was a Wisconsin senator from 1989 to 2013 -- is a longtime champion of Wisconsin sports, once donating $25 million to the University of Wisconsin-Madison to help build an arena now known as the Kohl Center.

"Our owners have committed $150 million on top of Senator Kohl's generous donation of $100 million, not just to build a world-class arena for a championship-caliber team," said Jake Suski, the Bucks' senior vice president of communications, "but because they want to help revitalize downtown Milwaukee and create an economic ripple effect for the region." Kohl, who is popular in Wisconsin, deeply wants the Bucks to stay. But if it doesn't work, his $100 million offer will also function to insulate his reputation, so that he won't become the Howard Schultz of the Upper Midwest. Schultz, the founder of Starbucks, became a pariah in Seattle for his role in selling the Sonics to a group led by Clay Bennett, who took the team to Oklahoma City. Bennett rarely came to Seattle in the two years before the relocation. When he did, he sometimes hired bodyguards for protection. If the Bucks can't get an arena deal done and there's another relocation, this arrangement will more likely cast the NBA as the villain, not the new owners. Edens and Lasry, meanwhile, have been visible in Milwaukee, routinely flying in for games and promising to further invest in downtown projects associated with the arena. "A balanced public-private partnership hasn't been the typical scenario in comparable economic markets," Suski said, referring to recent arena deals in midsized markets such as Orlando, Charlotte and Memphis that all saw more than 80 percent of the money come from government sources. "But our owners see incredible potential in the future of this community and state."

It is projected the new Bucks arena will cost $500 million. With a combined $250 million from Kohl and the Bucks' new ownership, the proposal is a 50/50 split between public and private money. It is similar to the arena being built in Sacramento, California, where the city avoided the Kings moving to Seattle when a partnership was struck that saw the city invest $255 million and the Kings pledge $222 million. Gov. Walker has proposed $220 million through bonds issued by the state. The legislature, however, is fighting him on it and is proposing a deal for much less: $150 million. The city has offered $25 million in the form of infrastructure and land but no cash. The county hasn't offered a formal plan as yet but is expected to offer a package in the range of $25 million, as well.

That leaves a major shortfall -- between $50 million to $100 million -- and no one is offering to fill it, including the Bucks' ownership, who lawmakers have more than hinted should fund the solution. It is in this hole where the Bucks' future probably is going to be decided.

"If the state comes in at $150 million, the deal is dead, and the Bucks will move," city alderman Bob Bauman told Milwaukee Magazine this week. The arena would be in his district. "The gap is too big."

Meanwhile, a poll released this week by Marquette University Law School was bleak for the Bucks. Nearly 80 percent of the respondents didn't favor public funding for the arena even though the current plan includes no new taxes. In Milwaukee itself, 67 percent of those polled were against giving the Bucks public money. As for Walker, who is a strong supporter of the arena construction plan, his approval ratings have dropped over the past several months. As he's about to run for president, he now has a 41 percent approval rating in his home state.

This a danger zone for Wisconsin politicians and that makes it a danger zone for the Bucks. Some politicians who were involved in the half-cent sales tax hike to pay for Miller Park were voted out of office. What everyone agrees on is there is no appetite for new taxes.

In an effort to build public momentum for the project, last week the Bucks unveiled renderings for the new arena and a surrounding residential and commercial district. The drawing is striking: a rectangular structure with sweeping glass facades and an arching wall that morphs into the roof. It would be unlike any current NBA arena. Next door, there would be a place for an indoor/outdoor viewing platform where fans could gather to watch Green Bay Packers games, World Cup matches and someday, the Bucks' owners hope, NBA Finals games being played in the adjacent arena. Edens and Lasry are selling this idea from their new headquarters on the sixth floor of a nearby building that used to be a storage facility for Schlitz Beer. It's light, airy and resembles a trading floor. Every salesperson sits in front of two giant flat screens, a design led by Alex Lasry, who has an MBA from NYU and cut his teeth at Goldman Sachs. The Bucks have hired more than 50 new employees as part of a modernizing of the franchise. The hires include not only new sales staff but also plenty of investments in the basketball product, with new personnel on the team training staff, a full-time sports psychologist, and player development and relations staff. Of course they also hired a new coach, taking Jason Kidd away from the Brooklyn Nets in a stunning coup. Kidd has helped the Bucks reach the playoffs this season after winning just 15 games last season. Next season, the Bucks will have new colors, adding cream and navy to the long-standing green, new logos and new uniforms. Combined with the new offices, new faces and arena efforts, they have crammed three years of renovation into 12 months. With the NBA deadline bearing down on them, they have little choice.

"We're looking to get shovel in the ground by early fall," said Bucks president Peter Feigin. "That's our reality."