By Bill Ruthhart Indystar.com
Report to CIB also shows annual loss of $17.8M tied to arena, tax revenue
Indianapolis would have $55 million less in economic activity each year, shed 909 jobs and lose $17.8 million through a drop in tax revenue and other expenses annually if the Indiana Pacers were to leave town, according to a study presented Monday to the Capital Improvement Board.
The CIB and the Pacers have been engaged in negotiations for months, centering on the NBA franchise’s insistence that it no longer can afford to pay the operating expenses for its home, Conseco Fieldhouse.
Monday’s release of a study aimed at assessing the Pacers’ influence on the city’s economy came as those negotiations have reached a critical stage. Owner Herb Simon and the team’s top brass are pressing for a deal by June 30 or could begin considering all options — including moving the team to a new city.
During the first 10 years of the Pacers’ 20-year lease with the city, the team has paid for operating expenses at the fieldhouse, but the team now is utilizing a window halfway through the lease that allows it to renegotiate terms.
As a result, the Pacers have asked the city to pick up the tab for the fieldhouse, which repeatedly has been estimated at $15 million per year. But on Monday, CIB President Ann Lathrop said that in negotiations, the team is placing the cost of running the fieldhouse “in excess of $18 million.”
That number is almost identical to the amount the economic impact study estimated local government bodies in Indianapolis would lose should the Pacers leave.
The study, conducted by Chicago-based Hunden Strategic Partners, estimated the city would lose $17.8 million if the Pacers no longer played at Conseco.
Of that total, $12.2 million would come from a net operating loss should the city run the fieldhouse. While the city would gain revenue from non-basketball events there that the team now keeps, it would have to spend $21.1 million to operate the facility if the Pacers were not a tenant.
The study estimated the team’s expense of operating the venue at $17.5 million but determined the city would spend more because of future improvements and a drop in revenue from sponsorship, naming rights and other revenue opportunities that would not generate as much without an NBA franchise playing in the building.
“It does not appear to us that the facility is being mismanaged or they’re spending too much or too little,” said Robin Scott Hunden, who conducted the study commissioned by the Indianapolis Bond Bank. “They seem to be right in line with other facilities we looked at.”
Lathrop said the bond bank initiated the study because of concern for the health of Downtown and its importance to the overall debt carried on projects there.
In addition to the $12.2 million the study estimated the city would lose in operating the building, it forecast a loss of about $5.6 million in local tax revenue, bringing the total projected loss for the city to $17.8 million.
“This confirmed what we knew with greater detail, which is that there is a significant return on investment from having a marquee tenant like the Pacers here,” said Paul Okeson, who as the CIB’s treasurer and former chief of staff to Mayor Greg Ballard has been a key negotiator with the Pacers.
The team had little to say about the study, with spokesman Greg Schenkel releasing a 10-word statement: “We appreciate the continued efforts and leadership of the CIB.”
The study also found the city had much more to lose than the cost of running the building and the loss of taxes.
It found that the city would lose $31.5 million in direct spending and $23.5 million in spinoff spending in the economy, such as local restaurants ordering more supplies or a waitress having more personal income to spend.
Hunden said the study accounted for some of that spending being redistributed to other entertainment options. However, he said, the fact remains that the money the Pacers spend on its employees, the employees, in turn, spend locally.
Plus, he said, 60 percent of those who attend Pacers games come from outside Marion County and likely would spend a lot more of their entertainment dollars closer to home should the team leave.
According to the study, the Pacers’ presence directly affects the equivalent of 539 full-time jobs and an additional 370 supported by spinoff spending in the economy, for a total of 909 jobs.
Lathrop said the study should help the CIB in its negotiations with the Pacers.
“I feel like the study is very important, because it allows us all to use the same numbers,” she said.
The study estimated the team’s expense of operating the venue at $17.5 million but determined the city would spend more because of future improvements and a drop in revenue from sponsorship, naming rights and other revenue opportunities that would not generate as much without an NBA franchise playing in the building.
“It does not appear to us that the facility is being mismanaged or they’re spending too much or too little,” said Robin Scott Hunden, who conducted the study commissioned by the Indianapolis Bond Bank. “They seem to be right in line with other facilities we looked at.”
Lathrop said the bond bank initiated the study because of concern for the health of Downtown and its importance to the overall debt carried on projects there.
Lathrop and Okeson said they continue to negotiate with the Pacers and said progress is made at every meeting.
However, Lathrop said the CIB does not feel bound by the June 30 date the Pacers have set as a goal.
“I think all of us would like to — if there’s going to be an agreement — have something within reason,” she said, “but we’re making sure that whatever gets done, gets done right and is not done through rushing.”
The CIB has its own financial woes.
Revenue for the year has come in more than $1 million short of projections, and last year the board cut its budget from $78 million to less than $50 million. The CIB, however, has the benefit of new tax revenue that has begun to trickle in, thanks to approval of an increase in the city’s hotel tax and an expansion of its professional sports taxing district by the state legislature and City-County Council.
That new revenue amounts to about $12 million per year.
So would the CIB have enough to pay for a new deal for the Pacers?
“Well, it’s keeping our new (chief financial officer) up at night for sure. We’re continuing to look at our budget. We have worked to continue to keep costs down, and that’s how we’d continue to look at it,” Lathrop said.
“Having a marquee tenant in the building is to everyone’s advantage.”
How Conseco Fieldhouse would be affected
A comparison of the number of events and attendance at Conseco Fieldhouse, estimated for 2011 with and without the Pacers.
|
Event |
With Pacers |
Without Pacers |
|
Pacers |
47 games, 700,700 attendance |
0 |
|
Fever |
17 games, 85,000 attendance |
0 |
|
Family shows |
22 with 105,600 in attendance |
24 with 115,200 in attendance |
|
Concerts |
17 with 166,600 in attendance |
21 with 205,800 in attendance |
|
Other sports |
31 events, 263,500 attendance |
32 events, 272,000 attendance |
|
Other events |
35 with 178,500 in attendance |
38 with 193,800 in attendance |
|
Other team-related events |
29 with 1,000 in attendance |
0 |
|
Meetings/banquets |
285 with 12,800 in attendance |
290 with 13,100 in attendance |
Source: Hunden Strategic Partners
