As Bucks sale draws closer, Marc Lasry and Wes Edens emerge as possible favorites--and line for funding grows longer

Jeff Hanisch-US PRESSWIRE

Bill Simmons reports that a sale to the pair of New York private equity giants was almost a done deal. So what happens next?

ESPN/Grantland's Bill Simmons kicked off a busy week of Milwaukee Bucks buyer speculation last Saturday, so it was only fitting that he bookended it with some juicy new details--and new potential Bucks owners--in his Friday mailbag.

Don't worry, you won't have to cheer for the Seattle Bucks. As I tweeted last weekend, the Seattle guys (Steve Ballmer and Chris Hansen) aren't getting the team - even though they were willing to go higher than anyone else, they dropped out because Herb Kohl (the longtime Bucks owner and a fearless champion of mediocre basketball) wouldn't sell them the franchise unless they agreed to keep it in Milwaukee. The guys who thought they had it as recently as two days ago? Hedge-fund billionaires Marc Lasry and Wes Edens, who slid under the radar this entire time and thought they landed the Bucks with an offer in the $550 million range (slightly more than Vivek Ranadivé paid for the equally unappealing Kings). As recently as Wednesday, Lasry and Edens were expecting the NBA to vote on their bid at next week's Board of Governors meeting.

So ... what happened? Apparently there's been a late flurry of offers from at least two other parties - not the Seattle guys - and now, incredibly, the price might be climbing and/or Kohl might be wavering to see if he should play this out longer. I thought I had this story nailed two days ago; now, I'm not sure. Will Lasry and Edens land the Bucks? Will someone else swoop in? What promises will be made to Adam Silver, who has demanded a new arena in Milwaukee by 2017 at the latest ... or else? And can the Bucks and Kings really go for a combined $1.1 billion or more???? Good Lord! My money is still on Lasry and Edens, but I can't believe this process is still dragging along. You know, kind of like the Bucks.

There's been no shortage of speculation about Bucks bidders over the last week, but Simmons is the first to cite Lasry and Edens--who also appear to be the wealthiest names yet linked to the team. On Tuesday Richard Chaifretz's name joined the ranks of Mark Attanasio, Jon Hammes, and Junior Bridgeman, while Woelfel shotgunned another handful of names on Friday, referencing former Raptors GM Bryan Colangelo, super agent Arn Tellem, and Red Sox/Liverpool chairman Tom Werner as potential leaders of their own investor groups.

With an estimated net worth of $1.7 billion, the New York-based Lasry started First Avenue Capital in 1995 and is a reported "competitive" basketball player. Meanwhile, Edens founded private equity behemoth Fortress, also based in New York. How either would fare as an owner is anyone's guess, though deep pockets never hurt. Of greater concern would be their commitment to keeping the Bucks in Milwaukee. While Kohl will do whatever he can to make that a reality, there won't be any guarantees until a new arena has been built. UPDATE: Save Our Bucks has a good take on how Edens and Lasry stack up as potential investors.

We'll likely know a lot more by next Thursday and Friday, when the NBA's Board of Governors meet in New York with the Bucks' sale likely on the docket for discussion. While Kohl's ultimate goal is assuring the Bucks remain in Milwaukee, the league's owners will no doubt be hoping for the biggest sale number possible--and the $550 million figure mentioned by Simmons is plenty big. Though less than the Forbes-estimated league average of $634 million, it would eclipse the $534 million valuation the Kings sold for last year while dwarfing the then-record $450 million the Warriors sold for in 2010 and the relative bargain price of $325 million that Tom Gores paid for the Pistons in 2011.

So why would anyone fork over that kind of money for a small market franchise in disarray? The spiking interest--and inherent scarcity--in NBA teams is one big reason, with the highly-favorable 2012 CBA and expectations of a massive new TV deal in 2016 doing nothing to blunt investor interest. But there's also one unique angle in the Bucks' sale that has largely gone unmentioned: the more money that new owners pay for the team, the more money they can expect Herb Kohl to contribute to a new arena.

To date Kohl has been understandably vague about how much he will put toward a new arena, which makes sense given that so much of his net worth is tied up in the still-uncertain value of his team. So as bidding on the Bucks has intensified, you'd expect that all bidders have been keen to get Kohl's assurance that as much money as possible will be plowed back into a new arena. In many ways it's a win-win: the more Kohl can contribute, the better he'll look, and the easier it will be for new owners to cinch a new arena deal.

There's also may be tax efficiencies to be exploited by Kohl using sale proceeds to fund a new arena. Having purchased the team for just $18 million in 1985, Kohl could end up with a tax bill approaching $100 million if he faced the maximum 20% tax on capital gains that may eclipse $500 million. I won't pretend to know all the potential ways of offsetting that some or all of that sort of liability--you can bet Kohl's accountants do--but the most obvious one we've already talked about: contributing sale proceeds toward some type of tax-exempt arena financing vehicle. If it works, that approach would also presumably mean new owners wouldn't be owning the new arena itself--you'd guess it'd be situation more like the current non-profit Bradley Center--but the potential to reach a solution that makes everyone happy is certainly there. The Bucks and their fans get rich new owners, the league scores another huge sale price, the new owners get a big down payment (and likely a sweet lease deal) on a new arena, Kohl gets his name on the building, and the city of Milwaukee gets a better deal while keeping their team. In theory it seems simple enough, though negotiating the details will likely be anything but.

Want public money? Join the crowd...

While proponents of a new downtown arena have yet to actually ask for public funds--let alone put forth a specific number or funding mechanism--that's not stopping others from latching on to the arena debate as means of drawing attention to their own funding needs.

Don Walker writes that community activism group Common Ground made its demands clear at a meeting on Tuesday night, pledging its support for a new arena...at a rather steep price.

Supporters, meeting at Milwaukee Hamilton High School on the southwest side, overwhelmingly approved a motion to support public funding for a new arena as long as $150 million to $250 million is directed toward better public school athletics facilities, playgrounds and recreational spaces.

If that amount is not set aside, Common Ground says it will oppose public funding for a new arena.

At first glance, Common Ground's opening salvo may seem like bad news for anyone hoping to see public funding directed to a new downtown arena. The perception of arena funding as tax handouts for rich players and even richer owners is a huge hurdle facing arena proponents, and the task of winning over lawmakers and taxpayers only gets more challenging when groups like Common Ground are asking to spend money on more basic things such as kids' athletic fields. Alas, Herb Kohl isn't quite as sympathetic as poor children playing on dilapidated playgrounds. Via Rich Kirchen at the Milwaukee Business Journal:

"We do not oppose the new arena," said Jennifer O'Hear, chair of what Common Ground calls its Fair Play campaign. "We simply demand a say in how our money is used, and that means investing in our children."

Nothing unreasonable about that sentiment, which could also represent an opportunity. Though there's no real economic synergies in tying the two groups together--ie one project doesn't enhance the other per se--there could certainly be political benefits to bundling issues that span diverse interests. Moreover, it's important that Common Ground isn't outright opposing arena funding, but rather just trying to get their piece of the action. I'd guess that they'd accept significantly less than their publicly stated asking price to make a deal, but only time will tell. Fortunately, the sort of investments they're suggesting aren't all or nothing, and ultimately everything is negotiable, right?

Speaking of negotiations, Wisconsin Center District chairman Frank Gimbel also expects to be at the table if and when an arena tax is discussed. On the same day Common Ground was voting on their stance, Gimbel suggested his group would seek $200 million in expansion funding as part of a potential arena sales tax. Again via Kirchen:

"The opening strategy is going to be that this should be part of a grand plan that embraces a basketball arena, the zoo, parks, entertainment and cultural groups," Gimbel told me.

The task force is not expected to make a recommendation until early 2015 on possible projects to fund or how to fund them. Besides a new arena and a convention center expansion, the task force has reviewed the funding needs for the Milwaukee Public Museum, the Marcus Center for the Performing Arts and the Milwaukee County Zoo.

Ironically, the idea of an arena tax is looking increasingly less about an arena and more about everyone else, though a tax meant to fund a broader set of community investments isn't without its merits or precedents. In fact, the more a public funding vehicle can be about things other than a new Bucks arena, the more likely it may be to pass a public referendum. That's why the MMAC's task force is intentionally broad to begin with, though no one ever said it would make agreeing on a plan any easier. Oklahoma City is perhaps the most notable archetype on that front, having passed its Metropolitan Area Projects sales tax in 1993 and using funds to make an array of investments including theThunder's Chesapeake Energy Arena.

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