Saturday, September 28, 2013

Is The IMS Giving The Old Heave Ho To Central Indiana's Nonprofit Organizations?

The IBJ's Anthony Schoettle has a story discussing the Indianapolis Motor Speedway's plan to put its concessions and merchandise vending operations up for bid for the first time in the Speedway's 104-year history. According to the story, Speedway officials are asking bidders "to commit to making unspecified infrastructure upgrades to help increase the customer experience and increase sales." Schoettle says the move is seen as a way "to cut costs and increase revenue." Centerplate and Levy Restaurants are considered leading bidder for food and beverages, while MainGate is viewed as having an inside track on the merchandising contract. Centerplate currently has the contract for Lucas Oil Stadium and the Indiana Convention Center, while the Simon-owned Pacers currently has a contract with Levy to operate the concessions at Banker's Life Fieldhouse.

Completely missing from Schoettle's story is what impact the outsourcing will have on nonprofit organizations in Central Indiana, which have long been awarded commissions on concession sales at the IMS events in exchange for providing thousands of volunteers to staff the concession and merchandise stands and to serve as ushers and parking attendants. The Ice Skating Club of Indianapolis, for example, provided volunteers to staff one of the concession stands at this year's Indy 500, Brickyard 400 and MotoGP races for the opportunity to receive 13% from the concession stand's sales.

Schoettle's story notes that Speedway fans have become accustomed to much lower food and beverage costs at the track than other venues, particularly Lucas Oil Stadium and Banker's Life Fieldhouse, where prices are atrocious. Speedway President Doug Boles says that he is confident that price controls in the vendor's contract will keep prices from increasing. Fans will still be allowed to bring their own food and drink to the track. The outsourcing, however, will mean the loss of about 15 full-time jobs at the Speedway, in addition to the loss of some part-time, seasonal staff.

Thanks to legislation approved by the General Assembly this year and signed into law by Gov. Mike Pence, Indiana taxpayers will fork over $100 million to the Hulman-George family to make improvements to their privately-owned race track because in Indiana it is apparently the duty of every taxpayer to provide public subsidies to the state's wealthiest families who operate professional sporting events. They're not concerned about whether you can afford to buy health insurance to take care of yourself and your family or whether your kids learn anything at our public schools, but it is absolutely vital that there be permanent public subsidies available to the Irsay, Simon and Hulman-George families to operate their for-profit sporting businesses because they are so critical to the future well-being of the state.

UPDATE: Centerplate apparently has a program for volunteer organizations to furnish volunteers to staff concessions in exchange for a share of the sales at Lucas Oil Stadium. I found an old article from 2010 discussing contracts it had with nonprofit groups and area schools. The article indicated that about 70% of the concession stands at LOS is operated by volunteers. The participating groups and schools seemed to be happy with the arrangement. Presumably, Centerplate would have a similar arrangement at the Speedway if it won the contract. I don't know how it would compare to the current arrangement with the Speedway. It's hard to see how you squeeze out larger profits with an outside contractor if you're not going to raise prices to levels more comparable with food and concession costs at Lucas Oil Stadium or Banker's Life Fieldhouse.

UPDATE II: I missed this end-of-week report. IndyCar's title sponsor, Izod, is ending its sponsorship at the conclusion of the 2013 season. Its 6-year, $60 million sponsorship deal was supposed to extend through the 2014 season according to the IBJ's Anthony Schoettle.


Anonymous said...

when did you become concerned about
local nfp volunteers such as a high school band booster club or kiwanis club or little league boosters who work these kind of events?

Indy Rob said...

After the Speedway accepts the winning bid, new security restrictions will be put in place that ban all outside refreshments and lunches. For a single day crowd of 400,000, I would expect the winning bidder to promise the speedway between 5 and 20 dollars per head for exclusive concession rights. We are talking about a captive audience that is inside the track for between 4 to 6 hours.

Gary R. Welsh said...

They claim they're not going to do that, Indy Rob, but I didn't expect them to close down Georgetown Road permanently for security concerns either.

Anonymous said...

"We are talking about a captive audience that is inside the track for between 4 to 6 hours."

Maybe you. Ever want to attend a sporting event, miss it because you were caught up in other things, then notice that your life didn't seem that diminished, perhaps even improved, for missing the event?

Let that happen enough times, and permanently moving away from sports becomes quite easy and enduring.

Anonymous said...

I can't answer for Levy Restaurants at Banker's Life, but I "worked" for them as a non-profit fundraiser out in Seattle at Cheney Stadium, Key Arena, and CenturyLink Field before they lost that contract. They were MUCH more generous with the NPO groups than the new company, Delaware North (Sportservice) is. So many NPOs were threatening to leave after DNC took over that they did agree to increase our minimum payout and increase our percentages to be closer to what Levy had offered us.