Monday, October 22, 2007

Stadium Financing Issue Not Being Addressed In Mayoral Campaign

It's the big elephant in the room nobody wants to talk about. While the construction of Lucas Oil Stadium is on schedule to open next year, it is far from resolved just how the city's Capital Improvement Board of Managers is going to find a nearly $10 million a year gap in paying annual operating and maintenance expenses on the stadium. Mayor Peterson earlier indicated he wanted to use tax revenues earmarked to pay down the construction debt on the new stadium, but he needs legislative authority to do that and Gov. Daniels and the legislature is opposed to using the stadium tax revenues for anything but the retirement of the construction bonds.

Gov. Daniels' position makes perfect sense. The Capital Improvement Board diverted taxes intended to be used to pay off the construction bonds for the RCA Dome. As a consequence, taxpayers will still owe about $75 million on a building it will pay to demolish next year to make way for an expanded convention center. The original cost to construct the RCA Dome was $77.5 million. Some may recall taxpayers were promised the tax increase to pay for the RCA Dome would only be a temporary tax that would go away once the construction bonds were retired.

Our local news media should make the mayoral candidates make a firm commitment on their plans with respect to paying the operating and maintenance expenses on the Lucas Oil Stadium. The truth is the deal Peterson struck with Jim Irsay and the Colts is the most one-sided, pro-team owner stadium deal in the history of modern, stadium financing. In its negotiations with Irsay, the City gave away the naming rights, as well as stadium concessions and non-football event revenues. The Colts aren't required to pay any of the costs to maintain the stadium, leaving the taxpayers holding a huge bill. Rightfully, Irsay should be required to pony up his fair share like other team owners around the country, but he earlier said he wouldn't. It is simply unacceptable to expect taxpayers to subsidize this team any more than it already has.

The next mayor is going to face a very difficult decision in his first year in office. If the state holds firm in its position that the tax revenues be used only for construction debt, Marion County will have to look elsewhere to find the money it will need to operate the costly new stadium. Voters have a right to know how Bart Peterson and Greg Ballard plan to resolve this dicey problem.

20 comments:

Anonymous said...

Instead of the CIB using the earmarked tax dollars to pay off the Dome debt they used it instead to build Conseco Fieldhouse and Victory Field. Several million dollars more were used by the CIB to buy more real estate downtown and private deals were worked thru the Bond Bank all to the advantage of private developers.
Please refer back to Peterson's campaign report for who the pigs were that fed at the trough and continue to feed at the trough.
The CIB is accountable ONLY to the Mayor as is the Bond Bank.
Taxes WILL need to be raised to pay for that $10 mil a year shortfall to maintain the Lucas Oil Can.
Bart said NO NEW TAXES yesterday?
Right, and my pet turtle needs Viagra too.
Voters are really really stupid in this town aren't they.

Anonymous said...

Most people have forgotten just how highly involved Mike O'Conner was in negotiating the deal with the Irsay. In fact, O'Conner was the main man on the point in the beginning not Fred Glass.
Then the nasty Irsay drug scandel came up and soon after O'Conner left as Deputy Mayor to go to Bose McKinney.

varangianguard said...

John Dillon "led" the Bond Bank for quite a while. No doubt because of his sharp mental acuity and "management" skills.

Sir Hailstone said...

Unreal. And it's this crowd that wants to lead this city?

Thing is, pro sports is cyclical. We're winning now just like the Chicago Bulls won every year in the 1990's. Eventually Peyton will retire and the team will essentially dismantle, and we'll be back in the sub-6 win seasons just like the few years immediately after the moved here from Baltimore. They won't be on TV and they'll be playing to an expensive, but empty stadium.

This "deal" was for what? 20 years? I'd wonder what outs the Colts would have such as if Irsay would sell the team or if there are successive low attendance years

Anonymous said...

Gary, the "next mayor" will be the current mayor.

And I don't know where you get your information, 6:00, but Fred Glass was the main point man on negotiations at the beginning, middle and end.

He did a lousy job, but he was the point man.

As for Conseco and Vic Field--Gary, are you sure the IndyU conspiracy wingnuts aren't writing some of this? You might want to check into the facts. And while you're at it, ask Bruce Shumacher, whose family benefitted from the Vic Field deal. He's running for council. Shouldn't he explain his family's involvement and benefit?

That knife cuts both ways. But let's be sure it cuts with facts, not crap.

Bart Lies said...

Anon 7:24 once again illustrates that good things are a politicians credit and bad things are somebody else's fault.

Bart is either in charge or he's not. No picking and choosing.

Anonymous said...

The city - rather, the taxpayers - also have been paying and will continue paying in excess of a million bucks a year for the Colts "gameday expensese".

Sir Hailstone said...

"Bruce Shumacher, whose family benefitted from the Vic Field deal."

Major League Baseball (yes I know the Indians are minor league but the Major League clubs control them through affiliations) told the Indians that old Bush Stadium was no longer up to standards for professional baseball. It was showing its age, it was right at 100 years old - it's up there with Fenway and Wrigley as ballparks go.

The Schumachers put up some money towards the new ballpark. That was a win-win situation. Even now you can take a family of four to an Indians game and not take out a second mortgage to do so. Try that at a Colts game. I assume with adding outfield seats, Victory field can become a major league ballpark if Indianapolis were to ever be awarded an major league team. One difference being the Schumachers weren't as I recall threatening to take the Indians and move to Los Angeles. Unlike the Irsays with the Colts.

Frankly the Lucas Oil Can deal was a win-lose. A win for the Irsays, and a loss for the City.

Anonymous said...

Hail, according to city lease documents, the Indians organization, which never threatened to leave, put up $55,000 for the new Victory Field. That "deal" was completed under Goldsmith.

And yes, their games are a bargain.
So was their "investment."

An inconvenient truth regarding Lucas Oil Stadium, is that its construction allows for the current Dome to be demolished, and replaced with convention space.

I talked last week with a relative in town for the HWI Do-It-Best show. Three times a year, fill every hotel...each show generates $12-15 million in revenue for hotels, etc.

They were going to leave unless they got more convention space. Ditto with the auto racing world, whose twice-a-year convention and show already left, but will return when the new space is finisihed.

If the mayor's folks had not found a way to build more convention space, the IndyU nutterballs would be screaming today about all that biz the city lost as a result of Bart's negotiatiing prowess, or lack thereof.

I wasn't thrilled with Fred Glass's negotiating "skills" either, but the added convention space was a must for our city. So I'd respectfully suggest the Lucas Oil Stadium deal was a no-win-no-lose situation, considering all facts. It could definitely have bene better.

Sir Hailstone said...

5:39 - I agree. We needed more convention space. Keeping FDIC, PRI, and the other large conventions here is a good thing.

What I'm disagreeing over is how it seemed everything was "given away" to the Irsays, that's all. At least the Mayor's people could have ensured the stadium would have paid for its own operation rather than being what appears to be a black hole.

Of course what we don't know is how much was Los Angeles willing to put up to bring the Colts to them.

Anonymous said...

Wondering if Lucas Oil moved it’s headquarters from California to Indiana yet?

Lucas Oil to stay in Corona, California

According to “The Business Press” :

A Corona motor oil company has decided to remain in town rather than move its headquarters to Indiana.

“It doesn’t look like it’s in the plans right now,” said Robert E. Patison, executive vice president for Lucas Oil Products Inc. “It’s not out of the question, but it’s not happening at this time.”

10:43 AM PDT on Monday, October 1, 2007

By DARLA MARTIN TUCKER
dtucker@ thebizpress.com

Anonymous said...

White Elephant

A white elephant is a supposedly valuable possession whose cost (particularly cost of upkeep) exceeds its usefulness, and it is therefore a liability.

Jason said...

Well, no offense to the Colts fans out there, but this isn't a pro football town. Go to Buffalo, Green Bay, or Pittsburgh and you'll see people who will go to games regardless of wins/losses. Heck the waiting list for Green Bay season tickets goes well into the next century.

There's a lot of parity in the NFL. Like someone said, when Peyton or Bill Polian calls it quits, we'll be back where we were before with local blackouts because nobody cared.

Anonymous said...

The terms of the Colts lease notwithstanding, it's important to note that already booked into the stadium and expanded convention center are more than 50 groups who will bring 1.8 million attendees who will spend an estimated $942 million in Indy.

Sir Hailstone said...

Just for comparison sake ...

How many people attended the three events at IMS in 2007? I'd say with infield on oval events, 1 million [yes I know IMS doesn't release attendance figures] - 400,000 for the "Month of May", 100,000 for Formula One, and 500,000 for Allstate 400. What kind of economic impact was there? $500 million or more? Formula One itself was probably $50 million by itself because it was mostly out of country visitors, staying in hotels, exchanging their home currency for greenbacks and leaving them here.

How much does any public entity put into the maintenance and construction of IMS? ZERO. OK so police are used to direct traffic - still a small price to pay compared to the impact of the events at IMS.

So it doesn't NECESSARILY take public money to bring in money, it's just how someone has chosen to do things.

Anonymous said...

Hail, you almost make the point for diversified sports offerings, and improved convention space for larger events. The George family does it with little or no public incentives, and bully for them. They're extremely rare. They also own an iconic faciltiy whose value is priceless. How many other sports facilities in the world are uniquely linked with that sport? None. And they've spent hundreds of millions keeping it current over the years.

I am familiar with organizations who book conventions--large ones. And they indicate Indy is a fine host because most people conventineers encounter are friendly and helpful, and the cost is lower than most other venues.

And, they note, interest in the city increased dramatically after the Super Bowl win, and after the Pacers' Finals appearance a few years ago.

All of which indicates we shouldn't give away the store, but we cannot ignore the impact of all kinds of sporting events.

Sports is an escape, be it auto racing or football. Now more than ever, we need escapes.

And please Mayor Bart, in your third term, do NOT let Fred Glass anywhere near improtant negotiations. The man's a rank amatuer. If he needs something to do in his spare time, now that he isn't the new BD managing aprtner, I've got a regular poker game that would LOVE his kind of negotiating skills. Love it.

Grover said...

Amen, Hail.

F1 was estimated, even in its recent waning years, to still bring in around $100 million. And as you stated, that's out-of-town/state/country money making its way here. Not a bunch of bandwagon jumpers who are going to stop going to games when the wins go down; but devoted fans who travel half way around the world to watch an hour and a half race. That's very valuable exposure in my opinion.

That's why I can't understand why Bart said this city could afford to lose that event. You had other people talking about what Super Bowl exposure can do for the city, now magnify that with the 2nd most popular sport in the world. And guess what, hayseed nay-sayers, just because it's not popular in the Heartland doesn't mean it's stupid or a bunch of foreigners. If air time during the Super Bowl is so precious to tourism, where does global exposure land? Astronomical?

Enjoy paying $200 a seat to a stadium you've already poured your tax dollars into. Irsay will be too busy counting his money to thank you for your contribution.

Anonymous said...

Grover, Hail ... such bitterness. It's too bad but, whatever makes you happy, er, unhappy.
For the record, F-1 bailed on Indy, not the other way around. His royal highness, Mr. Ecclestone, was the one who said F-1 didn't need the United States. He also insisted on a deal that made F-1 virtually unprofitable for IMS, especially when considering how much the Hulman-George family spent to make the Speedway F-1 ready.
Fortunately, IMS has moved to bring in a worthy replacement in MotoGP and I believe it will be enormously successful because, unlike F-1, MotoGP sees itself as partners with IMS.
As the other poster noted, IMS is highly unusual in what it can provide without cost to taxpayers.
And the fact is, Indianapolis is no different than most major American cities who have come up with funding for sports venues. Most (but not all) have some form of public subsidy. Again, you don't have to like it, but that's the way it is. That is also the case around the world.
In the case of Lucas Oil Stadium (and the RCA Dome) Indianapolis actually was smart to build facilities that could serve multiple functions and host conventions, trade shows, concerts and other sports. Do you know that of the 16 largest conventions that come to Indy, 15 use the Dome and, likewise, will use LOS moving forward.
And the funding does not come from property taxes, but from food and beverage, rental cars and hotel taxes. Much of that money is generated from visitors.
Did you know that tourism generates more than $700 million annually in tax revenue? Did you know that visitors spend more than $3 BILLION annually in Indy? I'm guessing you didn't.
Finally, yes, the Colts won't continue to win at their present rate forever. Teams go in cycles. And even though there is currently a 25,000 waiting list for Colts tickets, there may indeed come a time, post-Manning and/or Polian, when they're not an instant sellout. But LOS won't be dependent on Colts' sellouts for its viability precisely because it is a multi-use building. The NCAA agreement alone is worth an estimated $3 billion.
I realize this won't convince you critics otherwise. That's OK.
And yes, I will enjoy my $60 seats that I've worked hard to have the discretionary income to sit in.

Grover said...

Anon. 12:34,

I am extremely aware of Tyrant Ecclestone's shenanigans with the USGP. I never missed a single day of action whenever the race was in town. He is a PR nightmare for the sport, and there is no one in racing I admire more than Tony George; both for his efforts to bring F1 here and for his shunning of the podium ceremony after the 2005 race debacle.

There was nothing Tony, the city, or even the country could do to save that race, in my opinion. That is unless we wanted to pay a ridiculous amount to have it back. And see, that's where Tony's class kicked in and he realized instead of going to the city and asking for a huge favor (a la Irsay), he let them walk.

My question is also why does Irsay get kickback from non-Colts related events if we're the ones paying for the place? Bart said on WTHR Sunday morning that the most the Colts could use it was 12 games a year. My question right away to him (were I Kevin Rader) would have been why in the world does the owner of the team make money off of everything else held there AND the naming rights? The naming rights money should've went straight into the kitty!

At what point do the people that having nothing to do with the Colts get repaid for their efforts? Irsay has nothing to do with a majority of the conventions except that his team plays in the same building yet he's going to be raking it in for quite a while until he threatens to leave town again.

I am extremely bitter about this. I have every right to be. I live almost exactly one mile west of the Dome/Stadium and the value of my home has dropped nearly 1/3 since I bought it three years ago, yet Irsay's monument seems to be right on schedule.

Anonymous said...

Did you know that tourism generates more than $700 million annually in tax revenue? Did you know that visitors spend more than $3 BILLION annually in Indy?

Figures don't lie, but people lie with figures. I seriously doubt that $3,000,000,000.00 is spent the way you want us to believe. The problem is how they define "visitor." I don't live in Indy, but I live in the area. I do most of my shopping in Indy. Does this mean I am a "visitor?"

The one thing I do not like, which backs the "Bart Lies" crowd, is that many months ago Bart was on a local TV news broadcast saying that once the new stadium and CC is up and running, we would not have budget problems in terms of public safety. He said that, period. He painted a picture of a windfall of local tax income that would pretty much shore up the pensions and other costs with the police/fire issues. He obviously lied, and likely knew he lied, otherwise why would he need an income tax hike? My guess is that the state is doing their part with the Ir$ay Tax being a regional tax. Considering one county did not go for it, despite the bribe, shows that there is only so much surrounding county residents are willing to put up with. My guess is that after the thing is paid off, that tax will go bye-bye, or more likely, the surrounding counties will push big to keep it, all of it. Marion Co. can keep their taxes in placed to pay for the upkeep. However, it will be a long time before those bonds are paid off. Until then, Bart will need money somewhere, so all that windfall he talked about must be going towards upkeep?