Saturday, July 24, 2010

Is A Pattern Of Behavior By Simons Emerging?

Herb Simon tells our Capital Improvement Board that his Indiana Pacers franchise is losing tens of millions of dollars each year. He demands the CIB pick up the operating and maintenance costs, along with the costs of new capital improvements on Conseco Fieldhouse, which he gets exclusive use of rent free and gets to keep all of the revenues, or the CIB might just see his team packing up and moving to another city. The CIB complied with Herb's demand and is gifting him $33.5 million for agreeing to abide by the long-term lease agreement he thought was a swell deal when the CIB agreed to build the new fieldhouse for him a little more than a decade ago.

A few years ago, the Simon Property Group saw a need to build a new corporate headquarters. Unless the City gave up public park space across the street from the State House, free use of a city-owned parking garage and public incentives worth at least $25 million for its new headquarters, the Simon company might have to move its company headquarters out of town downtown we were told. Mayor Bart Peterson caved in to every one of the Simons' demands.

And then there's this story in today's IBJ by Cory Schouten about a lawsuit alleging unfair business practices by Simon Property Group.

One of Indiana’s largest privately held developers is suing Simon Property Group Inc., alleging the nation’s largest mall owner abused its “market power” to bully two national retailers into backing out of leases at a lifestyle mall near Mishawaka.

An entity tied to South Bend-based Holladay Properties Inc. alleges in court filings in St. Joseph County that Simon used “anti-competitive tactics” to pry Ann Taylor Loft and Lane Bryant, committed tenants of its Heritage Square lifestyle mall, to open stores in the nearby Simon-owned University Park Mall instead.

Holladay says Simon also tried unsuccessfully to persuade Coldwater Creek and Eddie Bauer to back out of lease deals at the 230,000-square-foot Heritage Square, which broke ground in 2006.

In the case of Eddie Bauer, Holladay claims Simon CEO David Simon personally appealed to the retailer’s CEO to break the Heritage Square deal and open in Simon’s answer to the new Holladay-owned mall: a 100,000-square-foot lifestyle component added in 2008 to University Park Mall.
It looks to me like there is a clear pattern emerging of how the Simons conduct their business affairs. Isn't it time the taxpaying public gave them a dose of their own medicine? Let's stop supporting their NBA team, their corporate give-aways and spending our money at their malls until they learn how to play fair. I don't know about you, but I've had my fill of this "Simon says, Indy does" routine.


Citizen Kane said...

Actually, I believe they only threatened to move out of the downtown - one can't have money flowing out of a Ponzi scheme! I know that the got permission at that time, by variance (height), to build a tower at Keystone at the Crossing.

But to your larger point; of course that is what they do - but it doesn't take much to make the city blink - unless your an average citizen.

Gary R. Welsh said...

Thanks for the correction. We gave them a multi-million dollar incentive to stay downtown instead of moving to another location within the city limits. That's great.

Jon said...

The latest deal also gifts the Virgina St. parking garage at $1 / year; parking fees that should have been paid to the CIB.

dcrutch said...

Are there businesses that headquarter in places because they like the locale, the culture, the weather, something besides being bribed to stay- or this is the norm everywhere?

My guess is in the landlocked Midwest, you have to sweeten the pot these days. I don't like it a bit. I'd rather have safe streets, good schools, and maintained infrastructure, but I suppose that's too sedate if you're not accustomed to Midwestern values. If you want to pursue some endeavor and want a national or international reputation for it, then it's now customary to put on the dog?

What happens when you craft this cosmopolitain facade, yet can't maintain the safe streets, good schools, and well cared-for infrastructure?

Did Detroit try things like raising the rates on utilities to pay for infrastructure before "eight mile"- or whatever that rotted center of Detroit is called? (before they led the country in nobody graduating from their inner city schools- until we started vying with them for that accomplishment).

The Simons have been good citizens in support of community endeavors at times, as have the Pacers and Colts. But, when is a business or a business that amounts to a attractive bauble of city-living too expensive?

There are Midwestern locations in which Wal-Mart got a tax break for building a new location, during a time they were noted for their sales of U.S.-manufactured goods. Local merchants sometimes closed their doors because of Wal-Mart's competition. When sales started to decline later, Wal-Mart went to cheaper foreign goods to prop-up revenue, and U.S. manufacturing was affected as part of a bigger decline. Then- sometimes, Wal-Mart moved away if they couldn't get the sales they desired. A town was then left with a fair amount of investment that went for naught, with less than what they had when they started from a calculation to keep a particular business around- to the detriment of other amenities of community living.

It's not an exact anology by any means. But, I'm trying to ask, trying to understand, how much is "enough" for the Simons, Pacers, Colts, et cetera? If we're supposed to spend all this money to keep them, then what are we to do about a local budget that is a wreck?

Downtown Indy said...

If the big names are expecting favors - like Indy showers on the Pacers and the Simon Property Group - in return for their generous charitable donations, can we really call it charity? Or is it just a cost of doing business?

Marycatherine Barton said...

I agree that a boycott of Simon's enterprises is in order!!