Tuesday, June 06, 2006

Chicago Not Shedding Tears Over Loss of Big Ten Tournament

While Indianapolis officials were performing cart-wheels in celebration of the Big Ten's decision to host the men and women's basketball tournaments in Indianapolis for a 5-year period beginning in 2008, the losing city, Chicago, took the loss in stride. The Chicago Tribune best sums it up, "Basketball fever led Indianapolis to outbid Chicago for a five-year run of the Big Ten men's and women's basketball tournaments, an outcome announced Monday by the Big Ten Conference."

Indianapolis gave the Big Ten an offer it couldn't walk away from. The City will pay $400,000 a year to the Big Ten, or a total of $2 million, plus establish a privately funded scholarship endowment worth $250,000 and run a job fair for Big Ten students. Compare that to the total package Chicago offered worth $200,000, or less than one-tenth the size of Indianapolis' offer. It offered to host a FanFest party at Navy Pier; to provide subsidized transporation between the United Center and downtown attractions; and to contribute marketing services.

It makes you wonder if Indianapolis really wasn't just bidding against itself. Allen Sanderson, a sports economist at the University of Chicago, makes this point to the Tribune. "You could have won because you know more, or you could have won because they know more than you do and they realize you went far beyond what made sense to do," he said, noting that Indianapolis has used incentives in somewhat of a big way."

Mayor Peterson told the Tribune that the city tries to use incentives judiciously, but that was hardly the case here. It should be pointed out that the Big Ten first began hosting the tournament here in an effort to make financial gains. It also liked the fact that Conseco Fieldhouse is downtown and within walking distance of hotels, restaurants and other attractions. "At least for the next period of time, the conference felt the tournament would be best served in an environment that was a little more cohesive and intimate, in terms of hotels, restaurants and the venue," said [conference commissioner Jim] Delany.

The Tribune article also notes that the Big Ten conference is hoping to build attendance at the tournaments, which provide about $4-$5 million in revenues annually. The primary reason Indianapolis offered for the $400,000 a year incentive was to make up for the smaller capacity of Conseco Fieldhouse, which holds about 4,000 fewer people than the United Center. This year's men's tournament in Indianapolis drew 90,763 fans for an average of 18,153 patrons per session. Conseco's capacity is 18,354. That suggests to me that, even with the smaller capacity, Indianapolis was drawing more fans than the event drew in Chicago's United Center.

An important economic point in the Tribune article deals with the financial gain from the event. The men's tournament has triggered about $15 million in spending over a long week-end in Chicago, which is nothing to sneeze at. However, that is about one-fifth the amount that is generated by a large trade show. While Indianapolis gains from hosting the Big Ten tourneys, it potentially will be giving up much larger trade show revenues. With all the hotel space occupied for the tournament, a tradeshow at the convention center that weekend is out of the question. Instead, Indianapolis will offer up free convention space for a job fair for Big Ten students.

WXNT's Abdul In The Morning plans to take up discussion of the Big Ten tourney deal during its Wednesday morning broadcast. AI Editor Gary R. Welsh will be joining in the discussion at about 7:05 a.m. Tune in to learn more.

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