Tuesday, January 27, 2009

CIB Bankrupt: Grand Won't Ask Colts To Shoulder Burden And Early Wants To Give More To Pacers

Despite facing a complete financial meltdown, the leaders of our Capital Improvement Board refuse to ask Colts owner Jim Irsay to shoulder some of the costs of maintaining the costly Lucas Oil Stadium which made him a billionaire, and those same leaders plan to reward the billionaire Simon family with more subsidies for their Pacer team to keep them in Conseco. That's the untenable view the CIB delivered at its monthly meeting this afternoon. The Star's Brendan O'Shaughnessy reports that the CIB now concedes that its financial woes go way beyond the $20 million annual operating deficit it deliberately incurred in building Lucas Oil Stadium and giving away virtually all income-producing opportunities to the Colts franchise. Other facilities, including Conseco, are running a $5 million deficit. Even worse, the financial meltdown has led creditors of the CIB to call in $43 million in loan and insurance obligations. By next year, the annual operating deficit of the CIB is expected to top $40 million.

Here's the rub that will really make you raw. The CIB plans to renegotiate the lease with the Pacers , giving the Simon family an additional $15 million a year subsidy for its Pacer franchise. CIB Vice President Pat Early discussed the Pacers lease since CIB President Bob Grand is conflicted out because he personally represents the Simon family. O'Shaughnessy explains Early's explanation for why we must give more subsidies to the billionaire Simons:

Pat Early, the board's vice president, said the Pacers are expected to use their option to renegotiate their lease this year. He said the CIB will have to take on more of the expenses of running Conseco if it wants to keep the team in Indianapolis."All we've established is that the business model we're working with now can't work in the long term," Early said. "We havent' figured out a solution, but I believe it's in the best interest of the city to have the Pacers stay in that building."

Bull! This team can't make money because the fans won't attend their games. They got sick and tired of a team full of players with nothing better to do than shoot up the town, get into brawls, hang out with drug dealers and frequent strip clubs. It is absolutely unconscionable to think that the taxpayers should have to dig deeper into their wallets to pay for the bad business decisions of this franchise. How greedy and self-serving can the Simons be to the people of this community. Thousands are being laid off every day because of this deep recession and these people think the taxpayers should shell out more to subsidize their playground.

Despite the CIB facing bankruptcy, President Bob Grand refuses to ask Irsay to make some concessions in the one-sided agreement Mayor Bart Peterson and his predecessor, Fred Glass, negotiated with the Colts. "Grand said he was not ready to ask the Colts to renegotiate a deal that many have criticized as too generous," O'Shaughnessy reports. "He said the board will review grants for the arts and other groups, work with others and find a way to manage the facilities."

O'Shaughnessy notes that the CIB's Treasurer Ann Lathrop expressed the dire financial condition of the CIB. "The situation is so dire that board treasurer Ann Lathrop said auditors are reviewing the CIB's finances as a "going concern," a term used to suggest that its near-term viability is in question," O'Shaughnessy said.

It's obvious that neither Grand nor Early are on the taxpayers' side. They are in the pockets of the sports team owners and the people who financially benefit from their presence in this town. Mayor Ballard needs to find a new team to run the CIB. If these guys can't tell the Simons and Irsay that enough is enough, then he needs to find someone who can. That is, if all of those free, front-row tickets he and his family have accepted over the past year hasn't completely corrupted his thinking.

UPDATE: Is Bob Grand violating his pledge to Mayor Ballard to wall himself off from any discussions concerning the Pacers' lease at Conseco Fieldhouse? Check out this quote from the IBJ: “The challenge is to renegotiate,” CIB President Bob Grand said of the lease. “[The Pacers] have an option to have these discussions.” I guess only a fool would have ever believed that Grand would abide by the agreement, effectively removing nearly one-half of the CIB's business from his plate. Note that Grand had to move for a reconsideration of a vote taken at an earlier board meeting at the CIB's December meeting approving a long-term parking lease agreement with Wellpoint. It slipped Grand's mind that the nation's largest health insurer was one of his firm's client when he voted on the parking lease agreement. His law firm is registered to lobby for Wellpoint. Grand is one of many lobbyists employed by the firm. He is also the firm's managing partner.

15 comments:

Paul K. Ogden said...

Did anyone not see this coming? This is disgusting. At a time when they are talking about being $40 million in the hole, they're talking about giving more away to the millionaire Simonses and won't ask for a penny from millionaire Irsay.

Downtown Indy said...

Makes you wonder where the 'financial benefit' that are always promised for these facilities is, doesn't it? The sorts of numbers being tossed around are NOT legitimately assignable to the tightening economy because they have been designed and implemented years ago.

The one silver lining in this is if the CIB goes away permanently.

What a dirty pile of laundry these greedy people have collected. They all need to be brought up on charges. Yeah, like anyone in the Prosecutor's office has the gonads for that.

It irks me the media is saying 'LOS is facing a shortfall' like it's something that just happened. It's been lurking for several years, just another of those 'elephant in the room' things.

Downtown Indy said...

Oh and one other thing. I'm still betting on the Mariott complex to change drastically, to cut back or perhaps even stall out, before long. Marriott is in a pinch too, as evidenced by their Austin TX hotel complex which is not unlike the one being put up here.

I wish a certain ex-Mayor hadn't handed them a $50 Million check a couple years ago!

HOOSIERS FOR FAIR TAX said...

So the Pacer's learned from Ir$ay how to threaten to leave the city to get everything you want off the taxpayers to stay.

I susupect if we let the Pacers leave, we'd get another franchise.

Ed Coleman said...

I don't make it a habit of commenting on blogs but this one just irks me. This blog is spot on as to why the Pacers are losing money. Nobody wants to go to the games. Even I as an elected official have turned down free tickets to their games in the past. Irsay got a sweet deal that never should have happened. The Simon's want a sweet deal now as well. Atleast the Colts are performing. I personally am not supportive of giving more money to millionares. As harsh as this sounds I say if you think your team can make more money elsewhere, more power to you. I won't agree to give it to you.

artfuggins said...

If the GOP and Luke Kenly had used the $50 million in the budget for operating expenses instead of diverting it to cost overruns....there might not be a problem now or a much smaller one.

Advance Indiana said...

Ed, Thanks for sharing. Why is it that we give more authority to the unelected Grand and Early to decide these matters than we give to elected officials like yourself to make these decisions?

Advance Indiana said...

The original sales pitch was that we had to have an open air stadium because domed stadiums were a thing of the past. Fans wanted the full football experience we were told. After the plan moved forward, Irsay demanded that the stadium have a retractable roof. That added about $75 million to its cost, none of which he paid. The CIB deliberately low-balled the estimate on how much the regional tax would generate in revenues, hoping that the legislature would give them the green light to divert those bond revenues to pay operating/maintenance expenses just like they did with the RCA Dome. Kenley nixed that plan. Yes, the contingency money was put in the budget, but the idiots didn't even spend the less than $1 million it would have taken to install a drainage system. As a consequence, the open air feature is being rarely used. As someone commented, it's really just like a sunroof in your car.

Sean Shepard said...

There is an often quoted line, "we don't negotiate with terrorists".

I believe we should not negotiate with "economic terrorists". These sports franchises are private businesses, and while many may argue they add economic value to city they fail to consider the $90 per Colts ticket taxpayers pitch in. And if the CIB shortfall is taken into consideration, it looks to be maybe double that.

If you can't run a bank properly, it is not the taxpayers problem. If you can't build cars profitably, it is not the taxpayers problem. If you can't profitably field a sports franchise, again ... not our problem.

These problems will only get worse, and will cause economic harm (drain) on cities until politicians, as Councilor Coleman wisely suggested, start telling them "no".

Taxpayers would be pissed off if they were paying for a brand new skyscraper for Eli Lilly or the Simons. This is no different.

spooknp said...

This is absolute, verifiable proof why it is morally OK for a common citizen to "cheat" the government out of the amount of taxes government is owed. Work off the books, for cash, and tell the government to go and pound sand.

Downtown Indy said...

If the Simons', who are billionaires, can't afford the Pacers, what makes them think WE can?????

Paul K. Ogden said...

AI,

Yes, I can't believe they built a retractable roof stadium and didn't spend a tiny fraction of that to put drainage in. Now the hundreds of millions extra we spent for the roof is worthless because its kept closed 90% of the time.

Sean Shepard said...

Yes spooky, but the citizens and taxpayers have no police powers with which to arrest and prosecute our politicians when they steal from us under the protection of a government badge, title or very large hat.

I believe ANY attempt to bail out the Colts or the Pacers, both of whom I like and appreciate having in our city, should be met with at least as much resistance as was seen with the property tax increases two summers ago.

With something like 1.4 million in the greater metro area, every $14 million in shortfall is $10 per citizen or, I would estimate, $25 per household maybe?

Advance Indiana said...

Sean, I'm not quite sure of that. There is growing talk of citizens using the grand jury process, the so-called fourth branch of government, to enforce the Constitution and our laws which are being trampled upon by our government leaders. Although prosecutors are currently the only ones exercising the right to indict through grand juries, there is legal authority which would allow citizens to bring indictments as well. Justice Scalia has discussed this possibility in at least one of his opinions.

HOOSIERS FOR FAIR TAX said...

I'd like to see a few hundred people picket outside Ir$ay's house.