A New Stadium For The 2017 Season?

[Dawson Rental]

It's all about risk management. The NBA assumes the risk of buying the franchise back and operating it while trying to sell it. The worst exposure to risk is that the new owner faces is they make $25MM should the deal fall through.

Yes, I would call that pretty brilliant.

The NBA made sure that if anyone was going to cash in by moving the Bucks, it would be the league and not the new owners.  And if the new owners can't get a new arena in three years that is what will almost certainly happen.

If there is is risk involved in running the Bucks in the interim that just makes the $25 million return that much more questionable.  Do these guys have $550 million of their own hanging around to invest or did they finance a chunk?  Financing costs can kill a return, especially when there is a (pretty low) ceiling on how much they can make when selling. 

It seems to me that these new owners are under fairly heavy financial pressure to get a new arena done.  Fortunately, they have 40% of the financing committed up front.

[humanlung]

The BMO Harris Bradley Center is the third-oldest arena in the 30-team NBA, behind current arenas in Oakland for the Golden State Warriors, and Sacramento for the Kings.

More sloppy reporting.

First off, Madison Square Garden is also older. 

Also, per wikipedia, the Kings arena technically opened a month after the Bradley Center (11/8/1988 for Arco/Sleep Train versus 10/1/1988 for BMO Harris), but the Palace at Auburn Hills actually opened about two months earlier (8/13/1988). 

So the older arenas are the Oracle Arena (Oakland) opened in 1966, MSG in 1968, and The Palace of Auburn Hills.

 

But MSG just went through a complete overhaul and remodel a couple years back.  The shell might be older but the functional parts of the building are brand new.

[humanlung]

One thing we all need to remember (and older members, please help me out here) is that there was a time when the Bucks were a huge draw and a perennial playoff team. 

Then...Kohll happened.  While the Senator was great for keeping the team in Milwaukee, he was a HORRIBLE meddler in the operations of the team,  I personally heard him in a downtown restaurant making Larry Drew explain why he was playing certain players over others and that he (Kohl) thought others should be playing instead.

That conversation is a microcosm of why this team has fallen apart over the last 15-20 years.  And why I think that new ownership is addition by subtraction.  I have little doubt that if Milwaukee invests in a new arena that the new owners will, over a few years, build a much better team and put a much higher quality product on the floor.  Same thing that happened with the Brewers.

[Spotcheck Billy]

but when the NBA buys the Bucks the team is guaranteed top lottery picks

[MU82]

No reason it would have to be 20k. The new arena in the Bay Area is going to be smaller but just do it right. I am thinking that is the way Milwaukee would head.

I would think smaller would be better, too. The article made it a point to say BC  is one of the smallest arenas, however, so that made me think they might want to do bigger.

When the Bucks were doing fairly well on the court and BC was newer, did they draw well?

[martyconlonontherun]

I would think smaller would be better, too. The article made it a point to say BC  is one of the smallest arenas, however, so that made me think they might want to do bigger.

When the Bucks were doing fairly well on the court and BC was newer, did they draw well?

Bigger could mean size and viewing areas. Seating capacity is a different story and could have been sloppy reporting since seating capacity resonates with readers better than square footage or number of boxes/shops.

[bork]

When the Bucks were doing fairly well on the court and BC was newer, did they draw well?

Not really.  Just over 17,000 the first year.  Over 18,000 in 2001-2002, the year after the big playoff run.  No other years over 17,000.  Otherwise, in the 15-16,500 range, win or lose.  Of course, the BC was built right before the Bucks went in the crapper for a decade.

Milwaukee may come for a year to see a new place (See Miller park), but after that you've got to have a winning team to draw the fans.

[Dawson Rental]

but when the NBA buys the Bucks the team is guaranteed top lottery picks

With Diamond Stone and Ellenson on the way, the NBA finally has some top local talent worth rigging the draft lottery for like the NBA did for Cleveland (LeBron) and Chicago (Derrick Rose).

[MDMU04]

If there is is risk involved in running the Bucks in the interim that just makes the $25 million return that much more questionable.  Do these guys have $550 million of their own hanging around to invest or did they finance a chunk?  Financing costs can kill a return, especially when there is a (pretty low) ceiling on how much they can make when selling.

$50MM of he purchase was financed, the remaining $500MM was paid from personal equity, according to an article from the Milwaukee Business Journal dated April 28th of this year. Sorry for no link, I'm sending this from my phone. So the new ownership group did have a pretty substantial pile of equity that they put to use.

The Bucks ran a net profit of nearly $15MM last season, entirely due to league revenue sharing. Their revenue sharing and luxury tax payout amounted to roughly $21MM. This also from a MBJ article, this one from July 1 of this year.

I doubt the prospective owners would have structured a $550MM purchase where the financing cost of a $50MM loan would put them in a situation where they would lose money if the deal collapses, especially considering that the franchise is a profitable business.

[Benny B]

First why do you guys not want to play in a new arena? I think that'd be a huge advantage to MU. Young kids care about tradition sure but I'd wager they'd be a heck of a lot more impressed with a brand new shiny arena.  Also if we built our own wouldn't we be unable to drink beer at games per NCAA rules? I'm sorry but if that's the case I'd rather play on a court in miller park if we have to.

Let's put this one to bed right now - the NCAA has no control over whether a venue serves alcohol or not during the regular season.  Their policy against alcohol advertising and sales only applies to championship events.

To the point, I don't want MU to play in a new multipurpose arena.  I want MU to play in a new basketball arena... whether it's on campus or owned by the university matters not to me (although realistically, that's the only way it's going to happen).  If you've ever been to a game at the Joyce, Zoo, Cameron, Hinkle or even the Pavilion, you'll understand what I'm saying.  In my opinion, Marquette basketball should be playing in a venue that isn't capable of hosting Monster Jam or the Shrine Circus.

[Canned Goods n Ammo]

Even if MU had the funds, it faces several big issues with an on campus venue:

#1 Real estate
#2 Can they get enough events to keep the building busy(rent) and maintained($)?
#3 City infrastructure. Milwaukee isn't just going to reroute a bunch of streets and on-ramps for nothing
#4 Opportunity cost (MU could use that money elsewhere)

Now, those aren't insurmountable issues, but they are significant, and will have to be considered before we even get into details like parking, capacity, luxury amenities, corp. partnerships, etc.

MU's best bet is to continue to rent/lease a facility from the city.

[Johnny B]

Even if MU had the funds, it faces several big issues with an on campus venue:

#1 Real estate
#2 Can they get enough events to keep the building busy(rent) and maintained($)?
#3 City infrastructure. Milwaukee isn't just going to reroute a bunch of streets and on-ramps for nothing
#4 Opportunity cost (MU could use that money elsewhere)

Now, those aren't insurmountable issues, but they are significant, and will have to be considered before we even get into details like parking, capacity, luxury amenities, corp. partnerships, etc.

MU's best bet is to continue to rent/lease a facility from the city.

Just wondering, where in the hell would the funding for a new MU arena even come from. Would the school cough up 200 mill for a decent 14k seat arena?

[Niv Berkowitz]

The whole arena size argument is just dumb. The size of the BC is just fine. Look at the percent-of-capacity of NBA games vs. the NHL. There are a lot of NBA teams turning out sub-85% capacity. Nothing close to the NHL numbers (10 teams under 85% NBA vs. 5 NHL).

Now, the people of Milwaukee...excuse me, the people of surrounding counties like uber-conservative Waukesha, Ozaukee and Washington counties are being ridiculously shortsighted if they don't vote for a new arena. These counties and people fail to realize that the value of their own property is affected by the anchor city around it...which is Milwaukee. Being a two-sport town is a big deal, and being a three is even bigger (I'm sorry, but Milwaukee gets a little bit of Packers credit).

A new arena keeps an NBA team here and lets Milwaukee be one of only 30 teams known globally for their hoops team. Better awareness of the city means more money, income, businesses, standard of living, and opportunities not afforded to non-sports team cities. The Bucks leave, it's not just a lost "losing basketball team". It's a hole in the wall of downtown and tons of lost jobs on 100+ days a year.

[Benny B]

Just wondering, where in the hell would the funding for a new MU arena even come from. Would the school cough up 200 mill for a decent 14k seat arena?

Considering that Cintas (Xavier) was built for under $50M about 13 years ago and the Sears Centre in Hoffman Estates was built for just over $60M about eight years ago, even with inflation MU could build an on-campus arena for around $80-90M.  Sure, it wouldn't have The Ralph's amenities, but as long as the seating was good, the floor was lit and the beer is cold, who cares whether or not the walls are embedded with gold leaf.

Where does the funding come from?  Donors.  If ever a new arena became a necessity for MU (i.e. the Bucks are gone and the BC is crumbling), I firmly believe MU could raise the first 15-20% amongst a handful of MU's largest donors without breaking a sweat.  Considering the last 30-35% of any fundraising campaign rarely rolls in until that segment of donors/alumni can see bulldozers and cranes, the biggest question is whether MU can/would put shovels in the ground at only 65% of a $100M goal.

[Johnny B]

Considering that Cintas (Xavier) was built for under $50M about 13 years ago and the Sears Centre in Hoffman Estates was built for just over $60M about eight years ago, even with inflation MU could build an on-campus arena for around $80-90M.  Sure, it wouldn't have The Ralph's amenities, but as long as the seating was good, the floor was lit and the beer is cold, who cares whether or not the walls are embedded with gold leaf.

Where does the funding come from?  Donors.  If ever a new arena became a necessity for MU (i.e. the Bucks are gone and the BC is crumbling), I firmly believe MU could raise the first 15-20% amongst a handful of MU's largest donors without breaking a sweat.  Considering the last 30-35% of any fundraising campaign rarely rolls in until that segment of donors/alumni can see bulldozers and cranes, the biggest question is whether MU can/would put shovels in the ground at only 65% of a $100M goal.

Id like to think that a school like MU which has much better tradition and fans,would want to have an arena a few steps above Cintas(not that its a bad arena).

[Benny B]

Id like to think that a school like MU which has much better tradition and fans,would want to have an arena a few steps above Cintas(not that its a bad arena).

Adjusted for inflation, Cintas would cost $65M today.  I'm advocating for $80-100M in today's dollars, which should get MU a bit more than sparkling clean uniforms for the janitorial staff.

[kmwtrucks]

Why would would want to build the a crappy bear bones stadium when we can rent one that would be state of the Art that is 1/2 mile off Campus?  That is what recruits want? How often do the recruits and players talk about the AL?  Was it the same breath as the old gym?  if you want to be a top 25 team a nice state of the Art Venue would only help.  

[Benny B]

Why would would want to build the a crappy bear bones stadium when we can rent one that would be state of the Art that is 1/2 mile off Campus?  That is what recruits want? How often do the recruits and players talk about the AL?  Was it the same breath as the old gym?  if you want to be a top 25 team a nice state of the Art Venue would only help.  

Because whole concept of the crappy stadium rests upon the presumption that the state-of-the-art arena isn't built.

If the Bucks stay and they build a new arena, of course you take up tenancy there.  No one is arguing to the contrary.

Besides, you wouldn't use bear bones... just import some of those pigeon bones that make up the foundation of most new construction projects in NY and Jersey.

[esotericmindguy]

It's all about risk management. The NBA assumes the risk of buying the franchise back and operating it while trying to sell it. The worst exposure to risk is that the new owner faces is they make $25MM should the deal fall through.

Yes, I would call that pretty brilliant.

I'm having a hard time reading your post. But billionaires don't become billionaires by accepting 2% returns. Silly post.

[MDMU04]

I'm having a hard time reading your post. But billionaires don't become billionaires by accepting 2% returns. Silly post.

You are missing the point. Selling the team for a return of $25MM plus the accrued operating profit for the team over the term of the deal is the worst case outcome for the new ownership group.

You are correct in saying billionaires don't become billionaires by accepting 2% returns on $550MM investments. They hedge their risk by having a third party put a call option that covers their cost plus a $25MM profit on the investment if the deal falls through.

[MU111]

MU's Lovell endorses new arena, wants more detail on finances
http://www.jsonline.com/blogs/sports/274544211.html

"Lovell said a part of recruiting top-flight student athletes to the men's basketball program includes the lure of being able to play in a NBA arena. He said recruits often were given tours of the BMO Harris Bradley Center to impress upon them that they would be playing in the same building as members of the Milwaukee Bucks."


Not much new here, but I think this is one of the first times that Marquette has gone on record about a new arena.

[Johnny B]

MU's Lovell endorses new arena, wants more detail on finances
http://www.jsonline.com/blogs/sports/274544211.html

"Lovell said a part of recruiting top-flight student athletes to the men's basketball program includes the lure of being able to play in a NBA arena. He said recruits often were given tours of the BMO Harris Bradley Center to impress upon them that they would be playing in the same building as members of the Milwaukee Bucks."


Not much new here, but I think this is one of the first times that Marquette has gone on record about a new arena.

A brand new arena certainly impacts recruiting, maybe mu throws a couple dimes around towards the arena.

[Wojo'sMojo]

Lovell stated that Marquette would be more than willing to make a financial commitment to a new arena. How much money would we be able to realistically contribute? 50 million?

[NersEllenson]

Lovell stated that Marquette would be more than willing to make a financial commitment to a new arena. How much money would we be able to realistically contribute? 50 million?

I've been very impressed with Lovell thus far - think it was great to get a lay person in the saddle.  Too competitive these days to not have a progressive thinker running an institution.

[NersEllenson]

I'd argue that putting up another arena out of fear is small thinking.

If a new arena is part of a bigger growth strategy for Milwaukee, then I'm listening.

If a new arena is just a strategy to keep a pro-basketball team, then it's stupid. Let them leave. The city can get far more bang for it's buck elsewhere.

Like how can it get more bang for its buck elsewhere?  It's this kind of small minded thinking that hampers cities all over the country.  What can Milwaukee spend $200 million on that will generate its name in the news nationally, and to an extent globally....at least 82 times per year....year after year after year. 

I mean Jesus, Kansas City is trying to lure an NBA team.  Oklahoma City is suddenly a lot more known/talked about/recognized since the Thunder got to OKC - and it has energized that city, and given it a rallying point as a community to get behind.  Just as MKE does when the Bucks have been good and the Brewers have been good.  Sports is the only common denominator in society that largely brings people together regardless of age, religion, race, income level, and even gender. 

But, MKE can just let go of an asset other cities clamor for...and revert into a Des Moines or Omaha.