Pacers have explaining to do

March 10, 2009
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pacersSlowly but surely, Indiana Pacers officials are releasing more information about their financial distress. Last month, Pacers brass told me they had lost money in nine of 10 years at Conseco Fieldhouse, including the inaugural season and despite a run to the NBA Finals. But they wouldn’t tell me the extent of those losses.

Yesterday, Capital Improvement Board member Pat Early said the loss this year is set to be $30 million. That’s more than triple any published estimates. Fans I talk to are split over the idea of the city and/or state raising tax revenue to help operate Conseco Fieldhouse. Many love and want to see the tradition of the Pacers continue in Indianapolis. They also appreciate all that co-owners Herb and Mel Simon have done for the community.

As for the $15 million annually Pacers officials want to operate Conseco Fieldhouse … Well, not all fans have shut the door on the idea. But most I’ve talked to that are willing to consider the idea want two things. First, they want year-by-year information about the extent of the Pacers’ financial losses. Those fans want to see to what extent the Pacers’ wounds have been self inflicted. In simple terms, fans want to see how much the Pacers were losing before the Detroit brawl and other off-court incidents, and how much the team lost after those events.

It's fair to point out that the Pacers-like the rest of the NBA-are struggling through an epic economic slump, which obviously is far from the team's control. NBA officials said 27 of 30 NBA teams will either freeze or lower ticket prices next season, and many are looking to trim their budgets. Some will make cuts as deep as 10 percent to 15 percent.

Secondly, the fans I have talked to want Pacers officials to stand up before the CIB, City-County Council and/or the state Legislature and make their request and plead their case. Pacers officials have not spoken at a CIB meeting since this issue erupted early this year.

Before I joined the IBJ in 1998, I covered politics for a decade. During that time, I found what taxpayers wanted most was a thorough debate of the issues. Not scripted dialogue, but honest debate by the people asking for money or relief and the elected officials (or their appointees) who have the power to grant it. Even though not everyone agreed with the outcome, most were willing to accept it as part of the process.
  • The Pacers were handed Conseco Fieldhouse on a silver platter. The city owns it, but the Pacers need to take a larger financial stake. True, the city allowed Pacers Sports & Entertainment to take control of operations and reap some of the benefits. But the city needs to play hardball. The value of the NBA has gone down. The NFL is king. But professional sports in general are a symbol of gluttony in a spiraling economy. Guaranteed contracts are costing the Pacers $7 million to Jamaal Tinsley sit and do nothing. What a waste. I'm not sure where to start, but the taxpayers and visitors to our city should not be asked to bear more of the burden.
  • No only do the Pacers have some explaining to do for requesting a $15 million annual Pacer bailout from the nearly insolvent CIB, but Jim Irsay needs to go public with his position considering his Colts contract caused this financial meltdown.

    Its not a public private partnership when the public is used as a doormat.
  • And as much as i love the Pacers and loved Reggie Miller, it seems to me that Reggie 'retired' in his final year, but received a salary in the neighborhood of $10m. I never understood why if he voluntarily left the team, the team still had to pay? Okay, if Simons want to throw money at the man that helped boost their franchise, but now that Pacers are saying they lost money even in the good years....hmmmm, somebody's got some 'splaining to do Lucy!
  • Wow. I agree with all of the above.

    but face it, nothing is going to change, and Jimmy will load up the trucks and be in LA in 2 days. Bank that.

    Pacers? Just a victim of NBA payroll BS.
  • Well, we could just let the Colts and Pacers go.
  • Problem is Joyce, what then do you do with those two enormous facilities. Consider, we, the citizens of this city and region, have invested a combined $920 million into those two facilities. And due to a $35 million annual shortfall, you are going to let those fixed assets sit. Talk about shooting off your nose to spite your face. I'd say the leaders of this great city better sit down with Pacers and Colts brass and make this work. And yes, it does appear part of the Pacers' problems are self inflicted, and it's time they own up to that. Things like the payments to Miller, Tinsley ... those kinds of errors in judgement must stop if they expect fans and taxpayers to support this enterprise in any way.
  • I will keep things simple and you can feel free to jump in with details to help out my thought process. The CIB owns and operates Conseco, Lucas Oil, Victory Field the Convention Center and maybe a few other venues. These venues came at a cost to construct and are financed. As I see it they have your typical building debt service and expenses such as utilities, leaky roof, snow removal, light bulb changing whatever typically comes up in the course of owning a building. All things a typical building management company budgets for and that should be the easy stuff.

    Now here are my two issues; (1) We have had sports/concert/convention venues for many, many years has the CIB not learned anything on how to budget the annual events to cover the cost. At least the CIB should hit the mark closer that $20 million. (2) In my opinion this is the big one. Indy is commonly known as a small market when it comes to sports yet we have two of the premier, most expensive venues in the country which I am proud to have but we can't afford them. To me this comparison would be like the Simons building Keystone at the Crossing in Smalltownville, IN - population 2,500 where their biggest retailer in town is a dollar store. The Simons need top dollar for rent to cover the cost but the dollar store can only pay half of whats needed. Now, the genious that thought a fashion mall in Smalltownville, IN would work probably got fired and the building sits vacant. I don't think these venues sitting vacant is the answer but this is what we are faced with because someone felt two elite venues would be financially feasible in a small market.
  • I have to think that part of the losses on the Pacers' books continue to be the cash payments that are required to at least one defunct ABA team that didn't come to the NBA when the leagues merged. I know I read the amount somewhere recently and I believe the Pacers alone are shelling out more than $10 mil a year for this. It's crap and the NBA needs to make it stop. The Pacers organization was financially hamstrung by the financial deal that was forced upon them to join the NBA, and it certainly continues to be so to this day.

    I hope a solution can be found to help this situation without raising taxes. Higher restaurant and hotel taxes will start to seriously cut in to tourism revenue.
  • The economic landscape is changing. Viability of professional sports will become an issue. It's better not to throw a bunch of taxpayer money at these non-essential entities when the City of Indianapolis itself may have a long term economic crisis. Things are changing right in front of our noses and I'm not sure we have yet begun ton understand what is happening. To continue to do sports and convention business within the existing and past templates is irresponsible and short-sighted.
  • Let's just keep the Indianapolis Indians. Really...I'm serious. Best bargain in town and no multimillionaire players.
  • Also, let's keep the ICE. Good minor league hockey action with reasonable ticket prices.
  • I think a seismic shift is about to go down in the world of sports business, and we don't even know it. Ticket prices falling, teams are coming calling in ways that has never happened before. People say players salaries will never come down. The golden age is dead, and I think those salaries will begin to reflect this new reality. Team owners will realize the new reality a lot faster if city and state officials here and elsewhere put their foot down and say 'no' to further handouts.
  • The Pacers do have a point: the Colts get a free ride in a much more expensive venue to maintain while the Pacers pick up the entire tab.

    The CIB shortfall is a result of such a bad deal for the Colts. Realistically, the Colts aren't going to move to L.A. and get some sweet deal to do so. The stadium being built there is privately owned. Irsay won't be able to strong-arm Los angeles or Los Angeles county into paying his way. Los Angeles already let two NFL teams leave because they weren''t going to bow down.

    Saying our venues are too nice isn't correct either. Much smaller markets than Indy support large basketball venues. (Louisville, Nashville, Oklahoma City and New Orleans)

    It's simply been poor planning on the part of the CIB
  • Jimmy Irsay will yank his team in a heartbeat.

    Maybe if they got creative and used these venues more often, they could increase the revenue, and, um, yaa know, PAY THE BILLS!? :lol:
  • The Pacers never made a profit????

    Hey Mel, I think we are close to making a profit, who should we give a big pay increase to or what do you want to spend it on?

    I believe that is called managing earnings by the Pacer accounting staff.
  • It's time the multi millionaire owners of the Pacers and Colts started paying their fair share and stop sticking it to the tax payers. If you can't run a profitable business while being subsidised by the taxpayers maybe it's time to sell the team. Or a mall. Or a Jack Kerouac manuscript.
  • I think AS is right. We need some debate on this. But first we need an accounting of what exactly is going into the loss. Is it payments of player’s salaries or is it the fat cat executives - no different than Wall Street - causing the issue. If the tax playing public needs to chip in, then we should be entitled to know how much these guys make - Bird, Morway, Morris, Fusion, Bower and probably countless others. Open the books and I bet we will be shocked at how much these prima donnas are soaking us for. If they have mismanaged an organization for 10 years and it is just coming out – this is as bad as a ponzi scheme and the tax payers are being schemed.
  • I don't have any confidence in the numbers the Pacers are putting out. If you want MORE of my taxpayer numbers, I want to see all the books.
  • Does your landlord pay you to live in your home?

    Do the Simon's give their mall tenants a big bail out check when a store shows a loss because the retailers CEO took all the profits out of the company in salary and dividends?

    Why should the insolvent CIB, which is the landlord for the Colts and Pacers, be expected to guarantee profits, subsidize excessive salaries, excuse any financial consequence of poor management decisions, and take potentially hundreds of millions of operating and overhead expenses for these private businesses regardless of performance by increasing taxes on struggling citizens and businesses?
  • Nick makes a good point that there is bound to be management of the bottom line. After all, why make a profit and pay taxes? so you re-invest in the franchise and the net worth increases. I'm sure they dont intend to lose millions, but there's no incentive to make millions IMHO.

    And over the years the value of the franchise has increased greatly. That should play into the equation somehow, shouldnt it?
  • This latest release on this issue says the Pacers want the CIB to help with O&M expenses of Conseco Fieldhouse. The release does not disclose what happens to the operating revenues. My recollection of the deal was that the Pacers would operate and maintain in exchange for the venue’s revenues. As the primary tenant, who demands first priority and control of the venue, this makes sense. However, recent Pacer statements do not mention revenues. To avoid the appearance of asking for a handout (or bailout) the Pacers have crafted it this way. However, they need to disclose everything – expenses, revenues and especially the bad deals mentioned above.
  • The Simons are wonderful people, and have been generously benevolent in the community. The spinmeisters are having fun with this one, and the CIB spokesman is leading the confusion. I think the Pacers are doomed unless some new blood is infused into the org!
  • The Simons are in it for the Simons, period. They are benevolent only if it is something they can write off. The Pacers are one of the most poorly ran teams in the NBA. The Simons have already mentioned moving the team if the financial situation doesn't improve, that shows how much connection they have to IN and Pacers history. I hope they sell the team to an owner who wants to win and not run the franchise like one of their failed malls.
  • Wonder how much of the financial drain on the Simons is from the money losing WNBA Indiana Fever team.

    I suspect they could save at least $15 million a year by closing that team.

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