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Big companies seek chance to bid on CIB privatization

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A dozen heavyweight firms have responded to Indianapolis’ proposal to privatize management of Lucas Oil Stadium, the Indiana Convention Center and, perhaps, Conseco Fieldhouse.

IBJ reviewed all 12 responses, which the city released Friday after a public records request.

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Check out this weekend’s IBJ for more on the companies vying to run Indianapolis’ sports and convention venues.

As sports industry experts expected and IBJ reported first in late November, the three biggest U.S. businesses that specialize in stadium and convention center management all expressed their interest.

Philadelphia-based SMG, which manages more than 200 stadiums and arenas, including five NFL facilities, submitted an individual response establishing its credentials. Founded in 1977, SMG is the oldest business in its entertainment industry niche.

SMG’s two biggest competitors, Los Angeles-based AEG and Philadelphia-based Global Spectrum, joined together with Pacers Sports & Entertainment and the Indianapolis Convention & Visitors Association for a four-way partnership proposal. Together, AEG and Global Spectrum run a similar number of sports and convention facilities as SMG.

Global Spectrum was founded in 1994; AEG in 2004. Typically competitors, this may be the first time the companies have aligned to pursue an NFL stadium management deal.

“We are prepared to offer our full corporate concentration and resources to this project, and we look forward to the opportunity to work with you on this exciting civic project,” wrote Pacers Sports and Entertainment President Jim Morris and ICVA CEO Don Welsh in their joint cover letter to Mayor Greg Ballard’s Office of Enterprise Development.

“As you continue this review of how to best operate/manage these facilities, we look forward to cooperating with you to identify the best ways to achieve efficiencies, enhance performance, and create benefits that are in the best interests of this community,” Morris and Welsh wrote. “We are committed to insuring that these valuable assets are operated to the maximum benefit for the entire community, both economically and socially.”

The Indianapolis Capital Improvement Board, a local municipal corporation, currently manages the convention center and the home of the Indianapolis Colts. It also oversees the Indiana Pacers’ facility, which the team operates. The CIB struggled all last year to close a projected $47 million budget deficit.

Seeking to trim the CIB’s expenses and hike its revenues, on Oct. 20 Ballard’s Office of Enterprise Development released a “request for proposals” soliciting businesses’ best privatization ideas. Sports business experts say large companies may be able to cut the facilities’ procurement costs via mass purchasing.

They also might be able to multiply the number of dates the CIB’s facilities are utilized annually. Along with San Antonio-based Clear Channel, SMG, AEG and Global Spectrum are the biggest players in the talent-booking business.

Indianapolis got 10 responses in addition to the ones it received from SMG and the four-way Pacers/ICVA/AEG/Global Spectrum partnership. Some came from companies that are national or international in scope with heavyweight credentials in facility management, but less experience with sports and convention venues. Others originated from companies that want to bite off just part of the CIB’s business, for example offering proprietary information technology systems. Locally based ProLiance Energy LLC proposes helping the agency cut its gas-procurement costs.

A response from Los Angeles-based  commercial real estate firm CB Richard Ellis, which proposes partnering with locally-based Venture Real Estate and Keystone Construction Corp., was the only one besides the Pacers/ICVA/AEG/Global Spectrum consortium with a significant local connection.

CIB Chairwoman Ann Lathrop said much of her board is still doing its homework on possible privatization of facility management. In November, Ballard shook up the nine-member CIB, replacing four of its directors. Former CIB president Bob Grand stepped down and was replaced by Lathrop, who had been CIB treasurer. Lathrop, who served as Indianapolis city controller under Mayor Steve Goldsmith, is an executive with Oak Brook, Ill.-based public accounting firm Crowe Horwath LLP.

For now, Lathrop said, the CIB is deferring to the Office of Enterprise Development for analysis of the 12 responses.

“Clearly, at some point in time, the board would have to get involved if there’s going to be some kind of wholesale execution, because we’d have to approve any kind of contract,” Lathrop said. “A lot of smart people are giving us ideas. We ought to take a look at them.”

Michael Huber, who directs the Office of Enterprise Development, said the process has already yielded small- and medium-sized efficiency opportunities the city can pursue immediately, such as energy audits and retrofits of CIB buildings, streamlining building maintenance, and contract renegotiation and consolidation among current service providers.

The Office of Enterprise Development will spend the spring analyzing whether to move ahead with a broad “request for proposals” soliciting business bids for the general stadium and convention center manager’s job.

“I think what you’ll see is a series of small- and medium-sized cost-savings initiatives, including some new RFPs or transactions start in the first part of 2010,” Huber said. “And then we’ve got a lot of homework to do to figure out if there’s a larger contracting opportunity that the CIB could pursue.”

 

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  • Here we go again!
    Privatization seems to be the cry for any elected Republican. First, the parking meters - was it good for the average citizen? Only in that you can use a credit card now. Otherwise, hourly costs have gone up and now you have to pay on Saturday. Couldn't the city have made those changes without putting a middle man in there to keep all profits? No, much better to give it to some out-of-state company, lay-off city workers who used to do the work and charge the people more and claim you've helped the city. Now, he wants to "privatize" management of Lucas - while still charging the restaurant and hotel/motel fees to pay for it - how many Indianapolis workers are going to be put out of a job because of this change? Will they keep the same contracts with service people, or will new management mean new contracts? Lucas and the Convention Center were just finally picking up in business besides the Colts - now you want to change management? There's never a Ballard change without someone in Indianapolis being hurt!
  • Tax dollars to private profit?
    Ugh. Here we go again. I believe taxpayer dollars go to fund the CIB and its properties like Lucas Oil Stadium. Here come the Republicans (and specifically Ballard) helping their corporate friends line their companies' pockets from the taxpayer coffers. Sure, we pay the expense to have these things built but then someone else signs a sweetheart contract and waits it out to reap any long-term profit...that stays private. Just get it over with and bring in Mitch to solve it. He'll hand it off to a FOREIGN private company (like the tollroad).
  • How does this affect us?
    so does this mean that the CIB would relinquish managing the properties?
  • Venture and Keystone
    Wow-how much have Venture partners and Keystone Construction owners given to the mayor?? Bet they have no experience in managing anything in this proposal.
  • Repair work
    It all fine and well as long as these assets get the appropriate care. I hope repair work on these facilities does not get neglected, so the management company makes more money. The tax payers should insist they get the proper care over the years to protect the investments.

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