Monday, May 10, 2010

City Spends $30,000 On Useless Study To Tell You Why You Should Give $15 Million A Year To Billionaire Simons

It's not worth the paper on which it is written. The CIB commissioned a study by Chicago-based Hunden Strategic Partners at a cost of $30,000, a cost which the Indianapolis Bond Bank picked up. Robert Hunden is a former economic development official for the City of Indianapolis under Mayor Stephen Goldsmith and previously worked for the Bond Bank. Hunden is already boasting about his study on his company's website. Not surprisingly, his study concludes the City will lose $55 million a year if it doesn't invest another $15 million a year in the Simon-owned Indiana Pacers. The Simons currently lease Conseco Fieldhouse for free and receive all revenues generated by the facility, including both game and non-game events. The Simons now claim they are losing $30 million a year. Forbes magazine has estimated the team earns $100 million annually in revenues and pays $65 million a year for player salaries.The $15 million is expected to cover operating and maintenance expenses on the facility, although the Simons claim actual expenses are running $18 million a year. The Pacers only recently adjusted that figure. It's a moving target just like the claim of how much money they are losing keeps growing each time Jim Morris opens his mouth.

The study included the women's professional basketball team, The Fever, with its economic analysis. Together, the Pacers and The Fever have 77 games a year at Conseco. Hunden claims those events create 900 jobs and draw 700,000 fans downtown. He contends the CIB will incur a $12.2 million annual operating deficit if the Pacers leave. And if you believe that, you also believe in the tooth fairy. As with all of these studies, it ignored other possible uses the CIB could make of Conseco to make up that operating deficit, not to mention the lower costs without those 77 events. Many of those 700 jobs mentioned in the study are part-time and extremely low-paid. Ann Lathrop, the CIB's president, bought the report hook, line and sinker. She worked with Hunden in the Goldsmith administration where she served as Controller. She told the IBJ the study is "very important."  “This allows us to have a benchmark relating to the true economic impact" of the Pacers," Lathrop said.

The CIB avoided a huge budget deficit this year after the City-County Council approved a $24 million a year plan to raise taxes and borrow money from the State of Indiana after some cuts were made in the CIB's operating budget and payment of long-term debt was deferred. The CIB should be ashamed for even putting out Hunden's study as anything remotely reliable and objective. The guy's bread and butter is made from preparing these one-sided studies. Can't we find a university professor without any strings attached to him or her prepare a believable study? No. Objectivity does not enter into these discussions.

The study can be accessed here. It's a quick read, although Hunden got creative in page numbering and page layout to make it appear there is more meat to it. It's quite easy to punch holes in it. The Pacers actually create only about half of those 900 jobs cited. The other half are created indirectly or induced (whatever that's supposed to mean). The same is true with the $55 million a year in spending. Almost half is attributed to indirect or induced spending. It claims Indianapolis governmental entities will lose about $18 million a year, including $12.2 million in net operating deficit and $5.5 million in lost revenues. Again, these are very dubious estimates. Hunden laments the rising per seat cost to the Pacers without mentioning the team's meltdown that led to a huge fall-off in the number of people attending their games. The study says Conseco currently generates only $8.1 million in non-game event revenues. Without the Pacers, the study suggests the CIB would increase that figure less than $1 million annually. I'm still waiting for the Pacers to release their audited financial statements.

UPDATE: The Star's Bill Ruthhart has a story today that casts no skepticism on the study's economic impact if the Pacers leave. He should be totally ashamed of his sloppy reporting in this case. It leaves readers with the impression there is no reason to question its accuracy. He doesn't note Hunden's former employment with the city, how he worked with Ann Lathrop in the Goldsmith administration or the fact that the Pacers refused to allow access to its proprietary financial data. And once again, the reporting omits the huge multi-million dollar penalty the Pacers would have to pay if they move the team to another city, which could be at least $50 million and is potentially as high as $150 million. The Pacers have no claim to privacy when they are receiving so much in public subsidies and demanding even more. It's only because our CIB is in their pocket that such information has not been released publicly to date. He quotes former Ballard chief of staff Paul Okeson as claiming the study confirms the conclusions the CIB had already reached before its release. Paul Okeson should be bounced from the CIB. He traded his job with the city for a major city contractor, Keystone Construction, which also happened to partner with John Bales' Venture real estate company in a bid to take over operation of CIB facilities.Shortly after Okeson joined Kestone, it was awarded a multi-million dollar contract to do work on the new Wishard Hospital. His presence on the CIB is a complete insult to taxpayers. The pay-to-play actions taking place in the Ballard administration rival the current criminal prosecutions taking place in Illinois for the administration of former Gov. Rod Blagojevich.


Indy Rob said...

$15 million per year amounts to about $10.60 per seat per game subsidy. Assuming 77 games and selling out every seat in a 18,400 seat field house.

In other words, the city should expect for this investment that every fan at these games spends enough extra money to account for $10.60 in taxes.

Downtown Indy said...

We made it to the top of the page (again):

Brizzonator said...

Read Note 18 in the attached... How can the CIB have discussions about financial committments when they still do not have there house in order... After last years debacle and the delay in issuing their results until September 2009 for 12.31.2008 results they are absoulute puke. If I was President of the CIB the Audit would be complete by 2/28/2010 for 12/31/09 results we would publish our report to the public by 3.15.2010. WHAT A BUNCH OF LOW CLASS BOOBS ON THAT BOARD.
BUSINESS 101 GET THE NUMBERS. The CIB shop is not in order. You expect them to get financial details from the Pacers? They cannot even get theirs out timely. AN ENTITY THIS LARGE SHOULD BE PRODUCE QUARTERLY RESULTS TO THE PUBLIC. ANN just what the hell is your background???