Monday, March 09, 2009

Pacers To CIB: Pay Up Or Else

Simon Property Group may be hoarding money to buy up additional real estate bargains in a down market, the Pacers may be paying $15 million to Jamaal Tinsley to just stay away from the locker room until his contract runs out and Bren Simon may have her $28 million third or fourth home in Bel-Air, but when it comes to Indianapolis taxpayers, you'll just have to fork over at least $15 million to cover the costs of the Simons' NBA franchise or they'll take the team to another city. That's essentially what CIB Vice President Pat Early reported back to the Board today, or that's what CIB President Bob Grand, an attorney for the Simons, told Early to tell the rest of the Board and the public since ethical considerations force him to let someone else do the talking for the CIB. The Star's Brendan O'Shaughnessy says this following today's meeting:

Pat Early, the board's vice president, said the Pacers are losing about $30 million this season and have lost money every year but two of the 28 years the Simons have owned the team.

Early said the Pacers cannot continue to shoulder the $15 million per year operating costs of Conseco Fieldhouse. He said the team has not threatened to leave but that there is a good chance it will leave or shut down if the CIB does not assume those costs.

“If we are unable to do this, we’re really jeopardizing the health of Downtown,” Early said. He called the Fieldhouse and Lucas Oil Stadium the bookends of a $4 billion annual tourism and convention industry.

“If one of those bookends goes down, who knows what’s next.”

Early said that the city still would have to shoulder the Fieldhouse’s operating costs if the Pacers didn’t play there and estimated that they would be nearly the same. He said the team acknowledges responsibility for its players’ problems off the court but cannot control a collective bargaining agreement that hurts small-market cities.

“It’s important that everyone understands the Pacers can’t participate any more financially,” Early said of talk that the city cover only a portion of the operating costs. “They are already participating with millions of dollars every year. We are going to have to find a solution.”

Notice that Early states as fact that the Pacers cannot continue to pay up to $15 million in operating costs for Conseco Fieldhouse and that the franchise will lose $30 million this year and has lot money in every year but two that the Simons have owned the Pacers. That is what the Pacers' Jim Morris told the CIB. Early, who is a CPA by trade, has not reviewed audited financial statements of the Pacers and made them available for public inspection to ascertain the veracity of that claim. Early is also not a good negotiator. He has already conceded the major point of contention with the Pacers before the two parties even sit down and specifically discuss renegotiation of the lease. Also, notice how these leases always give the team owners a chance to come back and renegotiate on more favorable terms after certain intervals when we're told at the time of their execution that we've entered into a long-term lease with them. But when circumstances change to the disadvantage of the taxpayers, we're always told "a deal is a deal."

Let's face it, most professional sports team owners claim their franchises are losing money, but whenever one of them goes up for sale, there is always a willing buyer ready to step up and pay the top dollar. The real reason the Simons are demanding that these costs be borne by taxpayers is because of the deal the CIB entered into with Colts' owner Jim Irsay, which requires the CIB to absorb all of the operating and maintenance expenses for Lucas Oil Stadium. Word of the Simons' reaction to that sweetheart deal and expectation that the CIB would renegotiate its lease on similar terms at the 10-year mark of its current lease next year was leaked to the Indianapolis Business Journal as a prelude to these current discussions. There is also speculation that the Simons may want to sell the Pacers. If the CIB agrees to pick up these costs, the potential selling price of the Pacers could easily be bolstered by $100 million or more.

The Simons could care less what the taxpaying public thinks of their demands; otherwise, they would have hired players who respect the community and fans who support them and don't have continuous brushes with the law. The Simons have nobody but themselves to blame for declining ticket and broadcast revenues--a direct result of the precipitous drop in community and fan support for their franchise. The Simons instead are banking on the fact that they've showered millions in campaign contributions to various Indiana politicians over the past decade and when they tell one of them to jump, he or she will ask, "How high?".

The CIB earlier announced a little more than $6 million in fake budget cuts. Why are they fake? When you increase your annual budget $20 million and then say you're reducing the amount of that increase, you're not cutting your budget. The CIB claims that Lucas Oil Stadium, even though it is brand new, costs $20 million more to operate and maintain than the RCA Dome, a 25-year-old building that has already been demolished to make way for an expanded convention center. The CIB has never substantiated this claim. Just as predicted, the CIB also announced a round of cuts to the local arts, a move intended to put pressure on more people in the community to support a tax increase for the CIB. The 13% reduction, or $400,000 cut, affects grants for the Arts Council, Black Expo and cultural tourism. The CIB also announced a cut from its super secret emergency maintenance fund. The IBJ says, "The board also agreed to eliminate for one year a maintenance fund that contains $960,000 for emergency repairs to the buildings it manages."

These cuts will not come close to closing the CIB's budget deficit, which has been a moving target for the past few months. To make up that difference, the CIB will push higher taxes on food and beverages, even though Indianapolis' 9% tax already makes it one of the highest in the country, and a higher admissions tax to at least all events at the CIB facilities. "Raising hospitality taxes would first need approval from the General Assembly and the City-County Council," the IBJ reports. "A 1-percentage-point increase in food-and-beverage, innkeeper’s and admissions taxes would raise more than $24 million annually but rank the city as one of the costliest in the nation for the taxes." There has been some talk of an effort to extend the tax to other events, such as the symphony and theaters, which are currently beyond the CIB's reach. Notice again how there is a complete cover up of the funding debacle the CIB faces this year after using variable rate interest bonds and interest rate swap notes instead of fixed, long-term bonds to borrow money. Let's also not forget that the CIB is quietly trying to get local businesses, which loaned $34 million from the dividends they earned on the taxpayer-funded Circle Centre Mall to build Conseco Fieldhouse, to forgive those loans. This includes distressed financial institutions which received federal TARP money and the Indianapolis Star.

The Star editorialized today against a backroom deal at the State House to bail out the CIB (without mentioning the millions it is owed by the CIB). "City and state leaders must avoid an all-too-common Statehouse scenario: a last minute, behind-closed-doors deal that cuts the public out of the decision-making," reads the editorial. "Mayor Greg Ballard could help head off that storyline by soon identifying his preferred choices for eliminating the deficit," the editorial adds. No, the politicians won't tell the taxpayers what they want to do straight up. They've already been wined and dined by the high-priced lobbyists who advocate on behalf of the Colts and the Pacers and who have enjoyed those generous campaign contributions Irsay and the Simons have given them. They'll just get the politicians to stick their backroom deal on to the state budget so they can tell us that they couldn't vote against all of those other good things in the state budget because of that one bad apple.

8 comments:

artfuggins said...

Bye bye..take your thugs and go away!!!

will h said...

this just might be the proverbial shot for this town; this could be the breaking point for the masses; change is never easy and is frequently quick and painful; methinks that little switch of public opinion just clicked over and i for one will help these guys pack up and leave this town; good riddance;

HOOSIERS FOR FAIR TAX said...

I don't care if Simon's sells the team. If they are losing money, they should unload the bad investment before it eats them alive.

I sure don't want it eating my city alive.

Indy4U2C said...

The THUG Pacers can pack their bags and leave! We taxpayers sure have no use to pay taxes and make them richer or let them use OUR fieldhouse to rent out to promoters, concerts, etc & make money.

Pacers, feel free to leave any time you want...please be sure your thugs go with you, so we don't have to house them in our jail, too!

Advance Indiana said...

Ballard is being advised by people who are using him to get what they want and hope that in the process they completely destroy him. They've already succeeded in alienating him from his best supporters. They could care less what happens to him in 2011. As long as he gives them all the cash they demand during his 4-year term, they will find a bought-and-paid-for Democrat to take his place in 2011.

guy77money said...

If the Simon's want take the Pacers to leave then it's time to let them go. I suspect in this environment there will not be much of a market for an NBA team. It's time for Indy to stop being held hostage by these sports teams. Hmmm what would it take to disolve the CIB and have the city run it with a fewer people and a smaller budget. Ok I'm dreaming!

Indy4U2C said...

One thing that also raises questions is the deal with the Pacers that gives them parking, concession revenue, and allows them revenue from all non-basketball events at OUR fieldhouse.

As far as I'm concerned all parking, concessions, and revenue from non-basketball events is OUR money, that should be used to pay for the fieldhouse, not to make the Pacers richer!

I wonder when the Pacers talk of "losing money" they figure all the profit they make from OUR fieldhouse?

iPOPA said...

Can someone explain what "tourism" Conseco brings in? Seems like a bookend with no books to me.