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Will A New Arena Bring the Milwaukee Bucks an NBA Title?


NBAE/Getty Images

After years of speculation and searching for a new owner, Herb Kohl has finally found a buyer willing to keep the Milwaukee Bucks franchise in Milwaukee. Kohl originally purchased the Bucks for $18 million in 1985 and has owned the team for the last 29 years. Coincidentally (or maybe not), if you multiply $18 million by 29, you get $522 million, which is just under the $550 million sale price for the franchise. Not a bad return on an investment that has widely been characterized as the least-valuable NBA franchise. There is speculation the sale price could've been far higher, if keeping the team in Milwaukee wasn't a condition of the sale.

In the wake of this announcement, Herb Kohl and the new ownership group have each generously pledged at least $100 million toward the construction of a new arena for the Bucks. No announcement has been made on the final price tag for this proposed new facility, but don't be surprised if the $200 million pledged comes in at well under than half the total cost. While I don't think anyone outside of Vladimir Putin's inner circle of Olympic friends could come to Milwaukee and figure out how to spend more than the $1 billion+ spent on the construction of the Barclays Center, expect this new facility to be pricey.

Those in and around the Milwaukee area can tell you the price tag for Miller Park 13 years ago was $392 million. Taxpayers in the five-county area around the ballpark are on the hook for that bill until around 2017. So did the new stadium carry the Brewers to a World Series? Not yet. In fact, the franchise's lone appearance in the season finale was more than 30 years ago back in 1982.

Meanwhile, to the north of Milwaukee, the Green Bay Packers are playing in the NFL's oldest continually operating NFL stadium at Lambeau Field. Originally built for just $960,000 back in 1957, Lambeau Field has received continuous upgrades and expanded throughout the years, including a $295 renovation in 2003 and another $140 million that is currently being spent to upgrade the atrium area. Has all that spending brought a Super Bowl to Green Bay? I'm not sure if it was a direct result, but the Packers did win it all as recently as 2010.

So will a new arena in downtown Milwaukee bring an NBA title back to a city and franchise that hasn't seen once since the Nixon administration? I can say with more than 91% certainty, the answer is "no." Even with a new arena, the Bucks won't be a major market team and they'll still be in a cold weather climate with a hostile tax environment. That is a combination that has only resulted in two NBA titles in the last 23 seasons (Detroit 2004, Boston 2008).

Milwaukee may never be a major market and there's not much that can be done to make the city a more popular destination for young NBA players in terms of climate or quality of life. There may be something that could be done to change a different climate- the tax climate. 

Wisconsin has long been notorious for having high income tax rates- currently 7.65% for the highest income bracket. The Bucks payroll (for players) is currently around $57,000,000. That means roughly $4.3 million in state income tax will come in from those salaries. The actual number is far lower, as NBA players are required to pay income tax in several different states, because they technically earn money in those states. That amount is offset against their taxable income in Wisconsin, so the actual income tax collected on that payroll could be closer to $3 million or even less.

Waiving income taxes for NBA players who make their residence in Wisconsin could be a real difference-maker for attracting top free agents to the Bucks and keeping them in Milwaukee. Compared to what a new arena could potentially cost taxpayers, the risk is very low and the potential for reward at least has a much better proven track record than building a new arena. Speaking of proven track record, NBA players definitely have a proven track record of spending most of what they make within a few years, so there's a good chance a significant chunk of those waived state income taxes would be pumped right back into the Wisconsin's economy. Besides that, how much is a state willing to offer in incentives to attract, retain and help grow a $550,000,000 business? 

What could be done to the BMO Harris Bradley Center if $175 million of the pledged money was spent to renovate the building and the other $25 million was put into a trust to help offset some of the lost tax revenue from player salaries?

The NBA has made it clear they don't want to find out the answer to that question. Even though CBS Sports has characterized the NBA's option to buy the franchise if a new arena isn't in the works by November of 2017 as a safeguard to keep the Bucks in Wisconsin, I think that is far from the case. I think the real agenda is for the NBA to avoid having Herb Kohl's legacy or the reputation or Wesley Edens and Mark Lasry's damaged in the manner Clay Bennett's was, when he moved the Sonics franchise to Oklahoma City. Owning and controlling the franchise also allows the NBA to continue strong-arming other cities into building new facilities for their teams.

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