Sunday, April 27, 2014

Herb Simon: $160 Million Gift To Him Was A Good Deal For Indianapolis Taxpayers Because It's Good For His Heirs

Herb Simon with his super model wife, Bui
The billionaire owner of the Indiana Pacers, Herb Simon, never had to appear at a single public meeting to address the need for the more than $40 million in subsidies Indianapolis taxpayers have been forced to pay his Indiana Pacers the past four years or the more than $160 million his NBA franchise will receive over the next 10 years thanks to a deal forged with him by the thoroughly corrupt and unelected members that govern the City's Capital Improvement Board. He did, however, sit down and talk to the managing editor of the Indianapolis Business Journal, which was generous enough to share with us an "edited version" of their conversation. Herb tells Greg Andrews that Indianapolis taxpayers got a good deal that was necessary to ensure that his children, who he says "won't have wealth on the same scale as he has amassed" will be able to keep the team in Indiana when he dies.
Simon assured Andrews that he never threatened to move the Pacers out of Indiana during his negotiations, a possibility the IBJ continuously published in its news pages and in editorials throughout discussions of continuing subsidies to the Pacers. "We didn't threaten anything," Simon said. "The team belongs in Indiana . . . That's all that it is . . . to make it economically viable so that my heirs and successors can keep it here."  When Andrews confronted him with the fact that smaller team markets like the Pacers received more favorable revenue sharing as a result of the NBA team owners' latest collective bargaining agreement with players and improved attendance resulting from better team performance has boosted the team's revenues, Simon was quick to throw water on that. While acknowledging his franchise is "doing much better than we did the last couple of years," he lamented that ticket receipts were only averaging about $700,000 a game. "Other cities get $2 to $3 million a game, and the interesting thing is we all have the same salary cap." But Andrews reminded Simon that the Pacers have exceeded the salary cap several times and the team's payroll so high that the luxury tax kicked in. "Maybe one year," Simon scoffed. "I wasn't paying attention," Simon told Andrews while chuckling. "That's not a good thing" for a small market Simon said. "But I've always allowed Larry [Bird] to spend up to the tax." He said the team doesn't "plan to go into the tax, but you can never tell." "You can't say never ever."
Andrews delved deeper into the Pacers' claim that they have lost money every year since the team moved into the new Banker's Life Fieldhouse built for the team courtesy of Indianapolis taxpayers, which the team uses rent-free and gets to keep all of the revenues generated from its use. "This is very confusing because the season is split up over two years," Simon said. He claimed, naturally without actually opening up his audited financial statements, that his franchise lost $44 million from 2009 to 2014. "And that does not include the extra $10 million I had to pay to settle the Spirits of St. Louis [litigation], and that doesn't include the $16 million I had to lay out for a scoreboard because I couldn't get anyone to act on it," he complained. "So if you think about it, there was an outlay of $70 million over these years worth more than we've taken in." The Spirits of St. Louis litigation was in reference to ongoing payments the NBA owners had been making to the former owners of the Spirits franchise who lost their franchise as part of an agreement when the former ABA league merged with the NBA. Andrews failed to follow up that Indianapolis taxpayers had given his team more than $43.5 million during that same period, or ask him how much money the team made from advertising revenues it derives from its $16 million scoreboard, which taxpayers are now being forced to buy back as part of that $160 million, 10-year deal, while his team keeps all of its advertising revenues.
All in all, Simon said the new $160 million dollar deal will mean that "the $150 million which was choking us for many years will be less of a problem, and his poor heirs "should be able to get a loan with very little help from the city." Andrews asked if $150 million was the amount of the team's debt. "It's actually $154 million, but it varies," Simon responded. "It's been up to $175 million. You know, it just goes up and down depending on the time of the year, depending on what's happening." Andrews wondered how an outside loan could possibly be a problem given that Forbes magazine values the Pacers as being worth $475 million, and another smaller market team, the Milwaukee Bucks with the worst record in the NBA just sold for $550 million. "It's just extra caution," Simon said. "I don't think it's a problem at all. Simon and his brother, Mel, purchased the Pacers in 1983 for $10 million. Andrews didn't ask Simon how much he paid to buy out his late brother's half share of the Pacers from his estate under a right of first refusal agreement when he kicked off three years ago.

The idea that the $160 million agreement with the Pacers includes any mention of the City helping the Simon children with financing for the Pacers and have a right of first refusal if financing can't be lined up is ludicrous, but Herb doesn't see it that way. "Well you see, I personally guaranteed the loan," he said. "Even though it is a Pacers loan, it could be an issue for my children--they are not worth as much as I am." "The city has a lot means [to help refinance the debt] where the kids can still continue [and not have to sell the team]." "There is money to pay off the loan, and we will try to pay it down before then." "The city has all the rights. All they have to do it make sure we get a loan on the team." Except, Herb can't make any guarantees about how his fellow equally as greedy billionaire NBA team owners will confront the issue of succession.
Billionaire Herb Kohl, a former U.S. Senator, purchased the Bucks for $18 million, and Forbes had placed the value of his team at $405 million, $70 million less than it valued the Pacers. With higher revenues and taxpayer subsidies, it doesn't take much of a leap to see the Pacers go for more than $600 million if placed on the market. Simon and his fellow NBA team owners have threatened to take away Milwaukee's NBA franchise if city officials there don't ink a new deal to provide additional subsidies to the team's new owners, two billionaire hedge fund owners from New York. Simon said that his son, Stephen, who runs Simon Equity in San Francisco, the private investment arm of the billionaire Simon family, will likely gain control of the team once he passes. "He's very generous," Simon says. "He is a little more fiscally responsible than I am," Simon said. Perhaps that's in reference to Herb's spending on his trophy wife, the beauty pageant winner and super model from Thailand he married after divorcing his first wife. Bui Simon was noticeably omitted from Herb's conversation with Andrews about his "heirs and successors." In case you haven't figured it out, the more than $200 million taxpayers will have paid out to Simon's Pacers has nothing to do with supposed losses. It's all about Indianapolis taxpayers being forced to help pay the purchase price Herb paid to buy out Mel Simon's share of the Pacers from his estate. 
Hopefully, Herb is a little more discrete conversing with his super model wife, Bui, than LA Clippers owner Donald Sterling has been with his trophy girlfriend. Sterling was secretly recorded by his young girlfriend, Vanessa Stiviano, going on a racist rant against blacks. It seems that Sterling was put out by Stiviano, who is part Latino and part African-American, bringing blacks to the games and posting pictures of them on her Instagram account for the world to see. Sterling is still married to his estranged wife of 50 years. She has filed a lawsuit against him in which she claims that he has spent lavishly on Stiviano, buying her a Ferrari, two Bentleys, a Range Rover and a $1.4 million apartment. Lucky for Sterling, an NBA investigation of his conduct will be decided by a group of like men--white, wealthy and male. With the exception of Michael Jordan, the African-American owner of the Charlotte Bobcats and former NBA standout player, and Vivek Ranadive, a billionaire businessman from India, all NBA team owners are white males. I would note another obvious distinguishing characteristic of all but about 5 of the 30 NBA owners, but I wouldn't want to be labeled a bigot. Will Sterling still receive a lifetime achievement award next month from the LA chapter of the NAACP, along side race baiter/drug dealer/FBI informant Al Sharpton? Enjoy the recording Sterling's girlfriend made of his racist rant below. It's incredible that someone who relies primarily on African-American players for his NBA team's success could hold such racist views.

Clowning around: Stiviano posed last April in a red bikini and a clown nose sitting in a Ferrari that Sterling allegedly bought for her with family money
Stiviano with the Ferrari LA Clippers Owner Don Sterling Purchased For Her
Damning recording: Donald Sterling (center) can be heard telling his girlfriend V. Stiviano (to his left) not to bring black people to Clippers games
Stiviano sitting with Sterling at a Clippers game


Anonymous said...

One would think that with all his money Sterling could have better quality shiksas.

Flogger said...

Gosh, I was nearly in tears at the thought the Simon Family would suffer so much distress over the Pacers and inheritance.

The article in IBJ repeats the fiction of real actual negotiations among the Pacers, CIB and City.

Who do these people in the Media think they are fooling with their bogus interviews?? It is Corporate Welfare.

We all know many people lost their homes during the last recession. I find it disgusting that our Political Establishment can sign on to this give away to the Simon Family and equally disgusting our Mega-Media can spin the give away as justifiable.

Downtown Indy said...

You KNOW his assets are buried in irrevocable trusts and well protected with respect to heirs and taxation.