Friday, July 16, 2010

The Ties That Bind Herb Simon's $33.5 Million Gift From The CIB To His Recent Purchase From Mel Simon's Estate

You won't want to miss out on this latest item the IBJ's Cory Schouten is reporting on the hearing taking place in Hamilton County to determine whether Bren Simon is fit to serve as the trustee of her late husband Mel's estate. I told you about how Herb Simon, Mel's brother, bought out his interest in the Indiana Pacers last year. According to court testimony today, however, the purchase of Mel's interest in the Pacers didn't get hammered out until this March right about the same time the Pacers were pressing the CIB to take over $15 million a year in operating costs for Conseco Fieldhouse, which the Pacers later claimed was actually $18 million. Here's what Schouten writes today:

Marrianne Schmitt Hellauer, an estate-planning attorney based in Baltimore who has worked with Bren for years, testified about detailed plans she helped develop for appraising the value of an estate likely worth $2 billion and the moves her legal team has taken since Mel died in September 2009.

Hellauer said Melvin's estate closed on a deal in March that transferred his stake in the NBA franchise to his brother Herb. A 2009 agreement between Herb and Mel called for Herb to take over full control within 90 days of Mel's death.

Closing on the deal took a bit longer as Herb sought out financing to buy out his brother's interest, Hellauer said. Herb had agreed to pay off a $47.5 million loan Melvin had taken out for the team as part of the deal.
Did you catch that? "Herb had agreed to pay off a $47.5 million loan Melvin had taken out for the team as part of the deal." Do the math on the $15 million in operating expenses the Pacers asked the CIB to pick up and the deal ultimately worked out. It comes out to $45 million over three years based on what Herb originally requested and later increased to $54 million over three years based on the $18 million figure the Pacers later claimed they incurred in annual operating expenses on Conseco Fieldhouse. In the final deal just announced this week, the CIB agreed to pick up at least $33.5 million in costs over the next three years, which has been characterized as a loan, but it is interest free and will be forgiven in its entirety if the Pacers stay put. That figure could grow to more than $38 million if the CIB winds up picking up additional capital improvement expenses on the fieldhouse over the next three years above the $3.5 million it has agreed to spend on a new digital scoreboard above center court. What do you want to bet Herb is using the money the CIB is giving him to pay off that debt owed by Mel?

No wonder the CIB raced to get this deal inked before these hearings began at the end of this week. They didn't want to give the public the opportunity to put two and two together. And after little debate today, the CIB rubber-stamped the backroom deal negotiated by Mayor Ballard with the billionaire Herb Simon on a 6-1 vote. This is government at its worst. Mayor Ballard has turned out to be public enemy number one when it comes to the taxpayers of Indianapolis. He is a total fraud who completely lied his way through the 2007 election by pretending to be someone he obviously was not. He and his family are enjoying tens of thousands of dollars in free gifts at our expense in consideration for all of our money he is stuffing in the pockets of his campaign contributors and cronies. I hope it's really worth it, Greg? How you can even show your face in public is beyond me.

I've maintained that the public has a right to know how much Herb Simon valued the Pacers' franchise when he agreed to buy out his late brother's interest recently. Forbes has pegged the value of the team around $300 million. The Simons purchased it for only $11 million in 1983. Why would Herb Simon want to own an entire interest in an NBA franchise that has supposedly lost $200 million over the last 10 years? It just doesn't add up. I've never believed those figures, and the public is denied access to the audited financial statements of the franchise, notwithstanding all of the public monies that have been spent to prop up their NBA franchise, that would indicate whether those claimed losses are anywhere near that amount. So while every other unit of government is facing severe cutbacks in their budget, the CIB, which claimed insolvency last year, now has a pot of money just sitting out there to hand to Herb Simon, which perfectly aligns with his buy-out of Mel's interest in the Pacers from his estate. As Bren Simon said, "Business is business is business." "There is no emotion in business." At least not when the public's interest is involved. And to think the Simons don't even like Ballard and supported his opponent, Mayor Bart Peterson, for re-election. And all it took was a snake oil salesman like Jim Morris (don't forget he's the guy who convinced the City to pay more than double the actual value of the water company and then walked off with an $8 million golden parachute agreement) and the Simons' lawyer, Bob Grand, who Ballard foolishly put in charge of the CIB despite his obvious conflict of interest and who laid the groundword for this deal, to win over the feeble-minded Ballard. What a sell out.

1 comment:

Marycatherine Barton said...

Yes, Ballard did lie his way through the '07 campaign. I think the reasons I had no trust in him were instinctual, but also because of a distrust I have learned to have in any candidate for public executive office, in this day and age, with his background.