Friday, April 16, 2010

Extortion Pays For Herb Simon

Herb Simon's Simon Property Group didn't become the king of shopping malls without learning the art of extortion. It looks like the extortion card is about to pay off big time for the Simons in their quest to get taxpayers to pick up all of the costs of operating Conseco Fieldhouse. Herb has given the CIB until June 30 to agree to his demands; otherwise, he will explore moving the Indiana Pacers to another City. The CIB would have us believe the loss of the team would have dire economic impact on the City's economy. Nothing could be further from the truth. Simon would have to pay a break up fee well in excess of $100 million if the team decides to move. That's money the CIB could use to pay off the debt on the existing arena, thereby dramatically reducing its annual costs.

Instead of doing what makes sense economically for the City, the CIB's leadership is talking about a deal with the Simons whereby the CIB would take over the management of Conseco but still allow the Simons to pocket all of the revenues from the facility. In other words, we're going to give the Simons the same deal we gave Jim Irsay with Lucas Oil Stadium. You may recall that the state bailout of the CIB was prompted because the CIB failed to budget the additional cost of running Lucas Oil Stadium, along with the loss of revenues it had previously earned from operating the RCA Dome. Ann Lathrop, the CIB's president, claims the CIB will achieve operational efficiencies if it assumes control of Conseco, in addition to the convention center and LOS. This would be the same CIB leadership which just months ago said it was considering privatizing the operation of those facilities in an effort to save money. Sen. Luke Kenley isn't worried. He says the CIB can simply raise visitor taxes again to pay for the added cost.

All of these discussions are based on a dubious claim by the Simons that they are losing tens of millions annually under the current lease agreement. Not once during the history of this lease have the Simons been required to publicly disclose the audited financial statements for the Indiana Pacers and its entertainment affiliate. How do we know these claims of losses really exist? Further, it's time for Ann Lathrop to fully disclose all of the clients of her accounting firm, Crowe-Horwath. I have strong reason to suspect that she has major conflicts of interest that she has never disclosed to the public. Show us the list, Ann.

Meanwhile, the widow of Mel Simon has listed her Bel Air mansion for sale at $50 million. She'll need that money to pay all of the attorney fees she will face as she defends herself against the accusation of Simon's children that she manipulated her late husband while he was suffering from dementia to rewrite his will to leave her everything. The loss of the Bel Air mansion will be no big deal. Bren Simon still owns a $50 million home in Carmel and condominiums at a Colorado ski resort and Manhattan.


Downtown Indy said...

Now more than ever, the City should allow them to pursue those other options.

Let's see what they come up with. After all, we DO have the first right of refusal. So that means we don't have to act premptively.

Let's see what other deal they cn turn up, if any, before we do anything.

Marycatherine Barton said...

Wow, what a opening powerful punch you have given Simon Property Group, AA. Shame on the Simons if they are playing the extortion card on us simple folks.