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Pacers' woes tied to Lucas Oil Stadium deal

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The negotiations going on right now between the city and Indiana Pacers have as much to do with Lucas Oil Stadium as Conseco Fieldhouse.

Sources close to Mayor Greg Ballard and the city’s Capital Improvement Board said much of the current debate over how much money—if any—the city should give the Pacers or who should manage Conseco Fieldhouse dates back to planning and construction of the $720 million new home for the Indianapolis Colts.

The Simons and the Pacers were supposed to be brought to the table during discussions of any developments downtown that could affect their operations at Conseco Fieldhouse, sources within Ballard’s and former Mayor Bart Peterson’s administrations told IBJ.

But their participation in Lucas Oil Stadium negotiations “fell through the cracks” as Peterson, a Democrat, began bickering with Gov. Mitch Daniels, a Republican, and state lawmakers over who would pay for and operate the Colts’ new home, sources said. The stadium, which opened two years ago, also is a key adjunct to the Indiana Convention Center and home to NCAA Final Fours and other major events.

A source within the Pacers told IBJ that there was angst early on about what the new multi-purpose stadium would do to Pacers Sports & Entertainment’s business—especially non-basketball events—at Conseco Fieldhouse.

“[The Simons] knew a facility like Lucas Oil Stadium had the potential to really harm their business,” said Mark Rosentraub, a former IUPUI dean and author of “Major League Losers,” a book about professional sports operations. “So now, Lucas Oil Stadium is sucking a lot of money out of the market, and the Pacers and Conseco Fieldhouse are really hurting.”

Rosentraub admitted that the Pacers’ own poor on-court performance, which has coincided with the worst economic swoon in a generation, hasn’t helped the team’s finances.

Herb and Mel Simon bought the Pacers in 1983. Mel died in September 2009, and Herb is now the sole owner. Pacers officials have shut off access to all media this week following public statements April 13 saying they would like an answer from the city by June 30 regarding a request that the city assume the cost of operating the Fieldhouse.

Pacers President Jim Morris intimated in a April 14 Indianapolis Star story that Pacers officials could consider moving the team if they don’t get the money they need to run the Fieldhouse.

Pacers officials two years ago informed city officials they need $15 million annually—or $150 million over the last 10 years of the Conseco Fieldhouse lease—to operate the 18,165-seat venue. Morris told IBJ that the Simons have lost more than $200 million since buying the team, including $30 million during the 2008-09 season.

City officials have been slow to respond to the Pacers' request for help as they sort out their own fiscal crisis. The city’s CIB owns Lucas Oil Stadium, Conseco Fieldhouse and the Indiana Convention Center.

CIB Treasurer Paul Okeson said Thursday that one possibility is the city taking over operations of Conseco Fieldhouse.

“We will be mindful of our responsibility to the facility,” Okeson told IBJ. “This isn’t about giving money to the Pacers. It’s about the facility.”

Part of the deal to build Lucas Oil Stadium, Rosentraub said, should have included a regional taxing district that included and protected both the stadium and Conseco Fieldhouse. Sources close to the Pacers said team officials thought the deal did too much for the Colts at the expense of the Pacers.

Without a regional solutions to keep both facilities and franchises viable, Rosentraub doesn’t think it will matter who operates Conseco Fieldhouse.
“Whoever manages it can’t increase the population of the region or the demand for event dates,” he said.

And he thinks it’s a foolhardy notion that Ballard and his staff would fare better than Pacers' ownership at running Conseco Fieldhouse.

“You’re going to make the case the city can manage this facility better than the Pacers,” Rosentraub said. “That’s nothing more than a political move. You think the Simons are sitting in Conseco Fieldhouse trying to lose money? Very few people know how to make money as well as the Simons. The fact that the Simons are having problems there shows there’s a fundamental problem.”

The fact that Lucas Oil Stadium has a growing reputation for its ability to handle a variety of events from music concerts to basketball games hasn’t helped Pacers Sports & Entertainment, which relies on non-basketball event business at Conseco Fieldhouse to bolster its balance sheet.

“They used to host 150 events a year at Conseco Fieldhouse,” Rosentraub said. “Now, it’s closer to half that number.”

Rosentraub said the only way to preserve downtown is to develop a “regional solution and joint financing concept.”

“Conseco Fieldhouse and Lucas Oil Stadium have to be tied together,” Rosentraub said. “Those facilities are a big part of bringing young, human capital downtown. And without that, the entire region doesn’t survive.”

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  • $$$
    >

    That falls into the category of BOHICA (pronounced bow-hee-cuh)

    Bend Over, Here It Comes Again.
  • Pacers' woes
    Does no one have the guts to call this multibillionaire's bluff?

    If $imon wants to take the Pacers out of Indy, so be it.

    Don't let the door hit you on your rear end on the way out.
  • Why Negotiate
    Reddog, why should we negotiate with the Pacers. They can't just pick up and move the team without breaking the contract. The early termination provision only applies if they're selling the team and it's moving out of the city. The penalties for early termination are enormous too. Why are City leaders even negotiating with the Pacers?
    • Yeah, Right
      Bill says: "Whether we like it or not, sports teams have a major, positive effect on a city."

      Gee, Bill, why is it every economist out there disagrees with you that professional sports have a "major, positive effect on a city."
    • blatant lie
      Anthony, I wish you had asked some more questions in this interview. Didn't Herb Simon say the Pacers have lost money almost every year since he bought the team? So how does Lucas become the villain?
    • What?
      Since when did competition become a bad thing? There are things that Lucas works great for and other events that Conseco would work better for. It is just going to take some effort on Simon's part to let people know this. DO NOT BRING THE GOVERNMENT INTO THIS! Indianapolis has already given plenty to their corporation.
    • Seattle is Doing Just Fine
      I recently visited Seattle for business. Gosh, let me tell you how all the residents and tourists carrying shopping bags full of their purchases from Saks and Nordstroms where just wailing about how the lovely city by the sea had fallen into economic ruin since the SuperSonics left for Oklahoma City...

      Seattle has done marvelously well without the Sonics. I am sure some residents miss attending basketball games, but they enjoy not having their pockets picked by a private enterprise even better.

      The Pacers have zero leverage. The city has treated them very well for years. If the Simons are losing money, then they should fold the Pacers or move the team to another city where they think they can turn a buck. Of course, it would have to be a larger city than Indianapolis, since the whole argument from them has been that "it's hard to turn a profit in a small market." I doubt Seattle is going to offer them any hefty incentives to relocate, so good luck to them in their search.

      Yes, they should consider all their options. But, what they shouldn't do is delude themselves into thinking they are going to get one more thin dime from the taxpayers' wallets. It's no longer business as usual, which in Indianapolis generally means signing the taxpayers' money away in back-room deals. Unfortunately, for the power brokers, the voters have had enough. Greg Ballard is already looking to be a one-term Mayor, and any give-away to the Pacers, will seal his fate, along with any other incumbents who would care to join him.



    • It doesn't add up or make sense
      Several others have made the same point as me. Exactly what events has Lucas Oil Stadium taken away from Conseco? Almost none is the answer. Yet, this is their latest angle they are trying to push. I'm very familiar with the concert business and their hasn't been one show at Lucas that would have played Conseco.

      Now, here's another angle to consider. Why does Conseco so consistently miss out on major concert tours that similiar facilities in Columbus, OH or even say Omaha manage to snag? Whomever is responsible for getting a little agressive and trying to bring concerts into Conseco is doing a piss poor job. We just missed out on the Roger Waters tour which would have sold Conseco out. I could give you dozens of other examples of shows that are skipping Indy. We did a much better job of booking arena shows back in the MSA days and the first couple of years in Conseco. Indy has really fallen off the arena concert map in the last five or six years and this can't be helping matters.

      Again, lets hear some specific events that went to Lucas that really would have been booked at Conseco before. There isn't a single concert where that's been the case. Plus, Conseco has gotten the enormous economic benefit in the last few years of having both the mens and womens Big Ten Tourneys. That is a huge economic plus that they didn't have in the first few years of Conseco.
    • give the state a chance
      Since Indiana Government occupies half of downtown tax-free, plus White River State Park, took over the Lucas Stadium financing, and now wants to run IPS, I say: give it to Mitch ! Then the special sales tax could be spread statewide-right? Afterall, farmers get lots of tax breaks and subsidies. Do any farmers have re-entry facilities nearby? Do rural residents have the infrastructure woes, semi-truck traffic and pollution ? I'm merely stating that the city of Indianapolis bears the brunt of social, correctional and poverty issues along with providing convention/entertainment facilities. And to top that, all the interstate highways converge in Marion county like a funnel causing vehicular congestion for local residents.
    • City size
      Whether we like it or not, sports teams have a major, positive effect on a city. If that isn't the cars, why do the ones who lose them spend even more money to get one back?

      Charlotte would've been better off to keep the Hornets, New Orleans the Jazz, and Seattle is trying to get back in the mix -- a big city, by the way, without a franchise and willing to deal with the Pacers.

      It's why Baltimore paid dearly for the NFL to return, as well.

      And, it's not just bigger cities we have to worry about. Do you believe Seattle really took the threat of Oklahoma City seriously before it was too late?

      You might think it would be great if the Pacers leave -- but, I bet we would later believe it would've been a bargain if we could have kept them.
      • The Machine is In Full Spin Cycle
        Now we are told that the city harmed the Pacers by building Lucas Stadium, and of course, from this specious argument comes the corollary that the taxpayers are now responsible for footing the bill (despite the massive subsidies the Pacers already received) so the Pacers, a PRIVATE business, can be profitable.

        The truth is that it is not the responsibility of the taxpayers to subsidize the Pacers to ensure that they are profitable for billionaires like the Simons. If the Pacers cannot turn a profit, then like any other unprofitable business, they should go out of business. If the Pacers think they can find a better deal elsewhere, then by all means, they are welcome to pick up and leave; hopefully, the door won't slam too hard on their rear-ends.

        When we have dilapidated public street, rundown public parks, failing public schools, and other crumbling public infrastructure, sports and entertainment deserve to sit on the back burner. The Pacers do not deserve any tax funds going there way, either directly or indirectly.

        Let them sink or swim on there own.
      • Conseco
        Who dreamed this up? What events has Lucas taken from the fieldhouse? Zilch.
      • Take the Dare
        Just say no to the "move the team" nonsense. Dare the Pacers to move. They know that every bigger market town that can support a basketball team already has one.

        The Simons may have lost money operationally on the Pacers, and I'm sure they took nice tax deductions because of it. Nevertheless, I suspect the market value of the team has steadily gone up by an amount that far exceed the accumulated losses.
        • Gimme a Break
          If the Simons thought for one second they were being excluded from negotiations they believed they should have been involved in they would have been banging tables and raising holy hell. It's laughable for those guys to now suggest that the Lucus Oil deal was done essentially behind their backs when everyone with internet access or who could read a local newspaper was being kept up to speed on that deal almost on a daily basis. And to suggest that because Simons' can make money in the mall business means that if they can't do the some running an enetertainment venue then nobody can is silly. Last time anybody looked they were losing their ass running the Pacers while half the league is in the black. Cry me a river and take responsibility for terrible team and personnel management.
        • Tear it down
          If it is not making money, sell it or tear it down as to not lose any more? Businesses deal with that harsh reality every day. Ever see a new restaurant pop up and an older one has to close? Quit whining, cut your prices and compete, or get out. Good thing I am in Dallas to not have to hear this kind of crap everyday. I hope the good citizens of Indianapolis do not get stuck with this tab. Go Colts, the Protector of Peyton Place (Lucas Oil Stadium):-)
        • Pacers playing hardball with city on lease
          Pacers playing hardball with city on lease

          http://www.ibj.com/pacers-playing-hardball-with-city-on-lease/PARAMS/article/19306
        • Sad indeed
          Re Dave's comments: Amen
        • Not 400
          400 is a crazy number. That's more than one event every single day every day of the year including Christmas, New Year's, Thanksgiving, etc. We can't start counting every 10-person luncheon in that formula. These events have to have some sort of revenue component to make a difference. Take away Pacers and Fever events, and it's well below 150.
        • ICVA Numbers
          I was as the annual meeting of the ICVA and they told us that Conseco has closer to 400 events a year. Someone, or several someones, can't count.
        • pacers
          How can Lucas Oil Stadium be to blame if the Pacers were losing millions before it was built????!
        • Clarification
          I should clarify that Mark Rosentraub was referring to non-basketball events in his statement regarding the number of events at Conseco Fieldhouse. Which brings up an interesting distinction where I think a gray area exists. Pacers basketball revenue vs. Pacers Sports & Entertainment revenue. The Pacers have said the basketball team has lost $30 million last fiscal year, but have never said how PS&E has done or is doing. In any event, as a noted economist, author, not to mention former dean at IUPUI and current Bruce and Joan Bickner Endowed Professor of Sport Management, University of Michigan, I have no problem with Rosentraub's credentials.
          • What is Government's role
            The problem is far deeper than what meets the eyes. When government begins to run football and basketball while at the same time telling taxpayers that they can't even run parking meters and basic government functions, is it no wonder things are in a mess. It may not be as glitzy sitting in a reserved suite at a game, but perhaps the mayor should be collecting parking meter change and stop trying to do things that never was intended for government to run.
          • Article makes no sense
            Lucas Oil Stadium is no more of a competitor for events at Conseco Fieldshouse than the RCA Dome was.
          • Fuzzy math
            â??They used to host 150 events a year at Conseco Fieldhouse,â?? Rosentraub said. â??Now, itâ??s closer to half that number.â??
            Huh?
            The Pacers play 41 regular season games and another 4-5 preseason.
            The Fever play 17 regular season games, at least one preseason and playoffs.
            The Big Ten tournaments fill eight dates.
            A glance at the CFH schedule shows about eight concerts or other events in just the next couple of month so, let's say on average, four of those a month would be 36 for the year.
            Then there's the Wooden Tradition, high school basketball, IUPUI, Indiana Ice, commencements and other activities.
            FFA uses the Fieldhouse for convocations about five days straight.
            Add it all up, and it's far closer to the 150 than the 75 Rosentraub implies.
            This doesn't change the challenges facing the Pacers and CFH. But it does challenge Rosentraub's credibility when he asserts something that isn't close to fact.
            Just sayin'.
            • This is our government
              Whether it be City, County, State or Federal Government this is a prime example of government's inability to plan correctly and is always trying to respond "reactively" versus "proactively" in this situation.

              Sad part is that as usual the taxpayers are the ones paying for it in increased taxes and doublely in decreased services due to budget cuts because of this type of government management
            • Conseco
              First, negotiate the lease with Conseco and if that doesn't work, bend over and kiss it all goodbye.

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