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Sports Business

Indy Eleven takes big gamble with stadium finance plan

January 27, 2014
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In the year since local businessman Ersal Ozdemir announced he was launching a professional soccer team in Indianapolis, the feedback has been overwhelmingly positive.

In my 16 years covering sports business at IBJ, I seldom have seen a start-up sports enterprise quickly gain so much momentum. The groundswell of support for professional soccer and this franchise has been amazing to watch.

Ozdemir is to be lauded for his timing and overall strategy for his soccer initiative.

The team found 7,000 people willing to put down deposits for season tickets, signed deals with credible sponsors and caused quite a stir when it unveiled its name, Indy Eleven, with a nod to the state’s past.

That wave of positivity was put to the test on Friday when Ozdemir unveiled a plan to seek state aid to build a new, $87 million stadium. Readers who posted comments on IBJ's online story were largely negative toward Ozdemir’s idea. And even though Ozdemir pointed out that Indy Eleven merely was asking for tax money generated by the team's operation, posters, and hard-care soccer fans I heard from over the weekend, were leery of the financing plan.

The response was predictable. Ozdemir is far from the only sports executive to get criticized for seeking public funds for a privately run sports team. Indiana Pacers owner Herb Simon and Indianapolis Colts owner Jim Irsay have taken more than a few arrows over the years for playing in publicly financed facilities and getting additional tax money on top of that.

The Hulman-George family took some heat when Hulman & Co. lobbied the Indiana General Assembly last year and was granted $100 million in captured tax money over 20 years.

The funds will be used to improve the Indianapolis Motor Speedway. It marks the first time the Hulman-George clan has asked for public funds for any motorsports endeavor. Before last year, the family was constantly lauded for paying its own freight. Not anymore.

Asking for tax money is a calculated risk for any sports franchise operator. The money clearly helps make the business more viable. But operators of those enterprises have to know the request is going to generate some ill will in their home market.

So Ozdemir was faced with a difficult decision. Should he seek government aid that he thinks he needs to play in an 18,500-seat open-air venue?

The Indy Eleven will play its first season or two at the IUPUI stadium, which will seat just more than 11,000 for soccer matches. But Ozdemir is convinced his team needs its own venue set up for soccer to maximize its potential here.

It’s no secret Ozdemir harbors a dream to one day turn the Eleven into a Major League Soccer franchise. To do that, he has to show folks this is a big-time operation. Maybe his idea for a new stadium is an important step in that direction.

But it’s also a gamble. And Ozdemir could be wagering the future of his franchise.

The good will a team builds up in its home market is one of the most valuable commodities a franchise can have. Ozdemir, the head of Keystone Construction, is an experienced businessman. But he’s new to sports team ownership.

There’s a chance he doesn’t fully understand the value of that good will. The fact that Indy Eleven's good will came so fast might have have led him to miscalculate its value.

Or maybe he feels he really, really needs that stadium, and this is genuinely the best way to get it.

Either way, the game now is truly on.

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