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July 12, 2010
Indy to pay Pacers $33m over three years for no damn reason
It's a couple of weeks late, but the Indiana Pacers have obtained their boodle: The city of Indianapolis has agreed to pay the Pacers $10 million a year for the next three years (plus $3.5 million for a new ribbon ad board, among other things) to play at Conseco Fieldhouse, the taxpayer-funded arena that the team plays at rent-free and keeps all revenues from. That's less than the full $15 million in annual operating costs — the Pacers' only arena-related expense — that the team owners said they wanted the city to cover, but not a whole heck of a lot less, especially considering that the Pacers' lease isn't actually up yet.
In exchange, the city gets a commitment by the Pacers to stay in town ... for three years. After that, the team could break its lease and leave town with a smaller penalty, which would dwindle to zero by 2019, the year that their lease is actually set to expire. I don't think the Indianapolis Star used my quote, but what I told their reporter was something along the lines of "This is a pretty crappy payoff for $30 million in government subsidies."
For its part, Deadspin, with its classic understatement, called the deal "the worst of all taxpayer-funded bailouts," "a ransom, plain and simple," and "a blatant cash grab by the Pacers, taking millions of dollars just to agree to live up to the terms of the deal they happily signed."
None of which I'd argue with, though I would take issue with Deadspin's contention that "Indianapolis needs the Pacers more than the Pacers need Indianapolis," given that there aren't a heck of a lot of cities with NBA-ready arenas, and certainly not with Indianapolis' fan base. It seems like the city's Capital Improvement Board caved to a major local business player — which may be partly explained by the fact that the CIB's president is a former aide to this guy.
The CIB still needs to vote to cough up the dough, which it plans to pull out of its operating budget. Yes, that's the same operating budget that ran out of money last year and had to be propped up with a $27 million state loan; with this in mind, at least one state representative says he wants to block the Pacers deal. Best of luck with that: The Pacers may not be able to beat anyone in the NBA Central, but they're unstoppable when going one-on-one with Indianapolis elected officials.
The CIB has abrogated the penalty provisions of the original contract by reducing the penalty provision for moving the team from 120-140 million in year 10 to 30 million if they move now. Additionally they can renegotiate (extort) more monies in three years.
The Pacers had zero leverage and yet our mayor and the CIB basically gave them everything they asked for and then threw away the city's leverage by dramatically reducing the penalty clause for moving the team.
I'd have to agree with Deadspin on this issue, it's a bailout for the Pacers.
One of the local Indianapolis bloggers brought up a good point; the total cost is 78.5 million for three years. Instead of the Pacers paying the CIB 15 million per year for maintenance we are paying them 10 million per year. That's 25 million per year not 10 million as stated in the paper. Way to negotiate!
Posted by IndyRes on July 13, 2010 09:44 AM
Will the Pacers still get their $10M next year if there's an NBA lockout?
Man, that's some pretty good action right there. Why are municipalities so stupid? I hope the Indiana state legislature gets it together and blocks this, given that they really are the ultimate source of the money.
It's crooks like these that motivate me to give up following pro sports completely.
Posted by MikeM on July 13, 2010 12:07 PM
What public representative agreed to that, and how do they defend that?
Posted by Sean on July 13, 2010 01:18 PM
The so called representatives in Indianapolis are the Capital Improvement Board (CIB) and they are appointed not elected. The CIB cited the ubiquitous reason to shovel tax dollars to the owners, "we can't afford to lose them". Unfortunately the people of Indianapolis can't afford to keep them anymore. As usual our representatives aren't representing us; from the beginning our mayor stated that "we will do whatever is necessary to keep the Pacers". With bargaining skills like that I'm surprised that they didn't get more dollars!
Posted by IndyRes on July 13, 2010 03:32 PM
Thx for the posts IndyRes. Many of us in Santa Clara follow the happenings in Indianpolis with great interest (our mayor sounds interchangeable with yours).
I probably won't cite Indy as a cautionary tale any longer because last month, as you may know, Santa Clara voters agreed to allow the 49ers to come to town by helping to build and own a stadium.
Posted by santa clara jay on July 13, 2010 03:41 PM
Uggh. I do like the Pacers and all but in this economy I simply find this deal distasteful. I would love to know the rationale for this decision; hopefully, someone will have to intelligently answer for it.
Posted by Steve on July 13, 2010 03:42 PM
The current president of the CIB is refusing to disclose details of the negotiations and we are confused how a corporate entity, Indiana Code IC 36-10-9, can refuse to answer our questions.
Posted by IndyRes on July 13, 2010 03:50 PM
For those interested here is the documentation of the Pacer's deal;
http://www.capitalimprovementboard.org
Posted by IndyRes on July 13, 2010 03:58 PM
When I read about the confederate of dunces running the CIB, I thought, "bites to be an Indy resident." Ah, I have to travel to Indy for a conference, which requires a two night stay at a hotel.
I will subsidize the Pacers.
On the map, I see a lot of sports-related attractions in downtown. Are there any actual museums?
Posted by bevo on July 15, 2010 04:08 PM
I predict the Colts will be renegotiating soon.
I seem to recall a provision for the Colts stadium was a certain number of "affordable" seats. I also recall the state legislature throwing that out in a midnight session because the owners would try their best to keep certain seat prices low.
I tried looking this up in the local papers in Indy, I read this in a Cleveland paper, but can't seem to find a reference to it.
So even if this has to pass in the state legislature, it should breeze through. 27 million loan or not, this is only the beginning of the pigs feeding at the trough.
Posted by Cujo on June 7, 2012 07:10 PM