The negotiations going on right now between the city and Indiana Pacers have as much to do with Lucas Oil Stadium as Conseco Fieldhouse.

Sources close to Mayor Greg Ballard and the city’s Capital Improvement Board said much of the current debate over how much money—if any—the city should give the Pacers or who should manage Conseco Fieldhouse dates back to planning and construction of the $720 million new home for the Indianapolis Colts.

The Simons and the Pacers were supposed to be brought to the table during discussions of any developments downtown that could affect their operations at Conseco Fieldhouse, sources within Ballard’s and former Mayor Bart Peterson’s administrations told IBJ.

But their participation in Lucas Oil Stadium negotiations “fell through the cracks” as Peterson, a Democrat, began bickering with Gov. Mitch Daniels, a Republican, and state lawmakers over who would pay for and operate the Colts’ new home, sources said. The stadium, which opened two years ago, also is a key adjunct to the Indiana Convention Center and home to NCAA Final Fours and other major events.

A source within the Pacers told IBJ that there was angst early on about what the new multi-purpose stadium would do to Pacers Sports & Entertainment’s business—especially non-basketball events—at Conseco Fieldhouse.

“[The Simons] knew a facility like Lucas Oil Stadium had the potential to really harm their business,” said Mark Rosentraub, a former IUPUI dean and author of “Major League Losers,” a book about professional sports operations. “So now, Lucas Oil Stadium is sucking a lot of money out of the market, and the Pacers and Conseco Fieldhouse are really hurting.”

Rosentraub admitted that the Pacers’ own poor on-court performance, which has coincided with the worst economic swoon in a generation, hasn’t helped the team’s finances.

Herb and Mel Simon bought the Pacers in 1983. Mel died in September 2009, and Herb is now the sole owner. Pacers officials have shut off access to all media this week following public statements April 13 saying they would like an answer from the city by June 30 regarding a request that the city assume the cost of operating the Fieldhouse.

Pacers President Jim Morris intimated in a April 14 Indianapolis Star story that Pacers officials could consider moving the team if they don’t get the money they need to run the Fieldhouse.

Pacers officials two years ago informed city officials they need $15 million annually—or $150 million over the last 10 years of the Conseco Fieldhouse lease—to operate the 18,165-seat venue. Morris told IBJ that the Simons have lost more than $200 million since buying the team, including $30 million during the 2008-09 season.

City officials have been slow to respond to the Pacers' request for help as they sort out their own fiscal crisis. The city’s CIB owns Lucas Oil Stadium, Conseco Fieldhouse and the Indiana Convention Center.

CIB Treasurer Paul Okeson said Thursday that one possibility is the city taking over operations of Conseco Fieldhouse.

“We will be mindful of our responsibility to the facility,” Okeson told IBJ. “This isn’t about giving money to the Pacers. It’s about the facility.”

Part of the deal to build Lucas Oil Stadium, Rosentraub said, should have included a regional taxing district that included and protected both the stadium and Conseco Fieldhouse. Sources close to the Pacers said team officials thought the deal did too much for the Colts at the expense of the Pacers.

Without a regional solutions to keep both facilities and franchises viable, Rosentraub doesn’t think it will matter who operates Conseco Fieldhouse.
“Whoever manages it can’t increase the population of the region or the demand for event dates,” he said.

And he thinks it’s a foolhardy notion that Ballard and his staff would fare better than Pacers' ownership at running Conseco Fieldhouse.

“You’re going to make the case the city can manage this facility better than the Pacers,” Rosentraub said. “That’s nothing more than a political move. You think the Simons are sitting in Conseco Fieldhouse trying to lose money? Very few people know how to make money as well as the Simons. The fact that the Simons are having problems there shows there’s a fundamental problem.”

The fact that Lucas Oil Stadium has a growing reputation for its ability to handle a variety of events from music concerts to basketball games hasn’t helped Pacers Sports & Entertainment, which relies on non-basketball event business at Conseco Fieldhouse to bolster its balance sheet.

“They used to host 150 events a year at Conseco Fieldhouse,” Rosentraub said. “Now, it’s closer to half that number.”

Rosentraub said the only way to preserve downtown is to develop a “regional solution and joint financing concept.”

“Conseco Fieldhouse and Lucas Oil Stadium have to be tied together,” Rosentraub said. “Those facilities are a big part of bringing young, human capital downtown. And without that, the entire region doesn’t survive.”