Gov. Scott Walker (R) may have cut $300 million from the University of Wisconsin system, but he’s nonetheless pledged to spend $200 million in taxpayer money to build a $500 million arena for the Milwaukee Bucks. The long-struggling NBA team is owned by a trio of billionaire hedge fund managers — Wes Edens, Marc Lasry, and Jamie Dinan — whose combined net worth is about $5.47 billion as of June 2015, according to their Forbes profiles.
When they purchased the team last year, a clause in the terms of sale declared that if the Bucks didn’t have a new arena by 2017, the owners can move the team.
For those keeping score at home, these three billionaires are worth 11 times what the arena is supposed to cost. They and the previous owner have pledged to kick in about $250 million, or 4.5% of their combined net worth. Walker, along with county and local officials, will post $200 million from Wisconsin taxpayers — an amount that with interest could balloon into as much as $400 million.
As an added irony, last year Walker cut taxes — that is to say, revenue — by $541 million, a move that prompted his state to miss a debt payment this year. Not surprisingly, the governor’s been wrangling with the legislature over what and how much will be cut from the state’s budget, and it looks like many road projects will be on the chopping block.
Considering that Wisconsin’s roads are ranked third-worst in the country, this could be problematic unless Walker plans on appointing Doc Brown to be his transportation secretary.
Since becoming governor in 2011, Walker has undertaken a cartoonishly sinister reverse Robin Hood act, of which the Bucks arena deal is most certainly the climax of this virtuoso performance.
In 2011, Walker infamously neutered Wisconsin public sector unions by stripping collective bargaining rights from most of them. In 2014, his state was just one of four in the nation to cut food stamps — a move that has disproportionately hurt the elderly and the disabled. Earlier this year he was actually forced to back away from a plan to drug test food stamp recipients. Now, thanks to Walker’s attack on the University of Wisconsin system — in which the $300 million in cuts are just the latest salvo — there have been “[d]ouble-digit tuition increases and historic, unprecedented budget cuts,” that “have resulted in declining enrollment, rising costs, and exploding student loan debt.”
The governor has defended his Bucks corporate welfare plan on the grounds that spending government money on a new arena will generate tax revenue for the state. “It’s cheaper to keep them,” Walker said at a press conference in which he argued that the tax revenue that would be generated by the arena would notch the state a three to one return on its investment. But economists have long been skeptical of the economic benefits of sports arenas. As Professor Victor Matheson of Holy Cross told The Atlantic, “Take whatever number the sports promoter says, take it and move the decimal one place to the left. Divide it by ten, and that’s a pretty good estimate of the actual economic impact.”
Beyond the fuzzy arena math, Walker’s motivations may be political. Two of the Bucks’ owners — Edens and Lasry — are big donors to the Democratic Party, in addition to being well-connected veterans of the financial industry. Walker’s gift-wrapped arena deal could be an effort to flip them to his side for his all but certain presidential run, or perhaps even just an attempt to keep their money on the sidelines in 2016.
Whatever the case, Walker has already shown he’s not afraid to help people and companies who already have the means to help themselves. His notorious Wisconsin Economic Development Corporation doled out tens of millions of dollars in loans to private companies in the hopes they’d create jobs. But as Think Progress noted,
“Since its creation in 2011, the WEDC has been plagued by scandals. An audit in 2013 found the agency repeatedly failed to follow state laws regarding the use of public funds. And in 2014, two corporations that received millions taxpayer funds from the WEDC, Eaton and Plexus, outsourced jobs to Mexico and other foreign countries, and laid off hundreds of Wisconsin workers.”
The plight of the WEDC was so embarrassing, Walker had no choice but to eliminate the agency.
It’s safe to say we know exactly what Walker’s priorities are, and can be summed up this way:
If you’re a public school teacher, a low-income elderly or disabled person, a University of Wisconsin student, or a member of any number of other groups that have been politically marginalized by the governorship of Scott Walker, he has a message for you: Tough shit.
But if you’re a billionaire hedge fund manager — or three billionaire hedge fund managers — who can afford to build your own basketball arena, but don’t want to because you know you can squeeze some dough out of the public officials who don’t want to be known for letting the Bucks/Brewers/Packers to pack up and move to (insert out-of-state city here), Scott Walker has a very different message: How much do you want?