1. Bucks President Peter Feigin revealed on Friday that the much-anticipated arena financing package should be completed over the weekend. A complicated multi-stakeholder negotiation going to the last minute -- who would have thought??? (Milwaukee Business Journal/Rich Kirchen)
The Friday agenda for the state Legislature’s Joint Committee on Finance includes the so-called sports and entertainment district in Milwaukee. However, Feigin said he anticipates the powerful finance committee, which writes the state budget, will vote on the budget including an arena funding package on Monday or Tuesday.
"We will spend the next 48 hours kind of locked in a room," Feigin said at the Milwaukee Business Journal’s Business of Growing Milwaukee breakfast. "...We will get this done kind of at the 11th hour. We’re very excited."
2. While the Bucks' arena financing plan hasn't been officially unveiled or submitted to the state legislature's legislative finance committee, the broad parameters are now public -- and they're somewhat complicated. Thankfully, the gang at Save Our Bucks have taken great efforts to decode the key elements of the deal, rebut some early criticism and identify the potential banana peels that remain. Do yourself a favor and read both parts 1 and 2. (Save Our Bucks)
3. Many questions remain over the details of a financing package, including the actual funding mechanism for a state contribution. But Rich Kirchen reports that Scott Walker's previously proposed "Jock TIF" is due to make a comeback in the final version, albeit in a greatly slimmed down form. (Milwaukee Business Journal/Rich Kirchen)
Vos confirmed a Milwaukee Business Journal story Thursday that the so-called jock tax will pay for the state's planned $55 million in bonding toward the arena. He said $4 million of the annual jock-tax collection from NBA players would be earmarked toward payments on the state's new arena debt, which is a much lower amount than Walker's original $220 million proposed state bond issue.
You'll recall that Walker had originally proposed a $220 million bonding in February, but the state's current up-front share has reportedly been slashed to one quarter of that -- $55 million up front, or $80 million including interest over 20 years. Granted, It's all a bit semantic so long as any bonding is backed by the general fund, but optically the same benefits apply now as before: No new taxes would be required, no hole would be left in the budget, and the money used traces clearly back to the Bucks and their presence in the state.
And in case anyone cares, I'm totally in favor of a JTIF being part of the solution since I suggested it last November. AHEM.
Still, I think there's at least one form of jock tax funding that even basketball-hating skeptics might consider (begrudgingly?) palatable. For simplicity, let's call it a jock tax incremental financing (JTIF). I haven't heard this suggested anywhere yet, but the idea is pretty simple. First, set a budget baseline for the amount of tax dollars the Bucks bring in -- for example, the $10.7 million figure calculated for 2012 -- and then allow any amount above that to be funneled towards debt service for an arena project. Conceptually it's similar to the notion of a traditional tax incremental financing using a property tax baseline and paying debt off the amounts added to it, though this would obviously be coming from a completely different revenue pie.
The obvious appeal to opponents of public funding is that it doesn't blow a hole in the budget, allowing the bean counters to continue penciling in the same state tax revenue they had previously received from NBA-related taxes. But given a huge projected spike in NBA-related revenues on the horizon, that still leaves plenty of potential upside for arena proponents to leverage for an arena development over the long term. Consider that while the NBA's salary cap for the 11/12 and 12/13 seasons was south of $60 million, the cap could swell to upwards of $90 million starting in 2016. League salaries of course don't track exactly with the cap (which most teams exceed), but you get the idea. Tack on the Bucks' recent staff hiring spree and ballooning Bucks corporate profits, and there's a good chance the state's $10.7 million in NBA-related tax collections could similarly rise 50% or more by the time an arena is being constructed -- and continue to grow in excess of inflation going forward. For instance, if that excess revenue amounted to $6 million in JTIF revenues, then at 4% interest over 30 years you could hypothetically support $100 million in debt, which depending on the ultimate amount of private investment could get you most of the way towards funding a $450 to $500 million project. If you assumed a 20-year term, then the number would be around $80 million.
4. We've mentioned it a few times this week already, but be sure to check out Zach Lowe's latest piece on the new wave of thinking about post play(making) in the NBA. Lots of good Jason Kidd stuff in here to chew on. (Grantland/Zach Lowe)
"I think the post-up makes a comeback," Kidd says. "Sometimes it feels like we are making the game harder than it should be. The bottom line is this: The closer you get to the basket, the bigger a threat you are."
"We did hundreds and hundreds of sketches and iterations, and landing on the orientation that we did required these micro-movements of the nose, clenching a little more upward or downward," Kay says. "There's a lot of difficulty in there. A buck can very quickly turn into a camel or a dog or a satanic goat. It changes the face so fast. For us, it became an intense character study – 'How do we settle on a buck that we feel strongly about?' There was a lot of minutiae in that process."