Unions and Pacers and Pro Sports and Labor and Sports Business

Pacers: Lockout won't sting employees, ticket holders

July 22, 2011

Despite the labor rift between National Basketball Association owners and players, Indiana Pacers President Jim Morris says he doesn't plan to lay off any of the organization’s 170 employees—at least for now.

“We’ve worked in a steady way over a number of years to get the [operational] team in exact order,” Morris said. “We don’t anticipate any changes to that at this time.”

Despite the lockout that threatens to cancel a good portion, if not the entire, upcoming season, Morris said there is plenty of work to keep staffers busy.

“As we look forward, we host 525 events,” Morris said.

He cited upcoming high school and college basketball games and tournaments, concerts and other events.

“You have to realize, when we closed Market Square Arena, we had 48 facilities workers. Now we have 37, and Conseco Fieldhouse is three times bigger [than MSA],” Morris said. “So, you can see, we’ve really tightened up.”

But if the lockout drags on?

“Later in the year, we’ll have to take a look at it,” Morris said.

Earlier this month, the NBA trimmed 114 employees in a cost-cutting move. The layoffs represented about 11 percent of the league’s work force in New York, New Jersey and internationally, according to NBA officials, who added that the layoffs were not directly related to the lockout.

The Pacers face financial challenges of their own.

The team lost a combined $60 million during the 2008-09 and 2009-10 seasons, Morris said. Though he wouldn’t reveal the team’s loss last season, he said it was “significant.”

Some sports business experts have surmised that since most small-market NBA teams like the Pacers are losing money, canceling all or part of a season won’t be that big of a financial blow.

However, for the Pacers, the lockout is coming at a bad time. The team just named Frank Vogel as head coach. He rallied the team into the playoffs as interim coach late last season. The Pacers also hired two new assistant coaches and made a draft day deal to add Indianapolis native and former IUPUI standout George Hill to the roster.

“There’s more excitement around this franchise than there has been in a long time,” Morris said.

The Pacers haven’t let the lockout deter their marketing efforts and off-season ticket and suite-sales drive, Morris said.

“Our folks are going to be working harder than ever,” Morris said. “Right now, ticket and suite sales are going very well. The community has really embraced what we’re doing. We’ve gained great momentum, and I expect that to continue.”

Morris declined to say what the Pacers’ season-ticket renewal rate is or how many new season tickets the team has sold.

NBA Deputy Commissioner Adam Silver said season-ticket renewal rates league-wide are running at about 80 percent, and league officials added that one-third of the NBA’s 30 teams have sold 1,000 or more full-season tickets for next season to new buyers.

“I hope, by the time the season starts, we’ll sell much more than 1,000 new season-ticket packages,” Morris said.

But the lockout continues to cloud any progress for the Pacers and the rest of the NBA.

“The lockout will clearly have a financial impact, and for the most part it won’t be good,” said Andrew Zimbalist, a sports economist at Smith College in Northampton, Mass. “Sponsorship sales as well as ticket sales will be at risk if the lockout jeopardizes all or part of the season.”

Like other NBA teams, the Pacers are offering season-ticket buyers a multi-option guarantee. Fans can either get a full cash refund plus 1-percent interest for all games that are canceled, or they can leave the money in an account with the Pacers and get an additional 10-percent credit toward future purchases.

Taylor Hamilton, senior research analyst with IBISWorld, a Los Angeles-based research firm that follows professional sports, said he does not think the lockout will cause teams to fold. But he added that some franchises that were struggling going into the lockout could be significantly weakened if it isn't resolved quickly.

Hamilton said one major issue is NBA teams’ inability to use players in marketing and outreach programs during the lockout.

 

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