Thursday, July 02, 2009

Mary, Mary, Quite Confused

WTHR's Mary Milz turns in this baffling report about how the success of Lucas Oil Stadium is not translating into additional revenues for the cash-strapped CIB. Well, duh, that's because the stadium deal allows Colts' owner Jim Irsay to pocket all of those revenues, a point Milz story completely misses. Here's what she says:

The city says business is good at Lucas Oil Stadium, but the money it's making is not filtering down to the Capital Improvement Board, the board that runs it. Nearly one year after the stadium opened, it's hosted more than football fans.

Stadium Director Mike Fox says so far Lucas Oil has hosted 174 events, or more than four times as many as the RCA Dome did in its last year. The stadium's hosted everything from the Kenny Chesney concert to a job fair to luncheons and board meetings.

Still, it's not anywhere near enough to cover the operating costs.

Paul Okeson, the mayor's chief of staff, said while the city does need to market itself more, there just aren't that many of the big multi-day events out there. He said, more importantly, running a stadium isn't exactly a break-even proposition.

"It's a bit of a loss leader," Okeson said. "The idea isn't for the facility to necessarily make money but for the economy to grow and for people to spend more."

He says it's why scoring the 2012 Super Bowl was such a big deal as it will bring more than 100,000 well-heeled fans to Indianapolis with a potential economic impact of several hundred million dollars.

"Some of the more lucrative events don't pay to use the facility," he said, "and that's the competitive nature of the business."

The CIB's continuing money issues have raised some concerns among some who've booked the stadium. Dan Acheson, Executive Director of Drum Corps International, says he's well aware of the CIB's $12 million shortfall.

"I'm sure it will have an impact on services at some point, so yeah, I'm concerned about that and hopefully we'll have good people doing the work on finding a solution," he said.

Indianapolis Convention and Visitors Association President Don Welsh said he's working hard to alleviate any concerns.

"They can be assured that the buildings will be open and operating and serviced in the manner they'd expect in Indianapolis," he said.

Despite the CIB's financial trouble, some groups like Music for All, formerly Bands of America, are getting a break to keep them marching back.

Music For All's CEO L. Scott McCormick said the stadium cost his group 25% more to rent than the RCA Dome, which was too much more for a non-profit. Given the growing competitiveness of the convention market, the CIB agreed to broker a better deal.

McCormick said, "When they asked what it would take to keep the organization here, they asked us to lay it all out and I think we presented a fair number and it looks like we'll end up with that."

He declined to give the final number as the deal had yet to be finalized.
What I find particularly troubling in the report is Mike Fox's comment that "some of the more lucrative events don't pay to use the facility, and that's the competitive nature of the business." Huh? You know Irsay isn't allowing groups to use the stadium for free. What Fox is saying is that the CIB is subsidizing those groups to come to Indianapolis, which translates into the taxpayers paying Irsay for the use of LOS for those events. Her story notes that the CIB brokered a better deal for Music For All after its costs soared 25% at LOS compared to the RCA Dome, which means the CIB is subsidizing the event. I've reported previously on how the CIB uses the ICVA to buy down hotel rates for conventions to lure them to the City because the room costs are high in Indianapolis compared to other cities. You can bet the ICVA is also picking up those costs to subsidize the higher costs of hosting events at LOS.

This probably helps explain why Jim Irsay says the CIB is inflating the actual costs of running LOS. He charges much higher rates for events than the CIB charged for those same events when they were hosted at the RCA Dome. Obviously, the CIB has no control over the charges he imposes. Instead of addressing that problem, the CIB puts out fires created by the higher fees by offering cash incentives to groups to use LOS. That's part of the reason it costs $20 million more to operate LOS compared to the RCA Dome. If taxpayers knew what was really going on . . .


Downtown Indy said...

What continues to baffle me is their bragging about the number of 'events' hosted at LOS. In this story they allude to 'luncheons and board meetings.'

Talk about under-utilization!

Some group books a small room to have lunch and LOS gets credit for an 'event!' Of course that also siphons off what would otherwise be a profitable event for a hotel or the Convention Center, instead diverting money directly to Irsay.

Each time a small group meets there, it's a loss for city businesses.

How many - what I would call legitimate - events have been held there? Those that require a stadium facility for patrons, not merely as a cool backdrop for an hour or so as some folks have lunch.

Paul K. Ogden said...

DI, you mean they don't set up a table on the 50 yard line and serve luncH?

Dana said...

Reporters are mostly just phoning it in, aren't they?