Thursday, August 13, 2009

Now Let's Talk About That $15 Million For The Pacers

You and I both knew Councilor Robert Lutz was lying through his teeth when he told people in attendance at the Rules & Public Policy Committee hearing on the $21 million a year tax, spend and borrow CIB bailout hearing that the extra $15 million a year for the Pacers was off the table and not a part of this proposal. Originally, Lutz claimed he would offer an amendment before the ordinance's final adoption that gave the City-County Council more control over the agreements the CIB enters into with the sports franchises, but he pulled that amendment at Monday night's meeting. With the ink barely dry on the new city ordinance, the CIB leadership is already discussing giving away millions more to the Simon family despite the continued budget woes it faces. The Star's Francesca Jarosz fill us in on their plan:

After a series of painful budget cuts, months of political wrangling by state lawmakers and a precariously close vote by the City-County Council, now comes the hard part for the Capital Improvement Board.

The fact is, the CIB, which oversees the city's stadiums and the Indiana Convention Center, still faces enormous challenges . . .

Among the most difficult will be hammering out a new financial agreement with the Indiana Pacers, who, after years of losses, say they can no longer bear the entire $15 million cost of operating Conseco Fieldhouse.

Among those challenges is finding a way to help the Pacers.

The team has lost $200 million since Herb and Melvin Simon bought it in 1983, said Pacers spokesman Greg Schenkel.

The Pacers have made clear, Early said, that they can't continue to sustain those kinds of losses.

"I don't want to downplay the fact that there's some urgency," Early said. "We're either going to have to (find a solution), or we run a real risk of them not being in Indianapolis."

Schenkel said the team's intention is to stay here forever, and that's why it's important to continue discussions with the CIB.

The team's 20-year contract, signed in 1999, allows the Pacers an option of terminating early if they can show they are facing financial hardship, Early said.

Although the team has not asked to renegotiate its contract, it has given the CIB financial documents to show it is losing money.

CIB officials and city leaders have pledged they will continue to work with the team, but at this point, there are no concrete solutions.

Paul Okeson, chief of staff for Mayor Greg Ballard, said the city must get a sense of how much money the Pacers need before discussing a funding solution.

He said an agreement with the club could cost even more than the estimated $15 million the CIB would have to spend to operate Conseco Fieldhouse.

"Everything is on the table," Okeson said. "No doubt we're in a tough financial position, but we've got to make it work."
There you have it. Everythng is on the table. Although the article quotes CCC President Bob Cockrum as saying it would be difficult to obtain council support for more funding, he knows damn good and well the council past up the opportunity to control the outcome of the renegotiation with the Pacers. The current board members will turn over next January, and Bob Grand, Pat Early and the rest of the Board, all of whom are in the pockets of the sports teams, will make sure this renegotiation takes place before the new appointments occur, leaving it to a newly-reorganized board to pick up the pieces. As to the $26.3 million debt payment the Board's Treasurer, Ann Lathrop, discusses in the article, you can bet a deal has already been cut with the State to avoid that payment but she avoided saying anything about it to keep the pressure on wavering councilors.

17 comments:

jabberdoodle said...

Two year bandaid. I thought we could all agree on that point.

I guess I was wrong.

Lutz will be seeking more money for the ICVA during the CIB budget hearing. And, last night, Cockrum asked if the $16M going into the City's rainy day fund (proposed as part of the 2010 City-County budget) could then be spent on a 'municipal corporation'. I think that $16M comes from county option income tax money and I don't know what COIT money is legally allowed to be spent on. Hopefully they aren't looking at 'laundering' funds from one restricted fund to an unrestricted one to benefit the CIB. Hopefully it was simply a fleeting thought by Cockrum that does not take full flight.

Two years. Hell, they couldn't even make it past 3 full days before their ungrateful hands were trying to pick more pockets.

Downtown Indy said...

"No doubt we're in a tough financial position"

Isn't it the Pacers who are in a tough financial position? We've given them a facility to play in for free and they are still losing money (they say).

"Everything is on the table"

Everything, that is, except saying, "Sorry, but we're tapped out. You aren't the only ones who've been losing money for the past 20 years."

jabberdoodle said...

Oh, by the way. Okeson's statement about a 'tough financial situation' sounds like reverb coming from the PR machine.

This budget takes in $65M more in revenue than the 2009 budget -- $27M more from local taxes (property and income, mostly)even after accounting for the tax caps -- $26M more from the State and Feds, including stimulus money. So, after subtracting grant and stimulus dollars that really should not be spent on recurring operating expenses, the City-County expects to take in $39M more than this year from all other sources.

Its not exactly the dire financial quagmire that they are implying. $65M in new money can ease the difficulty of balancing a budget.

Paul K. Ogden said...

Jabber, I thought they weren't including the stimulus money when counting total revenue.

I don't see the point in hiring more police officers with stimulus money. How are we going to pay for them later. (Wait...isn't that the City's motto ... don't worry about things until "later" happens.) I thought the stiumulus funds were supposed to be used for infrastructure projects, which would be an investment in our futre.

I really think the Mayor's staff used highly rosy revenue projections to get to the balanced budget.

Aryq46254 said...

This absolutely disgusts me, and yet at the same time I'm so not surprised at all. I think I've become completely disillusioned to all of this, at this point. It feels pointless to get angry about this sort of crap anymore. Ugh!

jabberdoodle said...

No Paul, the tax revenues are up. Again, mostly due to increases in the income tax revenues. All monies coming into the city are being accounted for. They do keep a separate line for stimulus money, so you can keep mental track of it - but it is in the paperwork of the budget. And rightly so.

State and Federal grants and taxes (which includes stimulus money) is up $26M from 2009-2010. And they do put that to use for non-recurring charges. The $11M for three years for the 50 new police officers will not increase the total number of police beyond what the current budget supposedly funds. So, one might be able to say that the stimulus money maintains the status quo. Once the IMPD budget comes forth for hearing, this particular point should be clarified. So it is not clear at this point, to me anyway, if the number of police will be increased so much that it will be a particular hardship to continue their funding once the stimulus cash is spent.

Hope that makes some sense. Tax revenue figures are obtained from the DLGF who monitor how much tax revenue is being collected by the Indiana Department of Revenue.

The folks who are creating the budget are trying to keep it as accurate as possible. That I am fully convinced of. The PR machine is another matter. They want you to think that Mayor Ballard is hiking to the top of the mountain with a hundred pound rucksack on his back while it is more like he is taking a chair lift with a lunch sack in his lap.

Bottom line is that the total revenues expected is up $65M from 2009 to 2010 - with $26M of that in new state and federal funds, which includes stimulus money. How they decide to spend that new money tells you what their priorities are.

Aryq46254 said...

...and while I'm at it, the Pacers can just leave for all I care. Let the building sit empty, frak, I dont care if that costs us MORE money -- its better than giving it away to snotty billionaire sports team owners. For crying out loud, how in the h*ll did we get into a position where our local governments are held hostage by billionaire sports team owners? Its disgusting. Absolutely disgusting.

Downtown Indy said...

I'm thinking the CIB could give every household a new HD 52" flatpanel TV and beer for a year - and it would be cheaper than maintaining the Pacers here.

Let 'em go elsewhere and we can all watch on our new TVs.

Paul K. Ogden said...

Jabber,

I guess I'm still confused. Are we talking about tax revenues are up or expected tax revenues are up.

If it's the latter, then I would question the assumption that tax revenues will rise during a recession. It doesn't usually work that way.

jabberdoodle said...

Paul - we are talking about the 2010 budget. Expected revenues and expected expenses. The DLGF and the taxing units aren't new to this and their estimates are conservative.

Advance Indiana said...

Has anyone actually seen the budget numbers beyond the press releases? I'm still trying to find where the actual budget is. You sure as hell can't find it on that lousy indy.gov website, perhaps one of the worst government websites I've ever visited.

JudgeNot said...

word on the street is that Mel Simon has pancreatic cancer and is terminal. Can anyone confirm?

Advance Indiana said...

He's definitely hospitalized with a serious illness. For some reason, the family doesn't want the public to know more than that, although his brother, Herb, made a point in making a public statement about the need to pray for him at an event filled with prominent citizens and several from the news media recently as reported in the Star.

Monty Basking said...

Is this page what you're looking for?

http://www.indy.gov/eGov/Mayor/Pages/2010Budget.aspx

Chris said...

AI:

I thought you had posted the Pacers contract with the CIB, but I can't find it now. It strikes me as strange that a party would agree to an "opt out" provision based on something as ambiguous as "financial hardship" without any concrete definition, doesn't it? I'm hoping there was at least some methodology for determining what constituted "financial hardship," otherwise, isn't it arguably whatever the Simons say it is?

a smith said...

It is outrageous that the Pacers claim that they have never made any money should go unchallenged.

Releasing partial and unaudited financials to a few friendly insiders, who are forced to sign non disclosure agreements, is NOT enough to convince anyone with ANY brains to believe this fairy tale that the Simons are not making money on their Pacers entertainment enterprise.

Public disclosure of audited financial statements from the Pacers and all other related entertainment companies along with legal affidavits from the team owners, accountants, auditors, and bankers would be a good start to legitimacy and creditability.

Anything less should be disregarded as fantasy and possibly a crime.

Paul K. Ogden said...

Chris,

The Pacers contract can be found at www.capitalimprovementboard.org.

My reading the contract (which is about as poorly written and organized contract one could imagine) is that in order for the 10 year out to apply: 1) the Pacers must show they're losing money; 2) they have to sell the team; and 3) the team must relocate. If those three condtions are not met, they can't take the early out.

If it is a situation in which the team can take an early out, the Pacers must pay a penalty. The penalty is based on a percentage, which declines year after year, times what the team sold for. In 2009 that percentage is 50%. So if the team is sold for $300 Million this year, the penalty is $150 million. There is an alternative method of calculating damages that can apply. The lower controls.

The penalty for early termination is quite substantial. Still the pacers would have to be selling the team for it to apply. That's how I read the contract, which horrible to read and interpret.