Friday, September 12, 2008
Time To Pay Up, Irsay
According to Forbes Magazine, the value of the Indianapolis Colts jumped from 21st in the NFL to 8th because of the new Lucas Oil Stadium we paid $720 million to build for the team's owner, Jim Irsay. The Colts franchise is now worth $1.076 billion. The Colts pay us no rent and nothing for the operating and maintenance expenses for the costly stadium. The City of Indianapolis is broke and simply can't afford this stadium. It's time for him to step up and pay something, acknowledging that the taxpayers were never represented at the negotiating table when this one-sided stadium deal was cut during the administration of Mayor Bart Peterson.
Subscribe to:
Post Comments (Atom)
29 comments:
I thought it was Mitch that cut the final deal.
I've really just about had it with that lie. Every time this subject comes up, partisan Democrats come on this blog and claim Daniels is the one who struck the lease deal with the Colts. That is an absolute lie. He and state lawmakers only provided a state financing mechanism for levying a food and beverage tax on the surrounding counties, along with Marion County, to pay for the debt service on the bonds. The lease the Colts signed is between the CIB and Irsay. Peterson inked that deal before he even knew what the state package was going to be. He knew that there was no money to pay the operating/maintenance expenses but he went ahead with the deal anyway, hoping he could later convince lawmakers to allow the diversion of revenues intended to pay off the construction debt for operating and maintenance expenses.
Um. The deal the city made to build the stadium/convention center is legally binding, no? Care to explain just under what legal grounds can you or the city tear up this legally binding agreement? I mean, the city had to pay the Colts $48 million to break the lease remaining on the RCA dome (which was what, three years). Can you imagine just how much money the city would be on the hook for if they tried to rip up THIS agreement with 29 years left on the lease?
Here's an idea.
The Indianapolis parks are falling apart, and severely in disrepair due to financial problems going back to the Peterson administration. Since it was under Peterson's watch that one of our greatest assets, the parks, became so dismal, and the fact that Peterson gave away a lot of the store to the Colts, how about having the Colts adopt the Indianapolis Parks. We have corporations that adopt highways and medians, so why not a corporate sponsor for the parks.
I don't care if they have signs all over the place saying, "This park adopted by the Indianapolis Colts" either. It would be great PR for the team, the city gets an asset taken care of, and the citizens feel like that at least they got kissed.
So he and legislature just raised taxes instead of asking Irsay for more money? Ok, that's better.
I think a case could be made that the deal was put together by a team of folks in cahoots to favor themselves and/or private citizens at the expense of the taxpayers they were supposed to be representing. Collusion, malfeasance, misrepresntation, ...
The City didn't have to pay a break-up fee to the Colts. That's a shell game the CIB played to make the public think the Colts were actually contributing something to the stadium deal. We were told that original deal was ironclad. Yet, the ink had hardly dried on it before talk began of building a new stadium to keep Irsay from leaving Indianapolis. The CIB broke that lease because it wanted to build a new stadium for Irsay. If he broke the lease and left town for another city, he would have had to pay a break-up fee to us. There was no other city in the country wooing the Colts to move to their town. False rumors were circulated that the Colts might move to LA, even though the mayor there said he wouldn't spend any public money to woo an NFL franchise to LA.
Small, the Colts threatened to leave town, through a loophole in the contract, if they didn't make more money. So we built them a new stadium so they could make more money. But we had to pay them $48 million to break the former lease? And you don't see anything wrong with that? That's why you have NEGOTIATIONS. We should never have agreed to that or giving the Colts 1/2 the revenue on non-Colts events.
The city's leaders negotitiors' work involved backing up the money truck and asking the Colts how much money they wanted.
Everything can be negotiated. The Colts needs Indianapolis. It's about time the city started making demands on the Colts, such as paying that $20 million operating cost for the new stadium.
" hiway said...
So he and legislature just raised taxes instead of asking Irsay for more money?"
So in your rose-colored world, all the governor had to do was "ask" Irsay to fork over more money?
After Irsay, Peterson, and Fred Glass had signed, sealed, and delivered a billion dollar handout to Irsay?
You liberals are SO funny!
Gary, the city had to pay the Colts $48 million to break the lease with the Colts three years before their RCA deal was set to expire. Shell game or otherwise, you can't break a lease without a penalty. The current deal with Lucas Oil Stadium is 30 years, suggesting that the city should try to break the lease less than one year into it is neither sensible nor feasible. The penalty the city would have to pay for attempting to break the lease would be astronomical.
Demanding that Irsay voluntarily renege on a legally binding agreement makes for great rhetoric, but it has no basis in reality. It's not going to happen, no matter how much you scream about it.
By the way, I actually agree that the Colts were in no danger of moving to LA, and the rumors about that were false.
HOWEVER, you might want to consider the deal the city cut with the NCAA the year before the Colts deal. In exchange for a promise of upgraded facilities, the NCAA would guarantee a Final Four in Indianapolis every five years.
Why is this important, you ask? With each NCAA Final Four, the host cities get to host a regional final the year before. So, two out of every five years, Indianapolis is guaranteed to host one of the largest sporting events in the country.
The financial impact of these events is enormous in terms of tourism dollars. With new facilities opening in Detroit, Phoenix, Houston, and Dallas, all of a sudden the RCA Dome was going to drop way down the depth chart for NCAA venues. Could a city with no real industry or corporate presence afford to throw away the steady revenues the NCAA events bring? Of course not. It's not just the Colts factoring into this stadium.
This is an interesting discussion to be having the weekend of the MotoGP.
Question: How much money does the Indianapolis Motor Speedway bring to the Indianapolis economy?
Answer: About $1 Billion (that's with a 'B') annually.
Question: How much does IMS receive annually in tax breaks/tax incentives, etc. from the city, county, and state?
Answer: $0.
IMS has never asked for or received any kind of public funding or tax breaks. The ONLY thing they ask for from the city is additional police protection on race day.
You miss the point entirely small question. We didn't have to break the lease. We had what was suppose to be an ironclad agreement through the year 2018. It is claimed we broke the lease. Irsay was whining about taking the team elsewhere behind closed doors. The CIB blinked first and the taxpayers' pockets got cleaned out as a consequence. We were under no legal obligation to break that lease. Everything was done voluntarily. Because Irsay was the one demanding a new stadium or else, there should have been an agreement to waive the break up fee. But they didnt' want to do that because they wanted to create this appearance that we were paying the break up fee and that Irsay was turning around giving it back to us as his contribution towards the new stadium.
Gary, I agree with you that the city was under no obligation to break the RCA lease when they cut the deal, HOWEVER, in order to build the stadium to open when it did, they had to break the lease.
While it is legally possible to waive the right to consideration in such an arrangement, it is not entirely plausible that either the city would have demanded this or Irsay would have volunteered to do so. So, I get your point, but I don't entirely agree with the way you're using this point to frame the argument.
Would you agree with me that legally the city would have a hard time forcing Irsay to reopen a 30 year lease agreement at this point?
By the way, you initially said that the Colts to LA rumors were false, but then later said that Irsay threatened to move the team. If it wasn't LA, just where was Irsay threatening to move to? The only cities that I can think of off the top of my head capable of taking in a relocated NFL team right now are San Antonio (which as of 2005 was trying to poach the Saints out of New Orleans) and Toronto (rumored to be the new home of the Buffalo Bills).
"Would you agree with me that legally the city would have a hard time forcing Irsay to reopen a 30 year lease agreement at this point?"
No, That is exactly what happened twice. Once under Mayor Goldsmith and the second time under Mayor Peterson, which got us to where we're at today.
And yes, I think Irsay was bluffing about moving the team.
"No, That is exactly what happened twice. Once under Mayor Goldsmith and the second time under Mayor Peterson, which got us to where we're at today."
No, the city and the Colts voluntarily agreed to reopen the lease, as occurred during the Goldsmith and Peterson administrations. My point is that I don't think that the city can unilaterally force Irsay to agree to reopen the lease in order to take away the benefits that were given him in a legally binding document. In theory, Irsay could voluntarily agree to the city's request, yes. However, I don't think it's at all plausible that Irsay is going to agree to reopen a lease with 29 years remaining on it, nor do I think that the city could unilaterally break said lease without some serious consequences.
Look,I believe that the stadium deal needed to be done for reasons above and beyond the Colts. I agree that the lease deal was entirely too generous to Irsay. However, a deal is a deal, and this deal is legally binding unless both parties agree to break it. Don't hold your breath waiting for that to happen.
But we allowed the Colts to threaten to break a binding contract as blackmail to build this stadium. They had a signed agreement with us yet on that threat we built them a billion dollar playground. We should have said, threaten once more to leave and we will sue you till you can't play on Mars let alone another city on this planet. But alas, leadership wasn't something Bart did well.
It is totally insane to think the CITY must pay the COLTS to 'break the lease' when the CITY is turning around and providing (for free, mind you) a bigger, fancier replacement with the rights to $100s of millions in naming, concessions and so forth, too. That's ridiculous no matter how you look at it. Breaking the lease with NO replacement place to play, then yeah, you gotta pay for that. That's not what happened though.
From Forbe's, on the future of the Colts:
"A more frightening prospect: an end to the salary cap, which could happen as early as 2010 because the owners opted out of the collective bargaining agreement last spring. If there is a prolonged period where owners can spend as much as they want on players, Indianapolis won't have the cash to compete with richer teams."
You know what? All this manuevering looks like Irsay hedging a bet against what happens in 2010. Sure building up the ol' bank account, at any rate.
http://www.forbes.com/forbes/2008/0929/083.html
2nd best debt/value ration in the league (4%):
http://www.forbes.com/lists/2008/30/sportsmoney_nfl08_NFL-Team-Valuations_DOV.html
8th in operating income:
http://www.forbes.com/lists/2008/30/sportsmoney_nfl08_NFL-Team-Valuations_Income_2.html
Well, it's no wonder, since we gave them EVERYTHING.
The financial impact of these events is enormous in terms of tourism dollars.
This is such bs. Barf was on the TV gloating about how we would have no problems financially once the new stadium and CC were up and running. He basically was saying they would bring in so much money, we wouldn't need tax increases. This was obviously a flat out lie. Indiana tourism just can't bring in all that much money, at least to Indy, to make that huge of dent. We have already lost our largest convention. FFA will decide this year, after this years convention, where the convention will be held the next five or seven years (Indy or Louisville). GENCON filed for bankruptcy this year, so who knows how long that show will go on. The final fours and regional tourneys just don't bring in windfall amounts of revenue. The only local people that actually see something are those who own establishments downtown and people who work downtown for tips. I live near a camp ground off I-70 just outside of Indy. The _only_ time that campground gets sold out (meaning the city has a lot of visitors) is during events at IMS, _not_ anything downtown. The hotels at Shadeland and I-70 only get packed during IMS events. They get busy during a few conventions. Tourism affects towns, cities, and states near oceans, gulfs, lakes, national parks, and mountains.
In the end, who really cares. I pay no additional money as a result of the stadium tax. When I go out to eat, I deduct 1% from the tip, which off-sets the tax. For the fast food places, I just stopped dropping my spare change in the charity collection boxes. In addition to that, the taxes for eating out are now 8% (and likely to climb in my opinion), that I am sick of paying it. I have seriously cut back on eating out, as it is 10x cheaper to eat at home. Not only that, I eat when I want to eat, the food taste no different, and it is always cooked 100% to order. I have literally saved thousands eating at home. The stadium tax can be paid in such that no additional monies come out of your wallet (cutting back on tipping, not donating to charity boxes). It is just a wealth transfer from the charities and servers to Irsay/the city.
Stories like these why I sometimes wish to vote in a rabid socialist like Barak Obama for president. He will level huge taxes at these semi-public entities (these are "private" organizations that are only around, or only as large as they are currently, thanks to getting tax breaks or handouts). Irsay needs to fork over another 20% in corporate and personal income taxes. Time for him and his players to pay their "fair share."
Small,
Do you not understand that the lease was broken because the Colts wanted to move into a new stadium where they could make more money? Since they were requesting to break the lease to move into a new stadium, they shouldn't get the liquitaded damages, the $48 million, for breaking the lease.
Small do you not also understand that any contract can be renegotiated? You seem to think contracts only work one way, in the Colts favor.
It's not an issue that contracts can't be renogiated. The point is that BOTH PARTIES have to agree to reopen the contract. The two other times the city renogiated the lease with the Colts, both parties agreed to it. Legally, Indianapolis cannot unilaterally break the Colts lease with Lucas Oil Stadium without paying a huge penalty.
Yes, the Colts can agree to reopen the lease, but do you honestly believe that's going to happen after just 1 year of a 30 year lease? I certainly don't think they will, and neither should you.
As for the notion that the Colts should forfeit the $48 million, you need to consider this. The city technically owns Lucas Oil Stadium. As part of the deal to build the new stadium, the city is going to tear down the RCA Dome. The Colts had a lease to use the RCA Dome until 2018. In order for the city to break the RCA Dome lease with the Colts, they had to pay a penalty. Yes, some of it is shifting assets around, but property laws are pretty clear about this.
I wholeheartedly agree that the city cut the Colts an overly friendly deal with the event revenues. However, both sides signed the agreement, which is legally binding. It's not the Colts' fault they won the negotiation, nor is it the Colts' responsibility to voluntarily rip up the agreement.
Spooknp, by the way, cutting back on a server's tip doesn't punish the city or the Colts', it punishes the server. They rely on those tips.
If Mr. Irsay was required to publicly disclose the names of everyone on his payroll or otherwise under contract with him, I suspect these one-sided deals wouldn't be happening. And if Mr. Irsay wants public support for the team, he will come back to the table voluntarily and put some money on the table. I don't think people appreciate the dire financial straits of our city. He's not getting a dime of that money we're paying in taxes to pay the operating/maintenance expenses and we aren't going to stand for anymore tax increases. If the public stands up to Irsay, he will have no choice but to put the money on the table. It will take the public's asking. We sure as hell can't count on our elected officials or the CIB to look out for our interests.
"The city technically owns Lucas Oil Stadium. As part of the deal to build the new stadium, the city is going to tear down the RCA Dome. The Colts had a lease to use the RCA Dome until 2018. In order for the city to break the RCA Dome lease with the Colts, they had to pay a penalty."
Which is totally insane. At MOST I could understand if the City would pay for all Colt's gear to be moved from old to new facility.
But to build a new building, give them complete use for free, turn over millions of dollars in other revenue sources and STILL BE FORCE TO PAY A 'PENALTY' to them??? With all the high and mighty lawyers around the CIB - this, THIS??? THIS is the best they can do for us taxpayers? I say again, 'malfeasance.'
We should name the street leading up to it 'Vaseline Alley.'
Small says:
"As for the notion that the Colts should forfeit the $48 million, you need to consider this. The city technically owns Lucas Oil Stadium. As part of the deal to build the new stadium, the city is going to tear down the RCA Dome. The Colts had a lease to use the RCA Dome until 2018. In order for the city to break the RCA Dome lease with the Colts, they had to pay a penalty. Yes, some of it is shifting assets around, but property laws are pretty clear about this."
Small, I am an attorney. Those "property laws" which mandate the city pay a penalty that can't be negotiated away exist nowhere but in your own mind.
The city did the Colts a favor by building them a new stadium where they can make more money. There is no excuse, none, for not demanding that in return for doing this favor, the Colts' waive the lease.
Absolutely I believe the Colts would come to the table to renegotiate. They owe the city a lot. The city has some leverage on the Colts. The last thing they would want is the City turning against them and embarssing the Colts in the public arena. But if you don't use your leverage, it isn't going to happen.
Just wondering why Wilson46201 and artfuggins have not commented on this? They both know the deal was made by Peterson. They usually try to cover for the corruption by stating "You caught them, so it's all your fault it happened"
Basically, what is being requested here is that Ballard show some leadership and demand that the Colts contribute to the stadium's maintenace. And we as citizens should demand that he do just that. But Ballard want do it because he has been snowed by Grand and all the others who really benefit from the largesse of the city.
Bart never possessed enough leadership skills to even lead the damn horse to water; forget about making it drink. He let everyone roll over him.
Gary, is totally right on this. LA was never going to happen (notice they still do not have a team and no one (well, there may be one or two) gives a flying crap! Those who did want a team were not going to let Irsay own the team; he would have had to sell. Since Irsay can't do anything else beyond owning a team he inherited, he sure wouldn't have given up the team to any LA consortium.
And this whole notion that tourism, a low wage industry is some major industry in Indianapolis is ridiculous. Tourism's impact is a minor, minor part of the overall economy. Just because someone throughs some big numbers around, first of all does not mean they are real, nor does it mean they are significant, particularly when the costs to the city of handling these events are factored into the equation. Sure, all of our subsidized downtown entities benefit from it, but that does not make it a major part of the economy.
If it really was a major part of the economy, shouldn't we be a boom town by now, after about thirty years of this downtown pyramid scheme? And don't get me started on that B.S economic impact study completed by that silly public accounting firm.
There is a flip side to the dollars the Colts bring to downtown during games. Check out Circle Centre mall during a game. People who aren't attending the game avoid downtown like the plague. Many of those stores in the mall actually see a downturn in business on game day. Most of the people who come to the game park, walk to the stadium, watch the game, return to their cars and then go home without frequenting any of the downtown businesses.
"Most of the people who come to the game park, walk to the stadium, watch the game, return to their cars and then go home without frequenting any of the downtown businesses."
After 5 hours of tailgating and 3 hours of game, who'd want to?
We're promised the stadium is used 200 days a year. That's an event every 1.8 days. Let's see. Sunday there was a game. Monday. Tuesday. Wednesday. Thursday. Friday. Empty, as far as I know. Hmmmmm.
What is missed is that it's essentially a zero sum gum. When a family spends money at the game, that's a meal (or two) they might not eat out at a restaurant. Also, the notion that people spend money downtown before and after the game is way overblown. A lot of people come to the game and leave in a hurry after it's over.
I remember the towns that thought riverboats were going to be a boon to their local economy. What they found is that most gamblers go straight to the boat and go straight home afterwards. They don't spend money patronizing local establishments.
Post a Comment