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NCAA, city haggle over Final Four rental deal

September 19, 2009

A little more than six months before the 2010 NCAA men’s Final Four is set to tip off at Lucas Oil Stadium, the NCAA has not yet finalized a rental deal for the facility.

While officials for the NCAA and Local Organizing Committee, the group charged with operating the event in Indianapolis, downplay any problems, sports business experts say it is unusual not to have an agreement pinned down in the months leading up to the event.

Part of the ongoing discussions center on how much, if anything, the NCAA will pay to play its marquee event at Lucas Oil Stadium.

Grand

Bob Grand, president of the city’s Capital Improvement Board, which oversees Lucas Oil Stadium and the Indiana Convention Center, insisted the negotiations are not tied to CIB’s fiscal woes, adding, “The rent will be negotiated and the 2010 Final Four will be here. I’m going to find the money to put the NCAA there.”

It’s coming down to crunch time to get a deal done.

“Certainly, you’d expect the deal for an event this size to be signed further than six months out,” said Mark Rosentraub, a sports management professor at the University of Michigan and author of “Major League Losers,” a book about sports operations. “This is probably a sign that there is something deeper going on.”

Rosentraub, a former dean at IUPUI, said an operational agreement is usually hammered out in the year immediately following the awarding of a bid to host an event like the Final Four.

The 2010 men’s Final Four was awarded to Indianapolis in July 2003. The city’s plans for a new stadium weren’t announced until 2004, a development CIB and NCAA officials say has complicated the negotiations.

Grand, who has a seat on the Local Organizing Committee, has no doubt the deal will get done and the Final Four will tip off as planned.

Not everyone is so sure.

Fong

Butler University President Bobby Fong fears the negotiations could become protracted, hurting the city’s relationship with the NCAA. Butler is the host school for the Final Four.

“Based on how the negotiations have gone, I’m very concerned right now,” Fong said.

Fong said CIB is seeking to raise the rent it charges the NCAA now that the event is held in the larger Lucas Oil Stadium. He added that negotiations that preceded last year’s men’s NCAA regional round were less than smooth.

“The CIB obviously is in a position of needing to raise revenue,” Fong said. “The Local Organizing Committee has to make the numbers work out.”

As the host school, Butler provides staffing that helps with things like crowd control. Butler is considering donating its staff time, Fong said, but added, “that’s a drop in the bucket.”

The NCAA says it is entitled to all ticket revenue and broadcast rights fees. The city’s Local Organizing Committee, which is headed up by the Indiana Sports Corp., gets revenue from parking, a percentage of food and beverage sales, and a percentage of program and souvenir sales.

Another revenue stream for the city is taxes from hotel rooms, rentals cars and restaurants that serve throngs of visitors expected for the event. The city in turn is responsible for paying for many of the event’s expenses, including the operation of Lucas Oil Stadium.

Fong said the Local Organizing Committee is scrambling to come up with a workable budget, but Susan Baughman, executive director of the committee and an Indiana Sports Corp. employee, said “everything is on target.”

The Indiana Sports Corp. is likely to tread carefully in putting together a budget, with the memory of the 2002 World Basketball Championships still on its mind. The debt for that event—which is bigger and more expensive to operate than a Final Four—stuck the ISC with a $2.69 million deficit.

The expenses for a Final Four are not insignificant, with sports business experts pegging it at $4 million to $7 million in a facility the size of Lucas Oil Stadium.

CIB: Financial woes not an issue

Grand and longtime CIB member Pat Early said the negotiations have nothing to do with CIB’s trying to ratchet up revenue. With a major budget shortfall looming, CIB this year has had to cut staff and slash other expenses to deal with increased costs, primarily the added expense of operating the year-old Lucas Oil Stadium.

“If there’s an issue, it may be with the NCAA and what they need,” Early said. “It certainly doesn’t have anything to do with money we are trying to raise. It would be inaccurate to say we are trying to change the deal.”

Greg Shaheen, NCAA senior vice president of basketball and business strategies, said cost is a factor. For example, after paying $200,000 to play in the old RCA Dome in 2006, NCAA officials expected to pay no rent in 2010. But Shaheen said financial matters aren’t necessarily the main detail to be worked out.

He said the deal needs tweaking because Lucas Oil Stadium, which can hold about 72,000 for basketball, and the soon-to-be-expanded Indiana Convention Center were only in the conceptual stages when Indianapolis won the bid to host the 2010 men’s Final Four.

“There is a give-and-take discussion that has to take place while learning how an event is going to take place [in Lucas Oil Stadium],” Shaheen said. “This is just the normal course of business. We’re not going anywhere.”

Some of the final details to be worked out, Shaheen said, have to do with ancillary events, such as events for NCAA partners in the Indiana Convention Center.

“The details we’re working out have to do with what will be available … the totality of the space,” Shaheen said.

Indianapolis also won the bid to host the 2011 women’s Final Four, but NCAA officials said they are now considering holding that in the 18,135-seat Conseco Fieldhouse. A decision on the women’s Final Four is expected some time this fall.

Businesses breathe sigh of relief

Shaheen’s assurance that the event is staying put is likely a relief to area hotels, restaurants, retail outlets and other businesses. The NCAA estimates the men’s Final Four brings the host city $50 million in direct visitor spending while depositing nearly 100,000 visitors in the city for the three-day weekend.

Grand and Shaheen said the NCAA and CIB’s relationship is on solid footing. But Fong is concerned that the dented relationship could mean some of the annual NCAA events here could go away.

In 2004, with the promise of a new, bigger venue to host its Final Fours on the horizon, the NCAA agreed not only to play the men’s and women’s Final Fours here every five years, but also to bring either a men’s or women’s preliminary tournament round here or the NCAA’s annual convention on a five-year rotation. That deal stretches through 2039 and ensures the city hosts a major NCAA event every year.

In addition to the 2010 men’s Final Four and the 2011 women’s Final Four, the NCAA already has a bevy of events slated here, including its annual convention in 2012, a preliminary round of the men’s NCAA tournament in 2014 and women’s tournament in 2015, the men’s and women’s Final Four in 2015 and 2016, and the annual convention again in 2018.

“The leadership of the city and the state are directly involved” in the discussions to nail down an agreement with the NCAA for next year’s Final Four, Shaheen said, but he added that he has no estimate of when a deal will be finalized.•

 

 

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