As prospective owners Wesley Edens and Marc Lasry await formal league approval of the $550 million sale agreement for the Milwaukee Bucks franchise, there's a good chance they're both thinking about how to quickly advance the arena conversation in Milwaukee and move toward a viable solution. Their fates as as NBA owners may hang in the balance.
NBA Commissioner Adam Silver said he expects league approval of the sale (which requires an affirmative vote from at least 23 of the 30 owners) "within the next month," and noted that he "does not anticipate there will be any issues," but the threat to stability in ownership is something that could come a few years down the line. The sale agreement contains a buy-back provision that would allow the NBA to purchase the team from Edens and Lasry for $575 million if a deal to build a new arena in Milwaukee is not in place by November 2017, according to a report by Brian Windhorst and Marc Stein of ESPN. This news may seem a bit scary at first, but a closer look should be enough to calm most Bucks fans (for now).
In many ways, this provision is designed to protect Milwaukee against a half-baked arena push that fails and leads to a move to a larger market to inflate the franchise value. With a huge new TV deal in the pipeline and a market like Seattle still shopping for a franchise, anyone buying into a small market franchise without a suitable home beyond 2017 would stand to make a fortune if the team relocated. It could be argued that the value of the new TV deal was baked into the sale price Edens and Lasry negotiated with Herb Kohl, but Mavericks owner Mark Cuban recently told ESPN he thinks Edens and Lasry "got off cheap" and grabbed a "bargain" with the Bucks. The buy-back provision negates any incentive for new owners to stall arena talks or leave the city without a deal.
Think of the buy-back provision as a fail safe device that adds a little umph to the good faith pursuit of a new arena in Milwaukee. It's a step that the league would likely only take if it didn't see "significant progress" toward a new arena by the 2017 deadline, according to the same ESPN report. When you couple that statement with (a) the Bucks' belief that the NBA would allow for a lease extension until 2019 if real progress is made on a new facility in the next 12-18 months, (b) the $100 million gift pledge from Herb Kohl, (c) the (at least) $100 million pledge from Edens and Lasry, and (d) the push to add local investors with direct ties to the community, it becomes clear that local support and public funding are likely the real sticking points when it comes to keeping the Bucks in Milwaukee.
Herb Kohl provided a no-nonsense summary of the situation to Don Walker of the Milwaukee Journal Sentinel: "Ultimately, if we don't get to a new arena, yes, we will lose our team," Kohl said. "The money will go away."
It's pretty much that simple. The Bucks can't play in the BMO Harris Bradley Center much longer (the expiration of the lease agreement basically coincides with the NBA's deadline for an arena deal), and a new solution won't be cheap. A significant sum of private money has been pledged, but public funds will almost certainly be needed to bridge the gap and get a new facility.
Ultimately, it's important to keep in mind that Edens and Lasry have given every indication that they are committed to getting an arena deal done in Milwaukee. They knocked their first press conference out of the park, they pledged money to the project, they started recruiting local investors to join the cause almost immediately, and they've formulated ideas about how they want to proceed. Edens laid out an ambitious plan to dedicate this year to planning, site selection, and design, with the goal of building a new arena within roughly two years. In a recent Q&A with Don Walker of JS-Online (that you should definitely read in its entirety), Edens didn't seem at all phased by the challenge of securing a new arena:
"For a project of this size and one that is both a private transaction and also in this case a public-private transaction where there is a number of different constituents, I think getting something designed, financed and ready to come out of the ground in the next 12 months is a very aggressive but a very realistic timeline so long as there is engagement locally, which I believe there will be. So as soon as we are mandated as the owners, we will jump into it with both feet and get after it. I think it's a challenge, but it is a tremendous opportunity."
"The value proposition at the end is what will carry the day. It's not about asking for a public handout, or asking for incremental taxes, that's not what people are responsive to. In my judgment, they shouldn't be. It's really about what the impact a new arena can have on the community. You keep the Bucks in the community. You revitalize the downtown...It has to be a positive economic result for taxpayers to feel good about getting behind it."
"I'm very confident with the magnitude of capital already committed and the prospects for other capital from other private sources of which there is many I think it is very likely we will get to a great answer where people will feel like it's not an incremental tax, not an incremental handout, but actually is a big positive result for the community."
When league approval of the sale agreement is formalized, expect these guys to get moving on the arena issue very quickly. It's clear that the clock is already ticking quite loudly.