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Fieldhouse feud results in tax refund for theater owner

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The Internal Revenue Service has refunded part of a former downtown movie theater owner’s payroll tax payments after he argued that Conseco Fieldhouse caused an undue hardship on his business.

Ted Bulthaup, who operated Hollywood Bar and Filmworks on South Meridian Street before closing it in 2006, touted the IRS decision in an advertisement he purchased in the May 17 issue of IBJ. His ad was a lengthy diatribe refuting the results of a recent study that found the Indiana Pacers have a positive economic impact on the city.

What’s unusual about the tax case is that such refunds, which are based on economic hardship, more typically are associated with natural disasters such as earthquakes and hurricanes.

“It boils down to something like [Hurricane] Katrina,” Bulthaup told IBJ. “That’s what the general rule was put together for. You just have to prove your disaster, which we did admirably well.”

The IRS granted Bulthaup's refund in early April after he convinced the agency that increased parking rates following the opening of Conseco Fieldhouse in 1999 led to a severe downturn in his business. Bulthaup said he skirted payroll tax obligations in order to keep his theater open.

He failed to pay payroll taxes for about a three-year period before he closed his theater. Bulthaup estimated he owed as much as $90,000, which he paid before filing for a refund. He declined to divulge exactly how much was refunded, describing it as "mid five figures."

The IRS decision came three years after Bulthaup and his attorney made the request for relief.

“The reasonable cause that was established was based upon the economic circumstances that resulted from Conseco Fieldhouse opening less than two blocks from Hollywood,” said his attorney, James Gilday. “That was considered and accepted to be a circumstance beyond the taxpayer’s control.”

A spokeswoman for the Indiana office of the IRS declined to comment on Bulthaup’s case, citing federal disclosure regulations that prohibit her from divulging details about individual tax matters.

The Capital Improvement Board, which commissioned the economic impact study and is wrangling with the basketball team over who will pay at least $15 million in annual fieldhouse operating costs, was among Bulthaup’s targets in the newspaper advertisement. Pacers executives, who say the team is losing money, want CIB to assume the cost.

CIB President Ann Lathrop said the board never received any type of notification from the IRS about Bulthaup’s claim. She declined to comment further.

Bulthaup closed the 15-year-old downtown fixture in October 2006 to focus on a similarly styled theater that serves alcohol and food, which he opened in the suburban Chicago community of Woodridge in 2003. He since has opened another theater, in nearby Naperville.
 
Bulthaup had a long-standing feud with the city of Indianapolis and CIB over parking issues following the arena’s opening, which he blamed for driving patrons from his theater.

While operating Hollywood Bar and Filmworks, Bulthaup founded the Indianapolis Downtown Restaurant Association, which spearheaded an unsuccessful effort to persuade the city and CIB to lower event parking rates.

The downtown restaurant association that Bulthaup founded now is affiliated with the Indiana Restaurant Association, led by John Livengood. He recalled Bulthaup as being “very aggressive” in standing up for what he believed.

Livengood agrees with Bulthaup’s assessment that the Pacers' economic impact on downtown is minimal, at least for bars and restaurants. Livengood pointed to the recent study commissioned by CIB, which shows the team’s home games generate just $175,300 annually in city food and beverage taxes.

The food and beverage tax, which applies to sales at restaurants and bars, was raised by one percentage point, to 2 percent, in Indianapolis to help fund the construction of Lucas Oil Stadium.  

Livengood said he hopes the Pacers stay but also wants the public to realize sports teams often don’t create as much business for downtown establishments as one might think.

“Everybody always comes to us to pay for this stuff,” he said, “and we’re not the big beneficiary, in every case.”
 
The study, released May 10 by Chicago-based Hunden Strategic Partners, found the city would lose nearly $18 million in tax revenue and other expenses if the Pacers were to leave Indianapolis.

It also said the Pacers and Indiana Fever contribute an estimated $55 million a year to the Indianapolis economy.
 
The Indianapolis Bond Bank paid Chicago-based Hunden Strategic Partners to perform the study. The firm is led by Rob Hunden, a former economic development official for the bond bank during the Goldsmith administration.

That relationship has led critics of any plan to provide financial assistance to the Pacers to question the results.

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  • Taps and Dolls formerly "Hollywood Bar & Filmorks"
    I frequent the new establishment known as Taps and Dolls that occupies the former Hollywood Space. They put in a fairly upscale 50 Taps system which makes for a new tasting every night. The fact that conseco has come to town has helped out almost all business that have open in the last 8 years some businesses just arent going to last forever. Think about a movie theater that you can smoke in "not gonna happen" most bars are non smoking new and old; great concept 10 years ago. The Pacers and Conseco maybe not be great, but with all the concerts and games makes allot of the businesses succeed. Ted, rewind to the sucess of your business in CHICAGO BURBS think about it.... ITS CHICAGO.
  • Reply to HKS
    I did not say a team was worthless. They can provide great publicity and add a great dimension to a city. What I did say isâ?¦
    1) That does mean they should get taxpayer money when they just have a bad business model, they have grown dependent on public subsidy for fat salaries and big facilities and they should fix their business model instead. Sports teams could and would do fix it only when they are forced to. That time should be now, nationally.
    2) That the economic impact they claim in order to justify getting taxpayer money has been proven again and again to be a big lie by every independent authority. Only when insiders with special interests do studies is that somehow justified, those studies are demonstrably flawed if not outright fraud and the public should be outraged. A local government agency reported that the top 10 downtown restaurants suffered an annual decrease in customers/sales for the first 3 years the Fieldhouse was open until they stopped issuing the report because they did not like bad news and the City Council Asset Management Committee found that the neighborhood was right in pointing a finger at the Fieldhouse as the reason.

    Note also that a city can have great fabric like the Speedway, the Childrenâ??s Museum, the Zoo without taxpayerâ??s picking up the tab.

    And no I am not a sports person, but how does that justify taking taxpayer money to lower the price of a ticket for someone like yourself that is a sports person. And that is not paying a little more taxes, that is estimated by the CIB itself at $400 per family per year, sorry but that is not appropriate. All teams should have to make it based on their own revenue, just like any other business.
  • Info
    I'm not sure where you are getting all of this information you are listing, but the bottom line is parking at Circle Centre has always been cheap, even on Pacers game nights. That study you are referring to must have been the year when Conseco opened because I haven't paid over $5 to go to a Pacers game at Conseco ever. Parking is $5 on the lot on Delaware across from Conseco and $1.50 at Circle Centre. The bottom line is cities need sports franchises to be considered a major city. If that involves paying a little more in taxes, so be it. I can't say I agree with how the teams run their business all of the time, but that is more of a league issue than a team. i.e. Players' salaries. Pro teams are part of the fabric of the city. I'd like to see you name a city that is considered big time that does not have 1 pro sports franchise. Chicago has 5! So by your rationale, the Colts are worthless to the city of Indianapolis as well, right? Those who disagree that cities do not need sports franchises, do not like sports, such as yourself. That is the issue.
  • Reply to IndyTodd

    After 15 years of downtown, even though I love downtowns which is why I built the first new downtown theater in Indy in over 60 years, and operated the first one in two decades, the decision making by Indy government, which I had lots of dealing s with on lots of issues, was so bad I decided never to make myself vulnerable to that kind of thing again. Cook County is even worse in that department than Indy. I know one theater owner that has to renew 94 permits annually, hires a law firm who does nothing but renewals for people. Expense of building is much greater in any downtown than a suburb. Also, will never build a theater that needs a security guard and I knew this suburb very in the next county over (DuPage) very well. And as for Indy suburb, aside from having enough with local government, I won't pay taxes to sports team (see my answer to HKS). Yes, as cities grow parking rates do go up. But when you essentially only have people in quantity living in suburbs they won't pay the higher prices, at least not often. Cities that provide free or discount parking to make their downtowns work have huge success stories and I gave Indy government materials on lots of examples, (and they at least realized it for Circle Center Mall but then, as I am not a basketball team owner, I am not a Simon either. They realize it was and is essential for retail to thrive in the downtown mall, but don't get it that all downtown retail needs that asset to be over-the-top successful, if they did it right like some other examples, downtown would be ten years ahead of where it is now) It was time to go, for me it was the right decision. While parking rates might not have kept you away from my place, I had literally thousands and thousands of customer comment stories the contrary, as did almost all other downtown establishments, all of who told Peterson, many of whom signed petitions and wrote letters, and it was statistically provable - just like the affect that is documented in every single academic, independent study of this issue, and there are many. The Pacers study is a pure fraud.

    • Reply HKS
      I am that confident, I have almost 400 employees and well over $20 million in sales up here. Better business strategy is to build more up here and not far flung like Dave & Busters. SO Iââ?¬â?¢ll invest where I can make money for my employees, my investors, my bankers and my family in the best way possible, just like you would do. Also, spent 3 years in long distance relationship while wife ran Indy and don't want to do that again.....and a sports team will never get a penny of my tax money again. The NRA says the average restaurant in Indy has a 4.5% pre-tax profit margin, Peterson broke his word (like always) and doubled the food & beverage tax, so at 2%, government has forced an entire industry into almost a 50/50 partnership with Irsay & Simon as it is. That is fundamentally wrong. The average Marion County family pays Irsay/Simon through that tax almost $400 per year whether they even watch a game on TV or not. Iââ?¬â?¢m not a super-religious guy, but I believe for those guys to get public money for this purpose is a sin. As wrong as anything can be. So maybe for those 15 games you went to, you found cheaper parking (even though the last survey showed the average price of a parking space went up 735% on a game night). For those 15 games you also had the vast majority of the cost of your admission ticket paid by other taxpayers ââ?¬â?? now how is that fair or right? Why should I or anyone else do that so you can watch in person a big rubber ball bounced on a hugely expensive wooden floor?

    • Question for Ted
      Hey Ted,

      I notice when you relocated your business to Chicago you didn't put it downtown. If you had you would have faced the same problems you did here with parking only they would be even more extreme parking rates. Sure, you've got more people living in downtown Chicago but it appears that you decided that maybe your type of business is not best served being downtown.

      So, you made a good decision to move to the Chicago suburbs where you can have ample free parking. Why didn't you attempt to move somewhere on the north side of Indy here? It seems that you love to talk about your success in Chicago but you may have had pretty strong success here too if you'd just made the same move. Once a downtown starts to mature more as it has in Indy you are naturally going to see parking rates increase over time as space is at more of a premium than during the 70's or 80's.

      Personally, the parking issue never kept me away from your theater. Anyone that knows downtown well at all can almost always find a free spot within a relatively short walk or at worst pay a very small fee with a relatively short walk. Your food was pretty mediocre at best but it was still a fun night every now and then.
    • Move back
      Ted - If you are confident in your business, you should move the company back in. I went to 15 Pacers' games this past season and paid $1.50 every time.
    • Reply to Barry Bonds
      You don't know the whole story. Actually, the comedy club was Crackers and they saw the writing on the wall due to Conseco and got out, selling it to someone who did not know any better about downtown. They got out while the getting was good (wish I also had in hindsight, but I believed Bart & Melina Kennedy when they said they would fix the problems - they lied)). The new owner of Crackers only pays $1400 per month in rent ( much less money than the HB&F which occupied four times the space and also invested a lot more money into upgrades). The new comedy owner had to cut hours way back from what they formerly were open and he owns other businesses to earn his living so this was more of a hobby when he got into it. Even the new owner of the comedy club signed all the petitions, wrote letters to the Mayor, and agreed with everything and everybody in the neighborhood. His manager, along with Rock Bottoms manager, were on the front page of the IBJ with me when the story first broke in the year 2000 that the Fieldhouse was hurting the neighborhood far more than any positives that came from it. So you are wrong.
      • I agree 100%
        I had the T-shirt, loyalty card and frequently went to Hollywood Bar and Filmworks prior to Conseco opening up. I did stop going when the cost of parking went astronomical. I took many out of town guest to Hollywood Bar and Filmworks and miss it greatly.

        How about opening something on the eastside Ted? The intersection of Washington and Franklin where the old Service Merchandise would be great. Just an idea.
      • Studies
        Virtually every academic studies has shown that investment in professional sports teams is a net negative for local communities. So why are people so hateful toward Ted? He was just one of many business casualties of the emphasis on subsidizing downtown sports while ignoring what is good for other businesses.
      • dump
        The comedy club beneath Hollywood was there long before Hollywood and is still there. Conseco had nothing to do with the demise of Hollywood Bar & Filmworks, but rather it was the filthiest place I've ever been and would never step foot in there after seeing how trashy it was.
        • Reply to Democratic Sycamore:
          Actually we proved the case so well, by facts and statistics that were clearly correct, verifiable, and often came from other areas of government (and that the new Pacers study somehow ignored), that there was no question from the IRS hearing officer that we met the criteria and proved our case. The only question was how much relief I was entitled too. Even the head of the CIB and President of Indy's largest parking company once told me at a public meeting that I knew their numbers better than they did. If you want to prove to yourself that sports arenas hurt more than they help, please read the independent, expert academic studies available, may I suggest...."Major League Losers: The Real Cost Of Sports and Who's Paying For It" by Mark S. Rosentraub
          "Public Dollars, Private Stadiums: The Battle over Building Sports Stadiums" by Kevin J. Delaney. "Field of Schemes: How the Great Stadium Swindle Turns Public Money into Private Profit" by Neil de Mause, or
          "Sports, Jobs, and Taxes: The Economic Impact of Sports Teams & Stadiums" by Roger G. Noll (Brookings Institute). Then you'll know the truth and you'll know the Pacers and the CIB are lying in their new study.
        • No exactly
          Reply to Bill: Actually Hollywood had continual double digit increases in attendance while downtown until the Fieldhouse opened, even the year Circle Centre opened with 9 screens we were up 35%. We almost always won local readers polls as best theater,the Indianapolis Star once called us one of the Crown Jewels of Indianapolis and readers of Indianapolis Monthly once voted the best place to bring out-of-town guests after the 500 Mile Race and the Children's Museum. Our new location in suburban Chicago has grown by similar leaps and bounds, with 5 major physical expansion in 7 years, plus a whole new location last fall. Using the same concept, menu, recipes, service manual, etc., we are by many statistics the most successful theater in the nation and we bring more visits to little old Woodridge (pop 30,000)than the Colts bring to Lucas Oil Stadium (pop. Indianapolis) without a single penny of subsidy from the taxpayers. Woodridge was juts list for the first time as 1 of the best 100 places to live in Money Magazine,largely because of the class act we brought to their community. SO, while you might not have liked my place,the facts overwhelmingly speak that you are in the minority. It was parking, I had over 1500 comments collected from polls that included the Star and Q95 websites saying so, and when we left I had over 5000 letters and emails saying what a jerk Peterson and Melina Kennedy were (which is still accurate) for not fixing the problem. Not quite true, not only were they each a jerk, but they broke every promise they ever made and misrepresented things to the very best of their ability. So your opinion of my business is in the decided minority. Don't feel bad, I don't really care for McDonald's but they seem to be popular anyway.
          • No exactly
            Reply to Bill: Actually Hollywood had continual double digit increases in attendance while downtown until the Fieldhouse opened, even the year Circle Centre opened with 9 screens we were up 35%. We almost always won local readers polls as best theater,the Indianapolis Star once called us one of the Crown Jewels of Indianapolis and readers of Indianapolis Monthly once voted the best place to bring out-of-town guests after the 500 Mile Race and the Children's Museum. Our new location in suburban Chicago has grown by similar leaps and bounds, with 5 major physical expansion in 7 years, plus a whole new location last fall. Using the same concept, menu, recipes, service manual, etc., we are by many statistics the most successful theater in the nation and we bring more visits to little old Woodridge (pop 30,000)than the Colts bring to Lucas Oil Stadium (pop. Indianapolis) without a single penny of subsidy from the taxpayers. Woodridge was juts list for the first time as 1 of the best 100 places to live in Money Magazine,largely because of the class act we brought to their community. SO, while you might not have liked my place,the facts overwhelmingly speak that you are in the minority. It was parking, I had over 1500 comments collected from polls that included the Star and Q95 websites saying so, and when we left I had over 5000 letters and emails saying what a jerk Peterson and Melina Kennedy were (which is still accurate) for not fixing the problem. Not quite true, not only were they each a jerk, but they broke every promise they ever made and misrepresented things to the very best of their ability. So your opinion of my business is in the decided minority. Don't feel bad, I don't really care for McDonald's but they seem to be popular anyway.
          • Missing Link
            The Circle Center Mall often raises its price to $10 during events. At least through 2005, the average price to park South of the Circle increased an average of 735% on Fieldhouse events nights, that was over 100 nights per year. The City had funded an independent study, but Melina Kennedy & Bart killed it when the facts starting coming out and were showing the net negative affect the arena had after a public investment of tens of millions of tax dollars. The parking rates and associated traffic drove all the regular non-event goers away from the district years ago. That is why the sales at the top 10 downtown restaurants shrank an average of 10% each of the first 3 years after the Fieldhouse was built (according to sales tax records) until government just stopped reporting the records because the Fieldhouse backfired and those reports confirmed their mistake. At the same time downtown sales were declining the countyâ??s restaurant sales were up an average of 4% each year, as was the state and nation (source National Restaurant Association). Almost 40 operations, including all the downtown restaurants, my old place the Hollywood Bar & Filmworks, plus the ISO and the IRT signed a petition to Peterson saying the problems caused by the Fieldhouse were there number one problem/issue (which Peterson & Melina Kennedy acknowledged but did nothing about). Twenty businesses closed, mine among them, costing hundreds of jobs and millions in lost tax revenue to the TIF district. The Pacers have, on a net basis, hurt both downtown visits and tax revenue. The academic term in the literature for this affect is â??Crowding outâ??.
          • nice
            This slimeball took advantage of a tax code that is supposed to help those in *real* disasters.

            The Star ran his whining tear-stained quotes in the paper for a year before he bought his own page of yelps and moans

            Congrats Bulthaup - I'm sure others in disasters couldn't use that money
          • Detail on Parking
            You are right that parking is cheap at Circle Center, but the big problem for this venue is that a majority of their business is on Thursday-Saturday nights and on game nights for the Pacers, event parking rates go into effect which has traditionally been $20 regardless of length of stay. For Circle Center, you can get out for normal rates if you show that you've spent more than $20 in the mall, but he wasn't in the mall.

            Maybe he should come back and lease the dead space on the top floor of the mall, but with the UA Theater there already, I doubt Simon would entertain that thought.
          • He Didn't Want to Pay His Taxes
            I'm with HKS. I do not at all understand why there's so much whining about parking rates. This city must have the lowest parking rates of most major metropolitan areas in the States. (No, I don't have evidence -- I've just traveled a lot.) And, yeah, even during a Pacers game you can park at the mall for $1.50 an hour; probably only a dollar back when Ted had his mediocre movie theatre idea -- that was just down the road a few blocks from a major multiplex.

            Adequate, affordable parking exists around downtown Indianapolis whether or not the Pacers are at home. My opinion is that Teddy seen his business revenues going down considerably and didn't want to pay his taxes. Fortunately for him America's 'free market' system of economics allowed him to get out of paying his taxes by using tax code intended for victims of earthquakes, tornadoes and hurricanes.

            Ineed, the Pacers are a disaster, but they're not *that* type of disaster.
          • Use of "diatribe"
            The use of the word "diatribe" to discuss Ted's advertisement doesn't seem to reflect impartial journalism, it seems to me. Am I way off base on this?
            • Have no dog in this fight
              Let me be clear. I understand their is 2 side to all stories. Do not know Ted. Never been to his place. Have no problems with Conseco. Like the place. Do have issues with parking rates. I have paid my share in Taxes. The case went to court. Court's Ruled. This is America. RIGHT!
            • conseco ruined plenty
              The majestic Oyster Bar and Grill were on the north east corner of Maryland and penn for as long as I can remember. In fact, they were rated by esquire magazine as one of the best restaurants in the nation back in 1986.

              The parking costs, and the diffiulty in getting clients to the restaurant during the construction phase ruined the restaurant. I loved that place.

              As far as Ted goes, really poor food, a complete lack of remodeling, indifferent staff, and a myriad of other reasons caused his business decline. The fact that he would demand police arrest individuals on a regular basis in front of his business led me and several others to write him off.
              His late election character hit piece advertisement against peterson didn't help. SO, he didn't pay employee withholdings for three years? Did he pay himself? What a jackass.

              That said, I am sick of the rest of us paying for a millionaire's dailliances
            • Ted Killed His Business
              Bad food, bad service, dirty environment, bad movies. Ted had a bad product. That's what killed his business.
              • Really?
                I don't quite understand this. Can't you park for 3 hours at the Circle Centre garage for $1.50, which is 2 blocks from where this establishment was located? What am I missing?
                • Good for Ted.
                  Asa small business owner. I feel Ted's struggles. We have to absorb all the tax increases and other increase of costs of doing business. At the same time we have to keep are prices the same or lower. Because everybody says. We are cutting back. If the IRS agrees WOW. Again good job.
                • Lots of damage
                  Unfortunately the Pacers and Conseco caused ruinous damage to lots of businesses. The Indiana News Company bought a 5 story building to move their newstand into and warehouse product. Unfortuantely the city "stole" the building shotly thereafter. Let 'em move.

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