Sunday, March 15, 2009

NOLA Perspective On The Pacers

The Times-Picayune's John Reid brings a New Orleans' perspective on the Indiana Pacers latest claims that their NBA franchise is bleeding $30 million a year:

Just like after last season when the Seattle SuperSonics relocated and were renamed the Oklahoma City Thunder, another NBA team is in trouble, and it could force it to relocate.

The Indiana Pacers are struggling on the court and off it. Specifically, co-owner Herb Simon is having difficulty paying $15 million a year in the operating costs of Conseco Fieldhouse, the Pacers' downtown-based home arena.

Simon has not given an ultimatum, but he cannot continue losing money. He said his franchise has not made a profit in nine of the past 10 years.

The Pacers' problem appears to be their lease agreement, which was the same for the SuperSonics.

In Seattle, the owners had to turn over a portion of their revenue to the city to pay for the renovation costs that went into KeyArena.

In Indianapolis, before the Pacers agreed to play at Conseco Fieldhouse in 1999, Herb and his brother, Mel, agreed to pay yearly facility operating costs of the building so they would receive profits generated from various events such as the circus, concerts and other entertainment. As it was then like now, Conseco Fieldhouse is owned by the Indiana Capital Improvement Board. Pat Early, the board's vice president, told The Associated Press it could not take over operating costs because it faces a $3 million shortfall in revenue this year.

"It's possible they could move the team," Early said. "It's possible they could sell the team. It is also possible they could shut the team down. What's not possible is the Pacers losing the kind of money they're losing this year indefinitely."

The Pacers are among struggling franchises that includes the Memphis Grizzlies, Sacramento Kings and Charlotte Bobcats. Since the Pacers-Pistons brawl in 2004 at the Palace of Auburn Hills in which former Pacers forward Ron Artest went into the stands and fought after a fan poured beer on him, the Pacers have struggled to regain their fan base.

Last season, they were last in the 30-team league with an attendance average of 12,221 per game. This season, after 31 home dates, the Pacers rank 28th with a 13,712 average. To fix the situation, the Pacers likely will need state funding help and the league should step up and offer assistance. The Indiana Pacers are a storied franchise that goes back to the American Basketball Association.

Whenever a franchise is struggling like the Pacers, it only hurts the league overall. These are difficult times with the recession, but the NBA cannot keep relocating franchises. The owners also must stop signing bad lease agreements if they cannot take the hit when things get tough.
I find the writer's suggestion that the owners should "stop signing bad lease agreements" a bit silly. Herb and Mel Simon signed a 40-year lease agreement in 1986 with the Capital Improvement Board to allow the team to play in Market Square Arena. A little more than a decade later, the Simons got exactly what they wanted: a full release on their 40-year lease on MSA and a new lease for a newly-constructed Conseco Fieldhouse, which cost nearly $200 million to build. The 25-year-old MSA was imploded as demanded by the Simons to prevent any competition with events at Conseco Fieldhouse. The current lease allows them to renegotiate the terms of the lease on Conseco Fieldhouse after only ten years. I think the writer has it backwards. It's the public that needs to stop signing bad lease agreements. The owners seem to be doing just fine with their lease agreements.

9 comments:

Douglass said...

"To fix the situation, the Pacers likely will need state funding help..."

That better not happen. Don't waste our tax dollars bailing out a basketball team. That team doesn't do jack for this state except apparently entertain about 13,000 people every couple days. If we want to keep it, we can buy tickets. At least you get something in return when you buy a ticket. You don't get jack if you are taxed to support the team. You'd still have to pay for tickets or cable TV to watch a game.

Patriot Paul said...

A.I. your are correct. It was the city's poor knee-JERK reaction and now we're still paying on MSA debt rolled into Conseco, just like RCA rolled into LOS. Drooling planners with major leage envy have sold the farm at our expense and don't know how to build a new one.

Eclecticvibe said...

This weekend, NPR even mocked the notion that the Pacers had lost $200 million over the past years. They had a good laugh over the idea, while discussing sports business.

artfuggins said...

The city budgeted $50 million for operating expenses in the first couple of years and then Mitch decided that the state would take over the construction and awarding of contracts and give it back to the city when the project was finished. By the time that was done, the state used the $50 million of operating expenses for cost overuns during the construction phase...That is why I think the state and not the city should bail them out. What I can't understand is how the Simons can run hundreds of malls at a profit and not one basketball team...it seems all the Simons need to do is run the Pacers like they would run a mall.........I personally favor no bailout from either the state or the city.

Concerned Taxpayer said...

"It's the public that needs to stop signing bad lease agreements."

Guess again! It's not the public who signs the leases. It's the DEMOCRATS.

HOOSIERS FOR FAIR TAX said...

Gary, I signed a bad contract with my cell phone company for two years. Guess what? I'm stuck!

Downtown Indy said...

Oh, art, there you go making stuff up again.

http://football.ballparks.com/NFL/IndianapolisColts/newindex.htm

State OKs deal with city and Colts
Stadium construction to start within days
By Michele McNeil
michele.mcneil@indystar.com
September 9, 2005

The who-pays-what was all signed and delivered before construction even started.

Bill said...

CT,

When it comes to corporate welfare in Indy, Republicans are not better than the Democrats.

indyicehockey said...

Boot out the pacers, pick up a hockey team. It's just what the state needs, a new refreshing team.