Wednesday, March 18, 2009

Pat Early Doesn't Get It

CIB Vice President Pat Early makes a pathetic attempt this morning to defend handing over an additional $15 million a year to the Indiana Pacers franchise at a time the CIB is facing an annual deficit of $30-$50 million. Early's guest column in today's Star is in response to Matt Tully's recent column criticizing the sports team owners for expecting more of the taxpaying public in these trying economic times. Naturally, Early can't discuss the economic benefit of the sports teams without lumping them in with the convention business. Early writes:

Many may not realize how important visitors and tourism are to Central Indiana. Each year, millions attend conventions and sporting events in Indianapolis. The economic impact of these visitors exceeds $3 billion annually to the city and state.

Attracting conventions without beachfront property takes some doing. City and state leaders developed a vibrant and vital Downtown with entertainment, shopping and a cultural district anchored by the Indiana Convention Center and Circle Centre mall. Conseco Fieldhouse and Lucas Oil Stadium provide the bookends. Add our mix of restaurants and hotels and you have an energetic Downtown.

The vast amount of the economic impact is derived from the conventions and not the sports franchises. The Colts and Pacers draw mostly from the Central Indiana region. People drive to the game and drive home the same day. They don't book a hotel room and many don't spend any money downtown beyond paying for parking. The convention center draws visitors for days at a time, generating lots of business for area hotels, restaurants and retail. Early doesn't even waste his time with an estimate on the impact of the two sports franchises alone because the true numbers aren't impressive.

Early's prediction of the loss of the Pacers on local revenues is equally misleading. He writes:

If they were to leave, it would eliminate more than $8 million of direct tax revenue to this county and state and countless dollars of economic benefit to the community. Our Downtown generates more than $400 million in state and local taxes. Much of this money comes back to Marion County to fund education, poor relief and public pensions. In various ways, all citizens benefit from this.

So Early is worried about losing $8 million a year in tax revenues and his solution is to spend an additional $15 million a year to make the Pacers more profitable. Early suggests that much of this money comes back to Marion County to fund education, poor relief and public pensions. That is simply false. To begin with, much of the downtown area is within a TIF district. That means increased revenues from development are diverted to pay for public improvement bonds within the TIF district instead of being distributed to political subdivisions. Further, income taxes generated from Lucas Oil Stadium are captured to help pay for the bonds on the stadium. Food and beverage taxes, hotel taxes, car rental taxes and admission taxes go to fund the CIB and Lucas Oil Stadium. The list of mechanisms for diverting revenues generated within the mile square to fund the various improvements there goes on and on.

Once again, the CPA Pat Early states as fact that the Pacers are losing $30 million a year. Early is guilty of professional malpractice. Early does not base that claim on audited financial statements that are available for public inspection. He bases his claim solely on what the Pacers PR machine has told him. Early claims the Simons, who purchased a franchise for $11 million that is now worth $300 million, are simply trying to break even. Everyone knows this latest demand from the Simons that the CIB pick up the $15 million in operating/maintenance costs on Conseco Fieldhouse has arisen because the Simons were peeved at the generous deal the CIB signed with the Colts, requiring the CIB to pay 100% of those costs. The Simons got the exact deal they wanted 10 years ago. Like a spoiled child, they want what the other kid has.

Early's childish closing reaffirms my belief that Early's CIB leadership has been abysmal and he should be forced to resign:

I have been a member of the Capital Improvement Board for 17 years. My sole focus has always been to do what is in the best interest of this community. I've done my best to explain the big picture. It doesn't surprise me Tully doesn't get it; I didn't have any crayons.

The guy has been on the board for 17 years. The Board has been running deficits for years despite numerous tax increases and tax diversions. The Board's budget has grown to about a tenth the size of the entire city budget. The Board decided to go forward with Lucas Oil Stadium knowing that it would be tens of millions of dollars short in paying for it. We now learn that the CIB couldn't even afford Conseco Fieldhouse, let alone Lucas Oil Stadium. Early's suggestion that Tully doesn't get it because he doesn't have any crayons to explain it to him demonstrates his arrogance and disdain for those of opposing views in the face of his glaring incompetence.

11 comments:

varangianguard said...

Three comments:

If I were Mr. Early, I would be disappointed the Star included a picture where I wasn't looking the reader in the eyes.

I know he was trying to insult Mr. Tully, but his quote could be taken (easily) to mean that Mr. Early was incapable of explaining anything in a cogent manner without resorting to using crayons. Funny.

And, problem solved! Mr. Early says it without "getting it". Get out the engineers to design a dome to cover all/most of downtown, then turn the White River into a BEACHWORLD resort complex (complete with faux sunlight lighting). Two birds with one stone! One, we'd have a perpetually sunny beach to appease conventioneers, and two, the Mayor would have his "Chinatown" type attraction.

Mr. Early should get to writing that dome RFP ASAP.

Concerned Taxpayer said...

We had BETTER get rid of the CIB itself, or the self-serving, non-elected, tax-raising fools that serve on the board.

Downtown Indy said...

Pat seems to have stumbled upon a 'mighty thin pancake,' don't you think?

artfuggins said...

I am not aware of any way that the average taxpayer can send Pat Early a message...He is not elected......Ballard won agrees with him...we have no way to say that we not interested in bailing out the Pacers and the Simons.

HOOSIERS FOR FAIR TAX said...

Congress is gunning to tax AIG employees 95% because they are getting government funding. Should be the same for anyone that works for the Pacers or Colts.

We The People said...

I would personally love to debate Mr. Early as he is trying to protect his reputation instead of doing what's right. I had given a presentation in Noblesville several years ago when our politicians decided to raise our sales tax to support the Lucas Oil stadium. I have read countless articles in regards to public financing of these projects and nearly every analysis I had read, the ROI (return on investment) is marginal and many economists claim that it actually hurts the economy.

The question here is based upon the economic factors of production when government takes money from one productive source and gives it to another. The government oftentimes takes a grandiose position in this matter and I'm sure we all remember the words by former Indianapolis Mayor Bart Peterson when he attempted to sell this idea as helping make Indianapolis a "world class city" or the other comments that the new stadium will bring us a Super Bowl. Well, that is just one Super Bowl in 25-30 years and compare that to Tony George's racetrack which brings in 2.5 Super Bowls a year.

On another point, I also want to express that if the Colts or Pacers were such a great idea, then why were the people not allowed to invest in them? Why steal the taxpayers monies to fund these franchises for if it was such a great deal for our city they could have easily raised the capital (in stocks) to make it work?

Lastly, Mr. Early and the CIB must open up their meetings to the public. We have some of the more established members of our community on this board and they close their meetings to the public. I also am curious how some of these top CPA firms who represent the CIB did not calculate "operating expenses" for this project? I do not understand how they could possibly miss something this important variable as it is a major factor when operating a business. Would anyone buy a car and not assume that they would have buy fuel or have oil changes? Please correct me if I am mistaken in my understanding of where the $43 million shortfall exists.

Jon said...

Pat doesn't get it, touting the fact that he has been a member of the CIB for 17 years means he is part of the problem. Much like AIG's current image I don't think it is helpful to announce your membership in a group of such dubious distinction.

Sean Shepard said...

Rhetorical Question Time:

If the stadium and arena business is so great, why didn't the Simons, being in the Real Estate and construction business, not build their own stadium as a private enterprise?

Citizen Kane said...

Pat Early get's it. He knows he has to keep lying no matter what. There wasn't a grain of truth in anything he said, but that is not going to stop him (and them) from saying it or large segments of the population behaving like lemmings.

We The People said...

I am sorry my response did not flow well. I just read it and found several areas I could improved upon. Hopefully everyone understands my points.

Can anyone confirm if the CIB did or did not calculate "Operating Expenses" for the Lucas Oil Stadium?

Lastly, Mr. Welsh, I actually look forward to reading your blogs each day. You are providing a tremendous service for our community and out of the own use of your time. Thank you very much for all you do!

Advance Indiana said...

The CIB knew it was going to cost more to operate Lucas Oil than the RCA Dome. Originally, they projected those costs at $5 million. Later, the CIB said the costs would be $10 million a year more. Then the figure increased to $20 million a year more. Keep in mind that the CIB is not responsible for the construction costs of LOS. Those costs are borne by the state stadium authority, which funds the bonds through the regional food & beverage tax, inkeeper's tax, car rental tax and state income tax revenues of up to $16 million from the stadium district. The CIB will not assume ownership of LOS until the bonds are paid off. Until then, the stadium authority leases it to the CIB, which in turn leases it to the Colts. Theoritically, the CIB could dump those expenses back in the state's lap and there's nothing the state could do but pay them to keep the stadium operating for the benefit of the bondholders, although the revenues will still be flowing in from the various taxing sources whether the Colts remain in LOS or not.