Ballard Wants Change In Control Of Fieldhouse After Blowing $43.5 Million

The Capital Improvement Board of Managers has agreed to pay $43.5 million to billionaire Herb Simon's Indiana Pacers to help offset the operating costs for Bankers Life Fieldhouse over the past four years based on an unsubstantiated claim that the Pacers are losing tens of millions of dollars annually. As Ballard begins a push to increase taxes on admissions to sporting and other events at the CIB's facilities, along with an increase in the auto rental tax, he's now telling the IBJ that he might make a push to give operational control of the Fieldhouse to someone other than the Pacers. He floated this idea a couple of years ago but abandoned it when people started asking too many questions about the companies vying to manage the company. Pacers Sports & Entertainment submitted a proposal to team up with Global Spectrum to operate the Fieldhouse, which made little sense because the Pacers claim they are unable to manage and operate the facility currently without tens of millions in additional public subsidies, despite getting rent-free use of the facility and all of the revenues it generates. Ballard said the CIB or a private management company might be considered under such an arrangement:

“We’re going to look at taking it over to see if it makes more sense for us,” Ballard said. Potential managers include the Capital Improvement Board—which owns the arena, Lucas Oil Stadium and Indiana Convention Center and operates the latter two—or national companies that specialize in venue management.
 

One of the reasons I find the Pacer's claim of financial losses dubious is the fact that Kansas City was able to build a $276 million arena that has no professional sports team as a tenant and is still able to operate it at no additional cost to taxpayers after paying debt obligations on it. Kansas City partnered with AEG, a private operator of public venues, to build the Sprint Arena. AEG agreed to put up $54 million in cash to help build the $276 million arena in consideration for a long-term operating agreement. Kansas City raised its hotel tax and auto rental tax to pay bond debt service on the arena, which is close to $14 million a year. Since Sprint Arena opened five years ago, AEG has shared $7 million in profits earned by the arena after hosting more than 500 events attracting 5.6 million visitors.

Ballard and the CIB continuously beat the drum that the City would be saddled with a costly facility to maintain that would sit empty most of the year if the CIB stopped subsidizing the Pacers and Simon chose to move his team to another city. As it stands, the CIB is paying not only the debt service on the Fieldhouse but also at least $10 million a year to operate it without realizing a dime's worth of revenues from it. Kansas City's budget director notes that if an anchor tenant like a professional sports team is found for Sprint Arena, the anchor tenant would take away most of the revenues the facility currently generates, and that it's actually more profitable for Kansas City and AEG not to have an anchor tenant. That's not to say Kansas City's taxpayers are getting a deal. They're still paying $14 million a year in debt service, but that cost would likely be tens of millions more annually if it were to attract an NBA team

Kansas City sold the naming rights to the arena to Sprint for 25 year for $42.5 million, or $1.7 million a year. Sprint agreed to increase its annual payments to $2.5 million a year if the City attracts an NBA or NHL franchise. By comparison, Conseco purchased the naming rights for the Fieldhouse in 1999 under a 20-year deal for $40 million. CNO agreed to continue the 20-year agreement after changing the name from Conseco to Banker's Life and picking up the rebranding costs. The Pacers pocket all the money earned from naming rights, as well as other advertising opportunities at the venue. The CIB paid $3.5 million to install a new digital scoreboard and ribbon board at the Fieldhouse, which provide more revenue-generating opportunities for the Pacers.

Pacers Sports & Entertainment CEO Jim Morris claims they've done a "superb" job running the Fieldhouse. I found it interesting that nobody even seems to know what the true operating costs are for the Fieldhouse. He insists the company he runs is not a profit-making company. "We operate it for the well-being of the community," Morris told the IBJ. Yeah, right. Morris wouldn't say whether the team would be willing to give up control of the Fieldhouse, which is quite telling. If the building is such a money loser to operate, then why does the team insist on managing it? Morris told the IBJ he wasn't even sure what the $10 million subsidy to the team represents. “I suppose something in the neighborhood of $15 million is what it costs us to operate the core expenses of this building,” Morris said. "That’s the amount the Pacers requested from CIB in 2010. But when IBJ initially asked Morris about that figure this month, he said he didn’t know its origin." “I have no idea what that number means," Morris said. The CIB told the IBJ that it believed in 2010 it cost $12 million a year to operate. In other words, they're just pulling figures straight out of their asses as usual.

Obama References Himself 63 Times During Sen. Inouye's Funeral Service

The narcissist-in-chief lived up to his reputation during a funeral service at the National Cathedral on Friday in honor of the late Sen. Daniel Inouye (D-HI). Instead of talking about the accomplished life of Sen. Inouye, Hawaii's senior senator and decorated World War II hero, Obama worked in references to himself no fewer than 63 times. The American Thinker's Jack Cashill says Obama  used the word "my" 21 times, "me" 12 times, and "I" 30 times in the course of his "1600-word oration." Obama spoke about having "a white mom and a black father," as if we didn't already know that, and how he didn't learn what a U.S. Senator was until he was 11 when his family took a vacation to the Mainland during the summer of the Watergate hearings, which his mother made him watch every night and he was most "fascinated" to watch "this man of Japanese descent with one arm, speaking in this courtly baritone, full of dignity and grace." Yes, he did manage to work Sen. Inouye into the tribute. Cashill notes, however, that Obama's story didn't quite add up. It seems the family trip to the Mainland occurred in 1972, a year before the Watergate hearings aired.

Idaho Senator Who Doesn't Drink Alcohol Arrested For DUI

Idaho's senior senator should have been back home in his home state the weekend before Christmas, but unfortunately for him he was still in Washington where nothing good seems to happen. Sen. Mike Crapo, a Mormon who claims he abstains from drinking alcohol, got pulled over in the early morning hours yesterday after running a traffic light in suburban Alexandria, Virginia and charged with driving under the influence of alcohol. The 61-year old senator, a graduate of Harvard Law School, failed several field sobriety tests and his blood alcohol tested .11. "I made a mistake for which I apologize to my family, my Idaho constituents and any others who have put their trust in me," he said.  "I accept total responsibility and will deal with whatever penalty comes my way in this matter."

Idaho's former Sen. Larry Craig became infamous for his arrest at a Minneapolis airport bathroom for soliciting sex from an undercover police officer. The former senator has been fending off a lawsuit brought against him by the FEC to recover $217,000 in legal bills he spent out of his campaign funds defending himself against the charges. Craig's attorneys have argued that his visit to the Minnesota airport bathroom was part of his official Senate business since he was traveling between Washington and his home state at the time of his arrest.

Three Criminally Charged In Indy Home Explosion

The owner of a south side home that exploded on November 10, killing two people and destroying dozens of other homes in the Richmond Hill subdivision, along with her boyfriend and his brother, have been criminally charged in connection with the ongoing investigation. WRTV reports that Marion Co. Prosecutor Terry Curry will announce today that Monserrate Shirley, her boyfriend Mark Leonard and his brother Robert Leonard have been arrested and are being charged with numerous crimes, including murder and arson. An update will be provided after Curry's press conference scheduled for later this morning.

UPDATE: Marion Co. Prosecutor Terry Curry laid out the facts contained in a probable cause affidavit. As this blog first reported, Curry said the source of the gas leak is believed to have originated from the fireplace where there was a missing gas valve regulator. A microwave in the home that contained a timer was the ignition source for the explosion. Investigators recovered the destroyed microwave and were able to determine that it had exploded from the inside out. A neighbor witnessed a white van owned by Mark Leonard at Shirley's home on the afternoon of the November 11th blast. Curry said experts believe the gas build up in the home had been taking place for approximately nine hours before the microwave ignited the gas. Leonard's white van was used to transport items removed from the home belonging to him and Shirley prior to the blast that were stored at another person's home according to Curry.

In addition to felony murder and multiple arson charges, Shirley and Mark Leonard also face conspiracy to commit arson charges based on statements an acquaintance of Mark Leonard made to investigators that the couple had tried to blow up the home the weekend prior to the November 11th blast, but that attempt failed. Investigators learned that Shirley had recently increased the value of an insurance policy insuring the home, and Mark had told the acquaintance that he expected to receive a $100,000 share of the proceeds. Curry said investigators learned that the Leonard brothers had changed a digital thermostat in the home to a slide switch thermostat that would ignite a spark. The two men had also spoken to a Citizen's Energy person about the difference between the volatility of natural gas and propane.

I should add that the prosecutor's office and the involved law enforcement agencies deserve the public's credit for their exemplary work in solving this tragic crime and bringing those responsible to justice.

Lilly Pays $29 Million To SEC For Bribing Foreign Officials

Just last weekend I mentioned in the story related to the Monica Liang Affair how American companies, based on my limited experience working with a business that sought to expand into China, are required to pay bribes or kickbacks to officials within the government as a condition to doing business there. The Monica Liang Affair involved a highly-paid contractual employee working for the Indiana Economic Development Corporation who immigrated to the U.S. from China and had been accused of using her position to solicit bribes from Chinese businessmen while representing the state's economic development agency in discussions regarding investments to be made by Chinese business interests in Indiana. Today we learn that Eli Lilly has agreed to pay a $29 million fine to settle a claim brought by the SEC alleging the company had paid bribes to officials in Brazil, China, Poland and Russia to obtain government contracts in those countries between 1994 to 2009. The IBJ summarizes the agreement reached by the SEC and Lilly:

According to a statement released by the SEC, Lilly paid millions of dollars to government officials or to third-party bank accounts associated with government officials. In the case of Russia, Lilly did not curtail the bribery payments from its subsidiary there until five years after the parent company became aware of them, according to the SEC charges, filed Thursday in federal court in Washington, D.C.

Employees at Lilly’s subsidiary in China falsified expense reports to provide spa treatments, jewelry, and other gifts and cash payments to government-employed physicians, according to the SEC.

“Eli Lilly and its subsidiaries possessed a ‘check the box’ mentality when it came to third-party due diligence,” Kara Novaco Brockmeyer, chief of the SEC Enforcement Division’s Foreign Corrupt Practices unit, said in a prepared statement. “Companies can’t simply rely on paper-thin assurances by employees, distributors, or customers. They need to look at the surrounding circumstances of any payment to adequately assess whether it could wind up in a government official’s pocket.”

Lilly paid $14 million in disgorged profits and $6.7 million in interest on those profits. The company also paid a fine of $8.7 million to the SEC.

Anne Nobles, Lilly’s chief ethics and compliance officer, said in a prepared statement, “Since ours is a business based on trust, we strive to conduct ourselves in an ethical way that is beyond reproach. We have cooperated with the U.S. government throughout this investigation and have strengthened our internal controls and compliance program globally, including significant investment in our global anti-corruption program."

Lilly is not alone. Other major pharmaceutical companies, including Johnson & Johnson and Pfizer, have reached similar agreements with the SEC in recent years according to news reports. "Industry experts say it's not unusual for foreign sales representatives to give gifts and payments to government officials, though this practice is not permitted by U.S. law," the IBJ reports. Gov. Mitch Daniels served as a high-ranking executive at Lilly before becoming Indiana's governor, and former Indianapolis Mayor Bart Peterson now holds a similar position with the company.

Durham Being Held At County Detention Facility In Kentucky

Some readers have wondered where convicted Ponzi schemer Tim Durham will be serving his 50-year federal sentence. Currently, he and his convicted business partner, James Cochrane, are being held at the Grayson County Detention Center in Leitchfield, Kentucky while they are in transit to their permanent home in a federal prison. Durham has filed notice of his intention to appeal his conviction based on numerous errors allegedly committed by the federal district court judge. He is seeking the assistance of a public defender to handle his appeal, claiming he is broke.

Ballard's Rationale For Raising Taxes For CIB Makes No Sense

In case you were wondering, Mayor Greg Ballard's number one priority is still finding new ways to raise your taxes to provide more money to the CIB to hand out to the billionaire sports team owners. All other city services may be suffering due to a lack of funding, but Ballard is going to do everything in his power to make sure the downtown mafia has all the public dollars it needs to finance their own personal business endeavors. In his quest to sell the public on highers taxes on admissions to public events and auto rentals, Ballard, who will never be accused of being the sharpest tool in the shed, makes this incredulous statement:

“People need to remember all this was built up based on larger visitor taxes and user fee taxes because it has to get paid for some way,” Ballard said.

Huh? What's this guy smoking? People have already been paying higher taxes and user fees to pay for these sports palaces. The argument went that if we raised taxes to provide a revenue stream to build these sports palaces, visitors would flock to the downtown, spend tons of money and generate even more business expansion that would grow the tax base and help pay for other city services. The exact opposite has occurred. Both the admissions taxes and auto rental tax were raised in 2005 to pay for Lucas Oil Stadium, but it still wasn't enough. In 2009, we raised taxes on hotels and received millions annually in state tax subsidies supposedly to help pay stadium-related costs. Now we're being asked to raise taxes yet again to pay operating costs on the Fieldhouse that billionaire Herb Simon's Indiana Pacers have been contractually obligated to pay since the Fieldhouse was built nearly 13 years ago. The more we tax and spend for these facilities, the greater demand there is from the CIB for higher taxes and additional spending for their benefit. When does someone tell the downtown mafia that enough is enough? We must focus our efforts on taking care of basic city services. We don't have the luxury of continuing to pump more tax dollars into a business sector that is simply cannibalizing the city's public resources to the detriment of everything else.

UPDATE: The comments Ballard made in an interview with WTHR's John Stehr are even more stupid than the comments he made to Fox 59 News. Ballard claims the Simons donated $100 million in services to the City by taking care of the Fieldhouse for taxpayers despite the fact that they get rent-free use of the building and get to keep all of the revenues generated from it as the reason we now must give Herb Simon at least $10 million a year. By the way, Ballard says other cuts will have to be made in the city's budget to make up for a shortfall at the same time he supports the CIB handing out tens of millions of dollars to Herb Simon without even batting an eye. That's just how much contempt he has for the people he was elected to serve. He would rather give your money away to someone who doesn't live in the City and who has more money than he knows what do with than use the money that belongs to all of us to provide essential city services.

John Stehr: "Here's the narrative that I think people have in their mind: We built them a building, we let them use it rent-free, we let them keep the revenue that is generated in that building all year long and now we have to give them another $10 million to pay for the upkeep and pay for the utilities. Is that still a good deal for the city and at what point does it stop?"
Mayor Ballard: "We're subsidizing the running of the building and the Pacers bring down 10,000-15,000 people 50 times a year to our downtown, so that's what they do. I could have stood on my high horse and took over the building and I can run it for $112-115 million, which was our estimate at the time and 'Pacers, you go away,' but then I don't have 10,000-15,000 people coming down 50 times a year and I've got a largely empty building, but I'm running it. Well, that's not optimal."
Stehr: "So is part of this that you don't want to be the mayor that loses the Pacers?"
Ballard: "No, I just want to make a fair deal, but I want people to understand that it takes money to run the building and the Pacers have been running the building for us."
The mayor says by operating the Fieldhouse in the early years, the Pacers provided $100 million of service to the city.
Ballard: "At that time, when we made the deal three years ago, it was cheaper for the Pacers to operate the building than it was for us to operate the building."
Stehr: "So, it's a good deal...a good deal for the city?"
Ballard: "Right now it is, but we're going to have to see if we can operate it more cheaply into the future."
The mayor also said that the city needs to look for cost savings to handle the current budget shortfall.

Stonewall Democrats' President Injured In Fatal Accident

Aaron Schaler, President of the Indiana Stonewall Democrats, suffered injuries in a fatal accident that killed another pedestrian. According to the Star, Schaler and another unidentified person were struck by a van driven by a 20-year old man, Joseph Anthony Scott Crandall, in the Fountain Square neighborhood of Indianapolis last night about 8:20 p.m. The unidentified person was pronounced dead at the scene. Schaler was transported to Wishard Hospital where he was reported to be in stable condition. Alcohol did not appear to be a factor in the crash according to the Star. Fox 59 New reports the driver was in a rush to get to the airport when his vehicle jumped the curb and struck the victims:

Crandall told police he had just eight minutes to get to the airport.

“There’s no way you’re gonna make it to the airport in eight minutes from this location… just know that you’re gonna be late and uh, deal with it that way,” said IMPD Officer Kendale Adams. “Certainly when we’re rushing and trying to get to another location and we have this type of result, it’s just tragic.”

Investigators don’t believe drug or alcohol played a factor a in the crash, but they took a blood draw from Crandall just to be sure.
 

UPDATE: The Star has identified the deceased victim as 22-year old Brian Benson. The updated story provides more details, indicating the high rate of speed the van was traveling when it struck Benson and Schaler. Not a pretty sight:

Police said the 1989 red Dodge van, driven by Joseph Anthony Scott Crandall, 20, Indianapolis, was turning west from Shelby Street to Prospect Street when it jumped the curb and hit the men. The impact hurled Schaler 22 feet into a parked car on the south side of Prospect, the IMPD report said.

Benson was stuck under the van and was dragged about 67 feet west on Prospect. After Benson was dislodged, Crandall drove about 50 feet before he tried to brake, the report said. The van skidded about 94 more feet before it stopped.

Government Report Blames State Department For Benghazi Failures

The blame for the security failures that led to the assassination of Ambassador Chris Stevens and two other Americans during a terrorist attack on the consulate in Benghazi, Libya rests with the State Department according to a newly-released government Accountability Review Board report. Despite "systematic management and leadership deficiencies" at the State Department that led to "grossly" inadequate security at the facility, the report recommends that no disciplinary action be taken against any State Department official. The report also confirms that the Obama administration's initial claims that there were protests taking place outside the consulate in response to an anti-Muslim YouTube video were untrue.

The report singled out the Bureau of Diplomatic Security and the Bureau of Near East Affairs for criticism, saying there appeared to be a lack of cooperation and confusion over protection at the mission in Benghazi, a city in Eastern Libya that was relatively lawless after the revolution that toppled Libyan strongman Moammar Gadhafi.

Despite those failures, the Accountability Review Board determined that no individual officials ignored or violated their duties and recommended no disciplinary action now. But it also said poor performance by senior managers should be grounds for disciplinary recommendations in the future.

The report appeared to break little new ground about the timeline of the Benghazi attack during which Libyan Ambassador Chris Stevens, information specialist Sean Smith and former Navy SEALs Glen Doherty and Tyrone Woods — who were contractors working for the CIA — were killed. Stevens' slaying was the first of a U.S. ambassador since 1988.

But it confirmed that contrary to initial accounts, there was no protest outside the consulate and said responsibility for the incident rested entirely with the terrorists who attacked the mission . . .

The review board determined that there had been no immediate, specific tactical warning of a potential attack on the 11th anniversary of Sept. 11, 2001. However, the report said there had been several worrisome incidents in the run-up to the attack that should have set off warning bells . . .

The report refutes claims that the government denied requests from officials in Benghazi for assistance in repelling the attack on September 11. It doesn't explain how officials in Washington who were watching live video feed from security cameras placed around the compound came to the conclusion that no military assistance was required there.

Secretary of State Hillary Clinton was originally scheduled to testify before Congress this week, but she will not appear now due to illness. She canceled a number of events starting last week, complaining of a stomach virus. This week, reports claimed she suffered a concussion from a fall following a fainting spell.