Monday, January 16, 2012

CIB Expects To Lose Money From Super Bowl

This should come as no surprise. All the giveaways the City of Indianapolis provided to the NFL so it could having bragging rights for hosting a Super Bowl is going to wind up costing the Capital Improvement Board more than $800,000. The IBJ's Scott Olson explains:

Scores of businesses in and around Indianapolis are licking their chops in hopes of scoring a windfall from the city’s hosting of the Super Bowl on Feb. 5.

But the city entity that manages Lucas Oil Stadium, where the game will be played, expects to lose money.

The Capital Improvement Board of Marion County is budgeting for total Super Bowl expenses of $8 million and revenue of nearly $7.2 million, leaving a loss of $810,000.

The largest expenditure is the $4 million CIB has agreed to reimburse the city for providing police security for an estimated 150,000 visitors. It also budgeted almost $2 million to pay full-time employees overtime and union members who have been hired temporarily.
The CIB's chief financial officer assures Olson there's no cause for concern because all the extra money from out-of-town visitors will generate more than enough in higher tax revenues from the hotel tax and the food and beverage tax to offset the loss.

CIB anticipates pocketing $3 million from the Super Bowl in additional tax revenue: $2.4 million in hotel taxes, $440,000 in food and beverage taxes, and $100,000 in auto-rental taxes.

An additional $794,000 in collected taxes will be paid the state of Indiana to help pare down debt related to the cost of building the stadium and convention center.

The total tax revenue generated during the days surrounding the Super Bowl equates to what the board typically earns from taxes in an entire month, Huge said.
The additional tax revenues may be about equal to one month's worth of typical revenues collected by the CIB from these taxes, but you have to also consider that the CIB is losing convention center business that could have otherwise been booked during the two to three week lead-up to the Super Bowl that had to be blacked out in order to prepare for the event. Most of those out-of-town visitors will only be in town during the extended weekend of the Super Bowl in early February, which means a loss of hotel room night bookings during the extended blackout period. The CIB is turning over the convention center to the NFL free of charge, space that would have otherwise been rented out by paying conventioneers.

As I've also reported previously, a special tax break afforded to the NFL during the Super Bowl could mean a loss of tens of millions of dollars in tax revenues the city would have otherwise collected from this event. The CIB is giving up about $2 million in admissions taxes alone that it won't collect on ticket sales to the game. The NFL has also been given control of government-owned parking garages and lots that it will be allowed to rent out during the Super Bowl, and the NFL gets to keep the parking revenues generated during the event.

It goes without saying that the Super Bowl will be a boon to the hospitality industry in Indianapolis and Central Indiana. A true economic analysis of the event's benefit, however, has to take into account all of the public expenditures and tax breaks made in order to land the event to determine its overall benefit. I doubt you will ever see that analysis performed. I suspect that it would show that the true economic benefit is not nearly as large as touted by city leaders.


Concerned Taxpayer said...

Wait a minute!!! I thought the city was supposed to come out of this rolling in cash!!! /s off

"... $4 million CIB has agreed to reimburse the city for providing police security..."

If this is true, WHY are IMPD officers being assigned to work from 14-19 days straight; days off & vacations cancelled; and overtime pay being denied them?
They have been told they have to "trade" their days off for days assigned to them by the city.
According to the FLSA, if officers work more than their normal hours, overtime or comp time at 1-1/2 times their normal rate is MANDATORY, at the officer's discretion.
So how can the city arbitrarily cancel their days off, make them work 10-12 hour days for 14-19 days straight, and not pay them anything extra?

Citizen Kane said...

The figures they use are always gross, not net; real numbers would end the party. All I know is that the taxpayers always lose.

Downtown Indy said...

An event like this cannot possibl be profitable. One the one hand, we have to supply everything necessary using tax dollars and on the other the NFL gets use of it all tax-free.

And I would like to know just how much tax revenue is never realized, from unreported parking income?

Paul K. Ogden said...

CT, if they go over 40 hours in a week, they have to pay them time and a half or provide comp time at time and a half.

Concerned Taxpayer said...

I know that, Paul. But they are NOT. They have forced the officers to take "trade days" that the CITY chooses for them.
At least that is what officers are reporting.
But I did hear that IFD & MCSD are paying O/T. Just not IMPD.

Paul K. Ogden said...

CT, if they don't pay those officers time and a half, the penalty is a wage claim where they are entitled to 3 times their damages plus attorney's fees. Those are generally slam dunk lawsuits.