Indiana Sports Corp. and Economic Development and Sports Business

New Sports Corp. boss adjusting game plan

August 14, 2006

Tom King thinks it's time to run the not-for-profit Indiana Sports Corp. with a for-profit mind-set, a change that could radically alter the organization credited with implementing the city's amateur sports strategy.

Major issues facing the ISC include deciding whether to stay in its Pan Am Plaza offices or look for a new home. The organization will also become more selective about which events it will host and will look for corporate, civic and government partners willing to share the financial risks of hosting major sporting events.

King was elected in April to succeed Earl Goode as ISC chairman during one of the organization's most promising, yet uncertain, times. The ISC chairman is a non-paid position with full-time responsibilities for helping the organization with sweeping policies and long-range planning.

"There was a pre-9/11 model, and now there's a post-9/11 model," King said. "Pre 9/11, just about everything worked. Now, we have to very carefully create a business model for the long-term stability of this organization. That's the only way we're going to assure we maintain our position as a sports capital."

Indianapolis has a long history hosting some of the world's largest sporting events, but changes in the national and international business climate put ISC's long-term survival at risk without bold action, King said.

Among King's observations since 9/11: changing international travel habits, a decreased number of corporate headquarters in Indianapolis, and increasing competition for the events this city has long attracted.

But King is far from pessimistic about ISC's future or the city's place as a sports mecca.

"We've built our expertise in hosting these events, and we've got some very strong infrastructure here," King said. "It's been proven that making this city a sports capital can be an important economic driver. Now we have to protect what we've established."

It's fitting, said ISC President Susan Williams, that board members chose to lean on a man who has been part of the organization since its inception in 1979.

As a founding ISC board member and one who played key roles in landing funding for the RCA Dome and other city sports cornerstones, King understands well ISC's risks. He watched closely as the organization almost lost everything from the financial deficits of the 2002 World Basketball Championships, and took another hit when attendance fell short of projections at the 2004 World Short Course Swimming Championships.

The basketball championships took ISC's $1.7 million reserve to nothing. The group had to tap into $1 million raised in a capital campaign that was to have financed the purchase of Pan Am Plaza, the office building it calls home.

Now, King is bent on rebuilding the organization's reserve to $2 million--which would cover one year's operating budget; finding a new, less expensive home; and forging corporate partnerships with players willing to share not only the bounty, but the risks, of hosting big-time sporting events.

"As a community, we need to think of amateur sports as a franchise," King said. "And as a community, we need to decide if we want to make the investment to keep this franchise."

Risk management

King said the ISC will not look to completely avoid financial risks, but he wants to share risk with corporate partners, sports governing bodies, leagues such as the NBA, and municipal and state governments.

Indianapolis Chamber of Commerce President Roland Dorson believes the local corporate community will step up, but said ISC officials must be prepared to show a significant potential upside to event hosting for its business partners.

"The objectives will have to match the business models of their corporate partners," Dorson said.

King said the ISC's business plan must bank on hosting events that draw significant interest from national and international advertisers and are less reliant on walk-up ticket sales.

King contrasts the Solheim Cup golf event held last year with the world basketball championships and short course swimming championships. While the golf event flourished with such sponsors as Ping, Rolex and Merrill Lynch, the basketball and swim championships didn't draw such high-powered sponsors and failed to meet ticket-sale projections.

"The events we do have to be something that appeals to national and international advertisers instead of the local bank or grocery," he said.

Sponsorships should cover 80 percent of an event's budget, and competing with larger cities could increase those budgets, King said.

While most events are considered successful if they break even, he said, he also wants to host money-making events so the organization can diversify its offerings, including more youth- and education-oriented initiatives.

Battling big cities

With larger cities such as Chicago, New York and Los Angeles increasingly aiming to attract many of the same sporting events Indianapolis has long lured, King isn't about to back down.

He pointed out that a superior strategy allowed Indianapolis to outbid Chicago for the Big Ten basketball tournament.

"Chicago could raise $500,000 more in ticket revenue than Indianapolis," King said. "We had to outflank Chicago strategically. We had to be a lot more creative. We had to make it about a lot more than hosting a basketball tournament."

ISC and city officials proposed hosting a Big Ten job fair and other events aimed at education to sweeten their package. Big Ten officials bit, awarding the city the men's and women's tournaments from 2008-2012. The estimated economic impact of both those tournaments is an easy eight-figure sum annually, sports economists said.

Mark Rosentraub, a former IUPUI urban affairs dean and author of sports business books, said Indianapolis should expect even more intense competition going forward.

"Cities are waking up to this billion-dollar business," Rosentraub said. "Indianapolis did a lot to forge this path to prosperity, but now others increasingly want in."

ISC officials are smart to fortify their position as a leader in event hosting, Rosentraub said.

"In terms of sports facilities and infrastructure needed to conduct these events and the personnel to pull it off, you say Indianapolis in the same breath as Chicago, L.A. and New York," Rosentraub said. "But now that you're competing in that league, what do they do to compete year in and year out?"

Address change for ISC?

First though, ISC officials must deal with issues even closer to home. One near-term project is deciding where the organization will be housed and what to do with its real estate holdings, King said.

The ISC owns the ice rink and plaza adjacent to the Pan Am Plaza building, but not the building itself or the parking garage beneath it. Options include selling the ice rink and plaza and moving into less expensive office space, possibly even a government-owned building, where the organization could get a reduced rent rate, King said. A partnership with IUPUI is another possibility. Or the ISC could sell its real estate and stay at the Pan Am Plaza office building, which is owned by Roseville, Calif.-based Coastal Partners LLC.

It's unclear how much leverage the ISC would have in negotiating a lucrative sale price for its property. Neither parcel is officially on the market, but local developer Michael Browning has an option to purchase the property if his proposal to construct a new convention center hotel there is chosen by the city.

Many observers think the real estate sale is the best bet for building ISC's seven-figure reserve.

King is the right person to help ISC chart a new course, said Milt Thompson, president of local sports marketing consultancy Grand Slam Cos. and an ISC board member.

"Tom King has a rare combination of skills and experiences," Thompson said. "He's well-known and renowned in this community as a clear, strategic thinker. He knows a lot of people at various levels in this town, and that opens a lot of doors."

King, 64, is now president of Thomas A. King Consulting, which focuses on philanthropy, economic development and marketing.

In his 20s, King went to work for the Indianapolis Chamber of Commerce, quickly scaling its ranks to become president at age 37. He later served in executive posts with IPALCO Industries Inc. and Walker Research. From 1995-2005, he worked for Eli Lilly and Co. Inc. as manager of corporate affairs and president of the company's $75 million foundation.

The former U.S. Air Force officer, who started his career as an Indianapolis Star reporter, quickly earned a reputation as someone who could usher in big projects.

As chamber president, he worked with then-Mayor Steve Goldsmith to lay the groundwork for a $1.1 billion street and sewer project the business community had lobbied hard for. He was central in forging corporate partnerships and raising funds critical to building the RCA Dome. He was also central in securing financial incentives to lure the NCAA headquarters to Indianapolis in 1999.

For all his efforts, those who know King best said he has become known as a quiet force.

"I never saw Tom put himself forward," said James Morris, former chairman of IWC Resources Corp., who asked King to spearhead fund-raising efforts for the NCAA relocation. "He worked faithfully in the background, pursuing good things for Indianapolis."

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