The Milwaukee Bucks have said the team will be moved if they don’t get public funding for a new arena, and there’s a financial reason to think this is not just an idle threat.
Bucks president Peter Feigin recently spoke about the arena situation at an informational hearing held by the Wisconsin state Legislature’s Joint Finance Committee, according to Mark Kass of Milwaukee Business Journal. Feigin told the committee construction on a new arena must begin in the next three-to-five months or the NBA will buy the team and move it to Seattle or Las Vegas.
Feigin confirmed that when Wesley Edens and Marc Lasry purchased the Bucks in early 2014 for $US550 million, there was a provision placed in the purchase agreement that allowed the NBA to buy back the team for $US575 million if the city did not meet a certain deadline for a new arena.
An earlier report said the NBA could buy the team if a deal was not in place for a new arena by November 2017. However, according to Feigin, construction of the arena must be completed in time for the 2017-18 season and the contract requires a new arena to be approved and construction started by the end of 2015.
“The window is closing. We can’t wait months, even weeks to start the public process,” Feigin said. “The NBA does not want the Bucks to extend the lease in an inadequate facility.” The Bucks’ current lease expires after the 2016-17 season.
This did not seem like that big of a deal when the Bucks were sold in 2014 because there was time to build the arena and there would have been little to gain for the NBA by purchasing the franchise.
But then the Donald Sterling fiasco in Los Angeles happened and Steve Ballmer bought the Clippers for $US2 billion. Now, with the deadline looming, the Bucks have yet to get approval for $US250 million in public funding for a $US500 million arena, and the team is now worth more than $US575 million.
Forbes’ most recent valuations say the average NBA franchise is now worth $US1.1 billion. The Bucks would likely go for more than that if they were sold with the promise of moving the team to a new city with a new arena generating much higher revenues.
Now, what originally looked like a conspiracy theory proposed by Bill Simmons is looking more plausible.
It goes like this: If the Bucks fail to get a new arena approved, the NBA will buy back the Bucks and then turn around and sell it to the highest bidder in either Seattle or Las Vegas for as much as $US1.6 billion. That would be a cool $US1 billion profit for the other 29 NBA owners.
Another scenario would allow Edens and Lasry to keep the team and move it to Seattle (or Las Vegas) after paying the NBA a relocation fee, likely in the hundreds of millions of dollars. Under this scenario, the other NBA owners still get a hefty pay day and Bucks owners get to keep an NBA team in a new arena that is still worth more than the total amount they paid in 2014.
At the same time the NBA could potentially solve another league problem, The Curious Case of the Missing Seattle Franchise, something that has become a league priority in recent years.
More importantly, both scenarios have the city of Milwaukee losing their NBA franchise in much the same way Seattle lost the Supersonics in 2008, and the NBA owners could make a lot of money if it happens.
The clock is indeed ticking.
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