Thursday, February 12, 2009

Luke Kenley Is No Friend Of The Taxpayers

I caught part of Sen. Luke Kenley's interview with WIBC's Steve Simpson discussing the legislature's plan to help the CIB fill its $50 million gap in funding its annual operating costs, which was replayed during this morning's news broadcast. His complete mischaracterization of the facts was very disturbing. Either he is the most uninformed person on the subject of Indianapolis' public subsidies for billionaire sports team owners, or he has chosen to take on the role of repeating the propaganda of the high-paid public relations persons the two teams hire to spread their dribble instead of looking out for the taxpayers. You have to hear the interview for yourself to believe it, but Kenley actually tried to make the case that the public really isn't subsidizing Irsay and the Simons.

To hear Kenley explain it, Irsay gave up $45 million in guaranteed revenue and put an additional $50 million of his own money on the table to give up that useless RCA Dome and move into the new Lucas Oil Stadium. What Kenley either doesn't understand or simply chose not to explain to Simpson's listeners is that the so-called $50 million investment by Irsay was actually a $50 million break-up fee he forgave the CIB if it built a new stadium for him. The folks at the CIB advocating for a new stadium deal were running around telling folks at the State House that there was a real danger of the Colts leaving the City to head to L.A. or some other city if we didn't break the old lease with Irsay, which did guarantee him minimum revenues, and build him a new stadium which guaranteed him even greater revenues. Essentially, Irsay's organization figuratively held a gun to our heads and told us that the deal the Colts made with Mayor Steve Goldsmith wasn't good enough. Either you, the CIB, break the lease and build them a new stadium, or they would break the lease and leave town, which incidentally imposed a similar break up fee against the Colts if that had happened. It takes a lot of audacity for anyone to characterize that as a $50 million contribution by Irsay.

When the CIB renegotiated a lease agreement for a new stadium, it gave up almost every revenue-generating opportunity which could be used to offset the costs of operating the new stadium to Irsay, including advertising, concessions, suite revenues and half of the non-game event revenues. Kenley acknowledged that state lawmakers knew there would be a shortfall in covering the stadium's operating and maintenance expenses when the legislature approved the state law creating a state taxing authority to pay the bond indebtedness on the new stadium, although he said the figure was pegged at $6 million at the time. The number later grew to $10 million and, as we now know, it is claimed to be $20 million. Kenley further acknowledged that the state kicked in an additional $16 million a year to help finance the deal, but remember, the public isn't subsidizing the Colts.

Kenley, a Harvard law graduate, spoke as if he understood the financials of the Colts and the Pacers. The fact is that he doesn't have a clue how much either the Pacers or the Colts are making or losing under the current arrangements. Neither team allows us to conduct an independent audit of their organizations which would allow us to make that determination and you can bet that isn't going to change. We're just suppose to take their word for it that these sports franchises really aren't good money-makers. To give you perspective on Kenley's thinking, he believes the Colts and Pacers would satisfy having some skin in this current task of dealing with the CIB's $50 million annual shortfall in operating costs if a new tax is imposed on ticket buyers to the events and a new gross receipts tax is imposed on the concessionaires. I will grant that those taxing options are preferable to a new or higher tax on the general public, but please don't insult our intelligence by calling that a contribution by the team owners. And it's an easy deal for lawmakers like Kenley to accept. Unlike you and I, he and other legislators receive free tickets to sporting events from lobbyists all the time and get invited to corporate suites, stocked with food and drink, thereby avoiding any expense at all in attending a game. If he actually knew how expensive food and drinks at the stadium are, he might not be so eager to raise the prices even higher.

Kenley seemed to suggest there was room for bargaining with the Pacers, but that too is a mischaracterization. Our trusted CIB has already agreed to pick up the tab for an additional $15 million in operating expenses for Conseco Fieldhouse, even before the team sits down to renegotiate its lease, a right the one-sided lease deal gives them after ten years. Making matters worse, people working for Mayor Ballard are spreading rumors that the team might pick up and head to Seattle if we don't give them more money. Once again, that proverbial holding of the gun to our heads has reared its ugly head. I've never had to do business with a mafia figure, but from what I've seen on TV and in the movies, doing business with sports team owners couldn't be much different.

What Kenley's interview with Simpson showed me is that this guy is completely in the tank with Irsay and the Simons. Like most of the legislators currently serving, he and his caucus have accepted significant contributions from the sports team owners and the powerful lobbying forces behind them. Money talks. Kenley demonstrates that he could give a damn less about the public's concerns. Again, this man actually argues that the team owners aren't really being subsidized by the public. He thinks it is unfair to ask Irsay to give back some of the give-away CIB officials gave him a few years ago as if that would make us bad faith negotiators. Yet, when Irsay twice demanded changes in his long-term lease on the RCA Dome, he got what he wanted both times and nobody at the table suggested he was acting in bad faith to demand changes in the deal his father negotiated when he first moved the team from Baltimore to Indianapolis more than 20 years ago.

If you, the taxpaying public, want to stop more of your taxpayer dollars from going to subsidize the lifestyles of these billionaire sports team owners, then you had better get fired up and start contacting your legislators today. As I feared, this train has already pulled out of the station without Mayor Greg Ballard ever once engaging the citizens of this community in a discussion on this topic. Instead, he has the same law firm which represents the Simon family being paid with your taxpayer dollars to work out this backroom deal with Kenley and other state lawmakers. Why do I call it a backroom deal? Because these so-called public officials didn't bother to introduce legislation straight up telling us how they wanted to raise new taxes to pay for the CIB's shortfall. Instead, they're looking for a vehicle bill on which to attach their tax-raising scheme through backroom negotiations. The public has been completely shut out of this debate. The only way you're going to have a seat at this table is if you force your way into the room. It won't be by the invitation of folks like Kenley. They've already made up their minds.


Downtown Indy said...

I believe an inspection of their books WOULD show they are losing money.

The reason? They hand over too much to player salaries. That whole matter is driven by the 'who makes more than who' competition. Teams give players celebrity status, and then create a problem of how to keep that player from going to another team if they don't make more than their counterparts on other teams.

Yeah, it's the same ploy the team uses to extort money from it's host city.

'Host city' is a curious term, isn't it? It's also used when describing parasitic plants and organisms, which feed off their 'host', letting the host provide their sustenance. Remove the parasite from its host and it dies.

Pro sports is also a parasite. Our elected officials are regrettably too timid to pick up the tweezers and pluck the bloodsuckers.

Diana Vice said...

Follow the money. Look at Luke Kenley's campaign finance report. Here are three names that you might recognize that are on it:

Irsay, Bob Grand, and The Indianapolis Colts

One might come to the conclusion that he's been paid via campaign contributions to do this job, because it's the only thing that makes sense otherwise.

Paul K. Ogden said...

There should be an independent evaluation of the Pacers financial situation. Why should we have to give them more money based on the Pacers claim, unsubstantiated, that they are not making money.

Brilliant column, Gary. I'm sorry I missed the Kenley interview. Then again, it sounded like it would have made me sick to the stomach to hear it.

Unigov said...

Advance - Great article. Most people in Indiana still have such total faith in their government that they can't 'get' that Luke Kenley is part of the problem. Good old Luke, he can't possibly be in on this whole thing ?

Luke Kenley is Irsay's man in the statehouse.

Hoosiers can't understand what crooks the Simons and Irsay are. People still think that pro sports is somehow good for the city and that the outlandish cost of the two Colts stadiums is ok cause it's "infrastructure".

Hoosiers can't understand that the Super Bowl doesn't bring in much revenue - San Diego's last one brought in $96 million total. But the CIB can hire some accounting firm that will say the SB brings in $396 million, which is a lie.

Add up a couple hotel nights on average for 70,000 people, and a couple hundred bucks in meals etc for a wild weekend in Indy, and you get about $35 million. Most of which goes to the hotel owners.

Citizen Kane said...

Politicians fund the Colts and the Pacers for the same reasons that they do pretty much everything else - for their benefit.

They are crooks, nothing more, nothing less.

Gary R. Welsh said...

Kenley has accepted about $3,000 in campaign contributions from Irsay and the Colts organization.

Diana Vice said...

Too bad there's no public record of how many other perks may have been given to certain legislators. I wonder how many "free" tickets, etc... have been handed out to supportive legislators. It was a sad day when I realized that legislators don't really work for the hard working citizens of the state. They've been bought and paid for by special interest groups and their lobbyists.

Gary R. Welsh said...

Mayor Ballard's campaign kicked in $2,000 to Kenley's campaign committee last year. Ballard pocketed $5,000 from Irsay and another $5,000 from the Simon Property Group. That doesn't count the hundreds of thousands of dollars law firms representing various Irsay/Simon interests contributed to Ballard's campaign.

Gary R. Welsh said...

I forgot to mention that Kenley is a former Barnes & Thornburg attorney. He would have done much better if he had remained there instead of attempting to run the family grocery story business.

Diana Vice said...

A former Barnes & Thornburg attorney, huh? Well, it's all starting to make sense now. Kenley was on the Senate Education Committee when Sen. Weatherwax submitted a bill to address the AEPA/Wilson Education Center/Tremco no-bid scheme that taxpayers have been complaining about for years. Barnes & Thornburg attorneys were hired to do the bidding for the schemers. Kenley's behavior at that committee hearing and afterwards makes perfect sense to me now. This was politics at its absolute worst! Good government obviously took a back seat to political cronyism.

I've been thoroughly educated, and I fully understand how government really works. It's sickening!