The three new principal owners of the Milwaukee Bucks pro basketball team are major Wall Street investors and hedge-fund operators boasting an estimated $6.6 billion in combined net worth.
So when the National Basketball Association seeks to enforce its rule that every arena be no more than 25 years old (regardless of the facility’s condition and money-generating capacity), why shouldn’t the three principle new owners—Marc Lasry (net worth: $1.7 billion, according to Fortune), Wes Edens ($2.5 billion) and Jamie Dinan ($2.4 billion) be expected to cough up the needed $500 million for the new facility?
But the notion of insisting that men of such immense wealth entirely finance the building of a new Bucks arena–even though it will be the most crucial facility of a private corporation—has become disqualified from serious consideration. The prevailing myth embraced by elected officials and their allies in major corporations is that major-league sports franchises are indispensable public assets, even though they are privately owned and profits flow exclusively to team owners. Much the same rationale underlies the estimated $80 billion that states hand out annually to major corporations in subsidies across the nation.
So it was no surprise when Wisconsin Gov. Scott Walker and Milwaukee’s corporate elite recently persuaded the State Legislature to eagerly swallow the toxic Kool-Aid disguised as the conventional formula for development, providing $250 million in state funding toward the estimated cost of a half billion dollars for a new Bucks arena. Some members of the huge Republican majorities needed a bit of nudging, but in the end most went along with Walker’s plan.
However, the state’s final tab could rise to as much as $400 million to $800 million, estimates Urban Milwaukee editor Bruce Murphy, who correctly predicted ever-soaring public costs for the Milwaukee Brewers baseball stadium.
Even if the cost does not climb that high, Walker’s allocation of $250 million for the Bucks’ stadium seems far more based upon his presidential ambitions, which are clearly tied to retaining the Bucks franchise in Milwaukee, than on the state’s urgent needs.
Wisconsin, long known for its tradition of progressive, pro-worker legislation, has suddenly veered under Scott Walker in a “Wis-issippi” direction of a Southern-style, starkly-low low wage economy and declining public education and other public services, with wealth increasingly transferred to the top 1%.
Wisconsin’s condition is palpably deteriorating:
ROBBING COLLEGE SYSTEM TO FEED ARENA OWNERS. The prioritization of funding for the new arena—for a team whose chief owners are Wall Street billionaires—illustrates the harsh turn that the state has taken under Walker. For example, the $250 million dedicated to the Bucks’ arena approximates the devastating cuts imposed on the long-prized University of Wisconsin system, whose excellence is certain to suffer under the weight of major budget slashing.
SHRINKING MIDDLE CLASS. “Wisconsin ranks worst among the 50 states in terms of a shrinking middle class, with real median household incomes here falling 14.7 percent since 2000,” according to a summary of the important report released by the Pew Charitable Trust in March. Wisconsin has suffered a loss of 14.7% of its middle-income jobs since 2000, more than double the national average of 7.2%.
JOB GROWTH AT LOW END. Wisconsin has consistently lagged behind the national average in job growth despite Walker’s central campaign pledge of creating 250,000 jobs in his first four years. During the first four years, actual job creation reached only 146,795, ranking 33rd in the nation in 2014.
Moreover, the growth of low-wage jobs far outweighed small gains in middle-income and higher-end jobs, which were offset by big losses. All of the net job growth occurring between 2010 and 2013 in Wisconsin has been concentrated in low-wage jobs paying under $12.50 an hour, accord-ing to a recent study by Prof. Marc Levine of the University of Wisconsin-Milwaukee Center on Economic Development.
Most notoriously, Walker targeted public employee bargaining rights and take-home pay in early 2011 with a “divide and conquer” strategy Act 10 rammed through in 2011 despite rallies of up to 150,000 people at the State Capitol in Madison. (Much like a segregationist Southern governor of the 1960s faced with massive civil-rights demonstrations, Walker has insisted that the huge crowds were largely from “out of state,” and topped that by claiming that his “standing up to labor” demonstrated his ability to take on ISIS.)
Walker has followed up on Act 10 with a new series of measures designed to drive down wages and silence the voice of labor in the workplace and in the voting booth. Contrary to numerous pledges Walker made in recent years, Walker signed Southern-style “right-to-work” legislation in March designed to discourage union dues and to weaken private-sector labor. He followed that up with the weakening of “prevailing wage” laws upholding pay levels on public construction projects.
BLACK POVERTY IN MILWAUKEE TOPS NATION. Just a few days before the $250 million state support for the Bucks arena was passed thanks to a Legislature stacked with Republicans in part due to extensive gerrymandering, the Milwaukee Journal-Sentinel—a staunch backer of public funding for the arena--gave prominent coverage to a new study on the state of African-Americans in the Milwaukee metro area. Fully 38% of blacks in Milwaukee are mired in poverty, substantially more than even such sinkholes of misery as Detroit.
Where in 1970 Milwaukee black households earned 121% of the national average for their counterparts, it is now 20% below. The loss of 80% of Milwaukee’s manufacturing base and substantial cuts in public-sector jobs, many due to Walker policies. The lack of opportunities has helped to fuel a sharp increase in homicides among black youth, after years of steady decline.
NEGLECTING PLAYGROUNDS TO FUND BILLIONAIRES PLAYPEN. Milwaukee’s public basketball courts and other playgrounds are in deplorable shape, as a study by the community group Common Ground dramatically demonstrated.
Unfortunately, experience shows virtually nonexistent spillover effects from the allocation of funds to billionaire team owners.
A pioneering 1984 study—since reinforced by a number of additional surveys—by Lake Forest College economist Robert Baade examined thirty cities that had recently constructed new facilities. His finding: in 27 of them, there had been no measurable economic impact; in the other three, economic activity appeared to have decreased.
But in contrast to the limited if not non-existent benefits to the community, to win the funding for the arena, Walker had to overcome considerable resistance to the arena funding due to conservative reluctance to subsidize private firms and hostility to the liberal city of Milwaukee with its majority of blacks and Latinos.
But Walker’s willingness to take on this fight and win over fellow Republicans was reinforced in financial terms that are always meaningful to the ambitious Wisconsin governor.
Citing the International Business Times, journalist Bruce Murphy noted, “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.”
Roger Bybee is a Milwaukee-based writer and University of Illinois visiting professor in Labor Education. He edited The Racine Labor weekly for 14 years. Email winterbybee@gmail.com.
From The Progressive Populist, September 1, 2015
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