Scott Walker Double Dribbles On Milwaukee Bucks Arena Issue

On Sunday, Scott Walker was on Meet the Press with Chuckles the Toad and the subject of Walker giving a quarter of a billion dollars in corporate welfare to the billionaires that own the Milwaukee Bucks.

Walker tried to defend this indefensible scam with two main talking points:

1. The deal had nothing to deal with pay for play even though one of the owners gave Walker's PAC $150,000. and is Walker's campaign finance co-chair. Walker went so far as to say that Hammes wasn't even really a part owner of the team.
2. That the deal is fiscally conservative and good for the taxpayers.

As for the first point, it's pretty obvious that Walker is lying through his weasel teeth:

And it's noteworthy that one big beneficiary of the new arena will be Jon Hammes, a developer and a Bucks minority owner who sources tell CNN also serves as a national finance co-chairman for Walker's presidential campaign.

Hammes' business focuses on developing "strategic real estate assets, specifically in the healthcare and sports industries," according to the Bucks announcement when he took a stake in the team. And the Milwaukee Journal-Sentinel has reported his firm has been buying land near the planned arena site to develop office buildings.

Walker's second point, that the income tax from the players would pay for the taxpayers' money he's throwing at the arena, isn't really true either. Mike Ozanian raises several questions, such as will there be enough money to maintain the arena? He points out that if there isn't, taxpayers will be responsible to make up the short fall. He also points out that there are a lot of tax exemptions that Walker somehow fails to mention.

Then there's this:

Finally, the cost of the bonds is double the $220 million being advertised. The administration’s policy decision to structure the proposed bond issue so that the amount of debt service due each year on the bonds would be notionally tied to, or mirror, the additional income taxes results in an amortization schedule that cannot meet the interest due on the bonds in the early years of the transaction and back-end loads the repayment of principal to the later years of the transaction. This results in the bonding transaction having higher overall costs than if the amortization schedule had more uniform annual debt service payments.

Due to the negative amortization associated with the deferred interest, and the total interest costs associated with financing the $220 million would be $268.4 million, including $53.1 million in deferred interest. As a result, under this scenario, the total fiscal effect to the state associated with financing a $220 million grant would be an estimated $488.4 million.

So the cost is more than double what Walker is saying it is and there is no guarantee that they can raise enough tax revenue to make up for what Walker is spending.

But there's more. There's always more.

One thing that neither Toad or Walker mention is that there is no guarantee that the Bucks will be even around long enough to justify the cost.

Oh sure, the Bucks owners said that they will keep the Bucks in Milwaukee for at least 30 years. But that promise is only in place as long as they are the owners.

Pat Small, writing at the blog Urban Milwaukee, points out that the three main owners - Wes Edens, Marc Lasry and Jamie Denan - are all hedge fund billionaires. And how did these billionaires make all their money? By buying low, improving the value, selling off their property and moving on. There is nothing to keep them from following this paradigm with the Bucks:

From a business perspective, the optimal time for current Bucks owners to cash out would be within five to ten years. Let’s assume the team’s performance continues improving, the fan base expands and income keeps rising. There will be no fiscal reason to sit on this asset indefinitely. A new arena will rapidly depreciate in value (as they all do) and require higher maintenance costs and the team’s play could certainly fluctuate. And future TV deals may level off, because cable customers are unlikely to absorb endless fee hikes.

Conservatively, let’s say a new owner pays $1.1 billion for the franchise in 2025 — the present average price. However, current Bucks owners would not have to require the team to stay here. That promise was only between Kohl and Edens/Lasry because of Kohl’s insistence.

What about the clawback clause in the public-funding deal? It offers some relief for taxpayers, but it basically defines known costs for breaking the arena lease/construction contract. Present and future owners would simply factor into a sale the remaining debt.

Here’s a ballpark tally of what Bucks owners would have to pay taxpayers if the team is sold and moves in 2025: Roughly half of the total principal borrowed by county and state–or $55 million—would be due. With prepayments and other costs, that could reach $60 million. Wisconsin Center District bonding of $93 million would still be outstanding, although ticket surcharges would have covered some accrued interest. Payback for city borrowing could be about $20 million. That’s around $173 million.

Perhaps I’m underestimating. Say they have to pay $200 million. That still gives them a $450 million gain from a $1.1 billion sale that involves the team leaving Milwaukee. That’s a nice return on investment.

Thanks to Walker and the others behind this deal, it's a very real possibility that Wisconsin, especially Milwaukee, could be stuck with this monolithic monstrosity. But on the bright side, I bet it could hold many of the bankrupted taxpayers.

O Yeah, That Guy!

By Jeff Simpson

Scott Walker denied that politics played any part in his decision to hand the Bucks owners almost $500 million Wisconsin taxpayer dollars!

Walker noted in the interview that one of two major new owners of the Bucks, Marc Lasry, is a “major bundler” of contributions for Democratic presidential candidate Hillary Clinton. Lasry is “putting in $100 million,” Walker said.

“The previous owner, who is putting in $100 million, is a 25-year Senate Democrat (Herb Kohl),” Walker also noted.

“So, it has nothing to do with politics. That’s just ridiculous,” Walker said. “If it was about politics, there is no way I would do this deal. I don’t know the owners. I don’t care about the primary owners. I care about the taxpayers.”

The problem with that statement?  Like many of Scotty's statements is flat out "pants on fire":

A minority owner of the team is Wisconsin business executive Jon Hammes, a longtime Walker supporter and a current co-chair of Walker’s presidential fundraising committee. According to the New York Times, a company registered to one of Hammes’ family members donated $150,000 in May to a super PAC supporting Walker.

I guess we are forced to believe that Scott Walker does not even know his finance co-chair.  

Maybe Scott Walker is trolling all of us!!

Scott Walker, Chris Abele And The Bucks Arena Scandal

A couple of months ago, I reported that part-time Wisconsin Governor and full-time presidential wannabe Scott Walker and his mini-me, plutocrat and Milwaukee County Emperor Executive Chris Abele were hammering out a deal that would take hundreds of millions of dollars and give it to the new owners of the Milwaukee Bucks so they could build a palatial playground and buy all the land around it for their greater profit. Most of the money that Walker and Abele would give away would come from the poorest of the poor.

As I repeatedly tell the gentle reader, when it comes to all things Walker and/or Abele, there's more. There's always more.

Per the International Business Times, it appears that one man stands to really gain from the bailout of the sports franchise - Jon Hammes. Hammes just happens to be a part owner of the Bucks, a real estate mogul and, oh yeah, the finance co-chair of Walker's presidential campaign:

In the year leading up to the announcement of his presidential campaign, Wisconsin Gov. Scott Walker championed a high-profile proposal to spend a quarter of a billion dollars of taxpayer money to help finance a new Milwaukee Bucks arena -- all while pushing to slash roughly the same amount from state funding for higher education. One of those who stands to benefit from the controversial initiative is a longtime Walker donor and Republican financier who has just been appointed by the governor to head his presidential fundraising operation.

Real estate mogul Jon Hammes, who has donated hundreds of thousands of dollars to Republican candidates and causes, is a prominent member of the investor group that owns Milwaukee’s NBA team. Last week CNN reported that he also will serve as the Walker campaign’s national finance co-chairman. Days after that appointment, Walker’s Republican allies in the Wisconsin state Senate backed the governor’s proposal to spend public funds on a new arena for the Bucks.

In his speech announcing his presidential candidacy, Walker presented himself as a free-market conservative and derided what he called a “top-down, government-knows-best approach” to economic policymaking. Hammes serves on the board of a conservative think tank called the Wisconsin Policy Research Institute that says “competitive free markets, limited government, private initiative and personal responsibility are essential to our democratic way of life.”

But under Walker’s proposal, the government would redistribute taxpayer money to a project benefiting Hammes and other Bucks investors.

A representative for Walker defended the proposal, saying in a statement: “Governor Walker's focus is on protecting Wisconsin’s taxpayers from the negative financial impact of losing the Bucks, while balancing state and local support.”

A Walker campaign aide additionally asserted that it was “a dangerous leap” for International Business Times to ask about the propriety of subsidizing a deal in which Hammes could benefit. “The stadium deal has been in the works much longer than he has been involved with the campaign,” the aide said.

However, before Walker proposed the arena deal, Hammes had donated more than $15,000 to his gubernatorial campaigns, according to state campaign finance data. Federal records also show that over the last decade, Hammes has donated almost $280,000 to Republican candidates and third-party groups -- including more than $14,000 to the Wisconsin Republican Party. Hammes Company in 2010 donated $25,000 to the Republican Governors Association, which that year spent heavily in support of Walker's first run for governor. Jon Hammes also contributed $500 to Walker while he was a Milwaukee county executive.

One thing that the reporters missed is that Hammes is also on the long list of people who donated to Walker and benefited from Walker's Wisconsin Economic Development Corporation, whose sole purpose for existence appears to be to reward Walker's supporters with taxpayers' money.

While Abele doesn't have the direct pay for play ties with Hammes that Walker does, there is no doubt a special relationship between the two men. They are on many of the same organization boards, including the Greater Milwaukee Committee, which is nothing more than a country club for plutocrats.

Abele and Hammes also share the same love for plantation economics, which Hammes proved by stating, "No one gives a blank about low-wage workers." When the news came out that Hammes had made this vulgar comment, Abele was the first to rush to his defense.

Ah yes, crony capitalism at its finest - or worst - depending on what side of the 1% you're on.

'No one gives a blank about low-wage workers.'

Supervisor Theo Lipscomb (Left) and
former Supervisor Eyon Biddle

On September 25, 2014, the Milwaukee County Board held a regularly scheduled meeting. It was the day that Boss Abele was supposed to present his 2015 recommended budget.  However, showing his incompetence and/or disdain for the people of Milwaukee County, Abele didn't bother to show up.

So the Board went on with their other scheduled business.

One of the agenda items being addressed was the proposed sale of part of the Park East area to a local
plutocrat, Jon Hammes.

As Dan Bice of the corporate media giant Milwaukee Journal Sentinel breathlessly and recklessly reports, Milwaukee County Supervisor Theo Lipscomb brought up an issue of concern regarding the sale:

At the County Board meeting on Sept. 25, Milwaukee County Supervisor Theo
Lipscomb relayed a damaging story, based entirely on hearsay, about businessman Jon Hammes — the man behind the project — shortly before a vote on the proposal.

The 8-year-old rumor, Lipscomb said, had come from former Supervisor Eyon Biddle.

"In 2006, as a young organizer, working on behalf of janitors trying to get downtown property owners to pay a reasonable wage, Eyon was down with other janitors protesting outside of a meeting," Lipscomb said during the board meeting.

"They were being escorted out, and Mr. Hammes personally walks Eyon out, puts his hand on his shoulder and whispers in his ear, 'No one gives a blank about low-wage workers.' I felt he could say that to a young black man because he was wealthy and entitled. And who was this kid anyway?"

It was an incredibly rash and harmful charge against one of the Milwaukee area's most powerful and community-minded businessmen. The County Board eventually voted to send the proposal back to committee.

Needless to say, Hammes and his friend, Abele, were outraged about this story getting out:

"There is no truth to those allegations," said Hammes' attorney, Marc Marotta.

On the day that Lipscomb made his remarks, Hammes was named to the Marquette University Board of Trustees. He also sits on the boards of the Medical College of Wisconsin, the University of Wisconsin Foundation, the YMCA of Metropolitan Milwaukee, the United Way of Greater Milwaukee and Teach for America.

Marotta added, "It's a real embarrassment to the county and to the area that someone in Theo's position would make such an irresponsible statement based on hearsay about someone who has done so much for our community."

Equally upset was Milwaukee County Executive Chris Abele, who backed the deal. Abele said he has worked hard with other officials to turn the largely empty and ignored Park East corridor into an attractive location for businesses.

"However, when developers see personal attacks like this from elected officials, it makes it hard to convince them to work with us and even harder to get them to invest in Milwaukee County," Abele said via email.

Except that what Lipscomb said was absolutely true.

Unlike Bice, I had no problems contacting Biddle, who attested that the story is accurate. Biddle also told me that he tried to call Bice twice, but Bice never got back to him before running the story.

Biddle also commented about the story on his Facebook page:

This story is absolutely true. Dan Bice and I played phone tag so I was unable to reach him to provide further context. Jon Hammes telling me that he didn't give a shit about low wage workers pretty much made me who I am today.

I applaud Supervisor Theodore Lipscomb and his leadership on this issue. He is looking out for working class people.

"They were being escorted out, and Mr. Hammes personally walks Eyon out, puts his hand on his shoulder and whispers in his ear, 'No one gives a blank about low-wage workers.' I felt he could say that to a young black man because he was wealthy and entitled. And who was this kid anyway?"

Contrary to Bice's allegations, the story is not hearsay. It is factual.  (Ironically, at the bottom of the same article, Bice is forced to correct something else he inaccurately reported. And that's not the first time either.)

Boss Abele trying
to buy his way out of
another mess.

Another thing Bice failed on is reporting that Hammes is one of the people that received WEDC money and then turned around and  held a fundraiser for Scott Walker.  Apparently, Hammes isn't quite the upstanding pillar of the community that Bice and Abele are trying to pretend he is.

But it does help explain why Boss Abele was so willing to stand up for his fellow plutocrat and friend of Walker's instead of the working people and taxpayers of Milwaukee County.

It is disappointing, but not surprising, that Abele would again take the pro-plutocrat, pro-poverty, anti-worker position again.  He has done it repeatedly in the past four years, most notably with Palermo's Pizza.

It is outrageous that Abele and his friends are not just trying to ram their plantation economics down our collective throats, but that they are doing it so blatantly and arrogantly.

Needless to say, Hammes, Abele and Bice all owe Lipscomb an apology.  And since they lied about Lipscomb publicly,  the need to apologize to him publicly.

Then the Board should take a long hard look to see if Hammes is really someone they want to do business with.

Finally, the voters and taxpayers of Milwaukee County should take a long hard look at Abele and his long string of unacceptable behaviors and wonder if we really need an elected county executive that is unaccountable to the people.  Then they should vote yes to restoring democracy to Milwaukee County.