Just The Facts, Please

A Star editorial today makes a half-hearted attempt to convince the Pacers and Colts organizations that they need to "contribute" some money to help solve the approximately $50 million operating deficit faced by the Capital Improvement Board. As I've said before, the taxpaying public cannot expect fair and balanced reporting on this subject from our local news media because of the vested interest they have in the long-term success of the two sports franchises in this town. In the case of the Star, that conflict of interest is even more direct and is clouding its reporting.

If you don't read the IBJ, or the blogs which fill you in on what it is reporting, for example, you wouldn't have known about a more than decade-old deal whereby nearly a dozen corporate citizens which invested in the publicly-funded Circle Centre Mall agreed to divert dividends from their investment to the CIB to help pay for Conseco Fieldhouse, including the Star. Or that the Simons, who pay no rent on Circle Centre Mall, refused to transfer any of its investment dividends in the mall to help pay for Conseco Fieldhouse. Or that the CIB is now quietly asking these same corporate citizens to forgive $34 million it now owes to them, including $2.6 million to the Star. Or that the CIB refuses to say whether the Simons ever made good on their $57 million pledge to help finance Conseco Fieldhouse. What does the Star tell us about all of this? "The Simons, who also have a state-of-the-art facility courtesy of the taxpayers but have been paying the operating costs, want to renegotiate that $15 million a year because the Pacers are doing poorly," the editorial says. Not exactly what you would call straight talk, is it?

In today's Star editorial, the CIB is lauded for making $6 million in budget cuts. "All of which is to say we hope our sports owners, along with state officials, noticed that the CIB has made the first painful move in what must be a multi-party resolution of a mess that's of multi-party making," the editorial reads. The fact is the CIB inflated its budget by more than 20% over the past two years, or $20 million. Only in government is it considered a budget cut when you still spend more than you've spent in the past but just not as much as you wanted to spend. If the Star had bothered to study the same CIB budget numbers it shared with the public, it would have no trouble grasping this fact. So as this debate proceeds, remember to call out these officials on these claimed budget cuts. The CIB hasn't sacrificed anything yet. It has threatened to whack its funding for local arts organizations and support of the ICVA to help build support for a state bail out.

"The state's takeover of the Lucas Oil Stadium construction project resulted in the doubling of an expected $10 million operating deficit, which the CIB wound up saddled with," the editorial claims. No, they were expecting a $6 million shortfall, which later grew to $10 million and then eventually reached $20 million. Notice how the Star buys into this urban myth that the only reason the CIB is in financial trouble now is because the state financed the construction of the Lucas Oil Stadium. Mayor Bart Peterson and former CIB President Bart Peterson brokered a deal with Colts owner Jim Irsay to build a new $500 million stadium (which later grew to $720 million). They agreed to those terms before figuring out how to pay for the stadium. They thought they would just ask the legislature to award a downtown casino to Indianapolis and use revenues from the casino to pay for the stadium. Any one with half a brain knew that idea wasn't going to fly, and it never received serious consideration. Gov. Daniels insisted on a state authority to oversee the stadium's construction because neighboring counties were being asked to pay additional taxes on food and beverages, hotels and car rentals, and the state was pledging up to $16 million annually in state revenues towards the stadium.

The editorial continues to perpetuate the urban myth that Jim Irsay contributed $50 million to the Lucas Oil Stadium. No, he didn't. He figuratively held a gun to the head of the CIB and threatened to take his team to L.A. or elsewhere if he didn't get a new stadium so the CIB would fold and agree to break the lease. Under the terms of the one-sided lease on the RCA Dome, the CIB had to pay a $50 million break-up fee to Irsay in order to enter into a new lease for the new stadium. Irsay generously agreed to forgive the break-up fee in consideration for the $720 million Lucas Oil Stadium. Again, only in the world of negotiating with professional sports team owners with the public's money would that be characterized as a contribution by Irsay. The CIB gave up the revenue-generating opportunities it had under the RCA Dome to Irsay, which is one of the many reasons it now has insufficient revenues to pay for the new stadium's operating and maintenance expenses.

During the negotiations on the state-financed deal, anticipating the tax increases would generate more than they were claiming would be raised, Peterson and Glass asked the state to allow excess revenues to be diverted to the CIB to pay operating and maintenance expenses on the stadium. At that time, the two told lawmakers they were going to be at least $6 million short annually in covering these costs (which later grew to $20 million). Gov. Daniels and lawmakers rejected this proposal. Gov. Daniels publicly stated that he wanted excess revenues used to retire the debt sooner so the higher taxes could eventually be lifted. Instead of going back to Irsay and explaining to him the problem, Peterson and Glass decided they would just go forward with the plan, knowing a day of reckoning would eventually come. They knew based on past experience that under such circumstances they would always get what they wanted--more public subsidies for the billionaire sports team owners.

"Local property taxes have to be off limits, as CIB president Bob Grand has said," the editorial says. Why is there any mention of property taxes? Property taxes have never been used to pay for the CIB and these palaces we've built for the Colts and Pacers. It's pretty easy to say the CIB ruled out a tax increase that it never had as an option. And despite valid objections raised by the Star to Grand's appointment to the CIB last year because of the conflict of interest he has because of he and his law firm's representation of Simon family interests, the Star has gone completely silent on his participation in this deal. How can he claim that these current negotiations to resolve the CIB's financial don't involve discussions about the Pacers lease?

Now, here's the real reason I call this editorial half-hearted. The purported reason for writing this editorial was to convince the Colts and Pacers they need to contribute some money towards resolving the CIB's financial shortfall. A normal person would think that means the money would come out of their pockets, right? Well, these aren't normal people we're talking about. "The most obvious partial remedy, though, is a sports ticket tax, something the Colts obstinately resisted for Lucas," "In this crisis, they cannot justify that adamance; nor can they refuse to consider giving up some of the millions they collect from Lucas events that have nothing to do with the Colts." It takes a lot of audacity to claim that a tax paid by the people who attend Colts games is a contribution of money by Colts owner Jim Irsay, but that's the common meme you'll hear throughout these discussions. It's laudable that the Star at least suggests Irsay should give up "some of the millions" he gets from non-game events.

What the public really needs at this point is an independent and thorough audit of both the Colts and Pacers organizations to get a better grasp on exactly how much these two teams are generating in revenues and what their actual costs are. Additionally, we need to demand an independent and thorough audit of the CIB to determine its financial solvency and get recommendations for cutting costs and improving its efficiency. Only then will the public be offered a fair analysis of where these two organizations stand vis-a-vis the CIB. I'm fairly confident the two teams will never open up their books to the public. Given that choice, Irsay and the Simons need to be asked to make this issue go away before the public catches on to the full extent of how much they've been padding their wallets. There's a real taxpayer revolt brewing here. If they haven't figured that out yet, but had better soon.