Star Appreciates AI's Doubts About Pacer Claims

Hats off to the Star's Brendan O'Shaughnessy and Mark Alesia, who didn't simply buy Herb Simons claims to the Star's editorial board about how much the team is losing. They cite the Forbes numbers I discussed in a post yesterday and the dramatic growth in the team's value since the billionaire Simons purchased the Pacers in 1983. Here's a little of what the duo says:

Simon said the Pacers have lost money nine of the past 10 years, including the year the Pacers played in the NBA Finals. (Forbes.com offers a different financial picture; see the graphic at left.) Jim Morris, president of Pacers Sports & Entertainment, said the team has lost $200 million total since Simon bought it in 1983 . . .

Simon avoided making threats to leave town and said he has not spoken to other cities that might be interested in the team. But, he stressed, "it's very important we resolve this in the near future. Very important."

David Carter, a sports business expert from the University of Southern California, said he can't evaluate the team's claims of losing money in nine of the past 10 years, including 2000, when they went to the NBA Finals.

But, Carter said, "even if they are (losing money), you still need to take a look at how valuable the team would be if it were put up for sale -- and not necessarily in the home market."

The Simons bought the Pacers for $11 million. Forbes magazine said the team is now worth a little more than $300 million, a figure the team disputes.

"The accumulated losses are close to the value of the franchise," said Morris, the Pacers Sports & Entertainment executive. "There is not some golden egg out there somewhere."

Potential suitors for the Pacers include Kansas City, which just built a new arena.

But, Carter said, "just because a city is interested doesn't mean they can pull the trigger. States, cities and school districts are laying people off, and there's going to be a headline about giving money to a new basketball team?"

Thanks in large part to Mayor Greg Ballard's decision to turn over city government to a well-paid Simon lawyer before he was even sworn into office, the Simons can rest assured that Ballard will carry their water for them, even if it means asking the public to pay higher taxes. The Star reports:

Paul Okeson, Indianapolis Mayor Greg Ballard's chief of staff, said the mayor wants to focus first on increasing admission taxes to help the CIB, spreading the burden to those who use the facility. But a 1 percentage point increase in that tax would raise only an estimated $1.5 million, not nearly enough revenue to cover the problem. In addition, the Pacers are concerned they would have to absorb that cost because they're not certain they could raise ticket prices without losing fans.

Another possibility is raising the existing tax on restaurants, but Okeson said the city needs to be cautious, especially because it would make that tax among the highest in the country. Still, the city senses it must do something.

"I think everyone involved would agree that a picture of Indianapolis without the Pacers would not be healthy," Okeson said.

Simon said he has been a community-minded steward of the team, which almost certainly would have left Indianapolis if he had not stepped in.

Again, I think the Mayor's people are clueless if they think the presence of the Pacers means so much to the future of downtown Indianapolis. The real question is whether a mid-sized city can afford the incessant demands of two billionaire sports team owners. The expansion of the convention center will bring more out-of-town visitors to the city; the Pacers simply drain disposable dollars local fans will spend elsewhere if they aren't spending the money on Pacers games. Making Indianapolis' food and beverage tax and hotel tax, both of which are already among the highest in the country, even higher could actually hamper future efforts to bring conventions to this town. Despite the ICVA's Don Welsh's claim that the city's convention business would be hurt if the Pacers leave town, the truth is that convention planners don't decide whether to come to a city based on whether it has an NBA team. As for Simon, don't look at him to fix your problem. "That's not our job," Simon said. "We want to cooperate, but I think some creative people can come up with creative ways of doing it." Well, Herb, if that WNBA team is truly losing millions, you might want to start by dropping it.

Unfortunately, it appears the Star's editorial board is simply looking after the newspaper's own self-interest and money-making opportunities from the Pacers. "The goal must be to keep the team in Indianapolis in such a way that the community is not hit, in the depths of a recession, with new tax bills," today's editorial reads. "The city might have to assume a portion of the Fieldhouse's operating expenses, but it should be phased in over the remainder of the lease agreement." "The team and the league, meanwhile, must work to fix an unsustainable business model." The editors fail to disclose that the CIB has asked the Star and other local businesses to forgive a $34 million loan to the CIB used to construct Conseco Fieldhouse. The Star's parent company, Gannett, stands to lose $2-3 million if the loan is forgiven.

Kudos to political columnist Matt Tully for just saying no to the Simons demand that we pick up an extra $15 million in their costs. "It's time to make tough decisions, and tough calls," he writes. "It's time for cities to say enough is enough. It's time to tell sports franchises that their financial problems are just that. Theirs."