Speedway request for tax money could start heated debate

February 11, 2013
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It’s difficult to say how proposed state legislation to raise money for Indianapolis Motor Speedway will be received.

Views on giving tax money to sports entities generally lean one of two ways—those who think sports entities are an economic engine worthy of tax support, and those who think they should be left to thrive or die as the free market dictates.

The Indianapolis Colts, Indiana Pacers and Indianapolis Indians play in taxpayer-funded facilities. The Colts and Pacers also get taxpayer money to help with operations. They’re far from alone, as this sort of arrangement has become a national trend.

I suspect, given what the IMS has done and meant for central Indiana for the last century, that lawmakers will support the measure to capture certain taxes generated by Speedway operations to give back to improve the facility.

Judging how public opinion will come down on this is far more difficult. Indianapolis is certainly sports-minded. People seem to understand that without an ocean, mountains or 12 months of summer-like temperatures, Indianapolis has to be creative to stay competitive on a number of levels. Sports entities have long been central to that creative plan.

But a certain fatigue factor is creeping in concerning publicly financing sports entities when other parts of local services and infrastructure are in decay.

Those who support this type of initiative are likely to point out that the IMS has never before asked for a dime. After what we’ve done for other sports franchises here, it seems like it’s time for the taxpayers to pitch in to help the Speedway at least a little, right?

The sigh can already be heard from those opposing these hand-outs. The Speedway is one of the last great sports entities here and nationally that hasn’t extended its hand for a public handout. The Speedway was often used as a shining example of what could be done by a sports entity without taxpayer assistance.

If this measure gets approved by state lawmakers, opponents have to be fearful that the Speedway will soon be back asking for more. Who knows, maybe the money-losing IndyCar Series will ask for financial assistance as well.

Later today we’ll get a good idea of what the lawmakers think. Given the controversy surrounding these types of initiatives, it shouldn’t take much longer to gauge the court of public opinion.

Let the debate begin.

  • Why Would There Even Be A Debate?
    Couple of thoughts. First, I am surprised it took IMS this long to advocate it. Second, it's not just the Colts and Pacers. It's almost every professional sports entity in this country. And the numbers ISC and SMI use from such funding males the amount IMS is talking about pale by comparison. Plus, if it comes up short, IMS picks up the difference. Based upon the verifiable hundreds of millions of dollars IMS contributes in economic impact (and taxes) this is a no-brainer.
  • Welfare again
    Once again we make a differentiation between welfare for corporations and the individual. They are both feeding at the same trough. Where does this stop. If I was a small business owner could I expect this kind of government assistance? I doubt it.
  • TIF?
    Couldn't they create a TIF where $ from new investment are used to pay for the improvements? This seems to take existing tax dollare from gov't entities - presumably Speedway schools, city gov't, etc. - with no plan to replace those $ so the remaining taxpayers pick up the tab. TIF applies to only to new tax dollars with the district.
  • Pence's tax hike proposal serves a purpose.
    To subsidize NASCAR, Pence wants you to pay more to drive YOURCAR. Is it possible for Indiana voters to recall a governor?
  • Really, Ryan
    Really, Ryan. Already blaming Pence?! His name is not even mentioned in the article and, because he's not a legislator, is unable to introduce legislation. This proposal is driven by mgmt changes at the Speedway not at the Statehouse.
  • Night Races
    There are only so many NASCAR races available to all the tracks in the USA. We have one and are not likely to get a second race. I don't think we need to light the whole 2.5 miles of the Speedway for one race that might benefit. I remember going to Raceway Park for Friday night stock car races years ago, and there were very few fans to be found. It's a real gamble to expect Brickyard fans to show up at night.
  • Hoosier Sports
    Having observed how we Hoosiers fund sports in this State, I would say the number one sport equipment that is being used in a sport related act, is the couch. In other words, public funding for regular everyman sports is a joke.
  • Subsidies Are Inevitable
    What people don't understand is that sports entities are consumed by millions more people than those who actually buy tickets and attend the events. Everyone who is a fan of a team "consumes" its product every time they check the standings in the paper, talk about "the Colts" in the office or with their friends, play fantasy games, etc., etc. These teams create enormous value that nobody pays for directly. What these teams and entities produce are "public goods" that add enormous entertainment value to a community and its residents. That is why public entities in city after city are willing to come up with public dollars to keep the teams in their respective communities. When a business produces value to the citizens of a community that no one directly pays for, that business can and inevitably will demand that some mechanism for paying it for the vallues it creates be established, and usually that mechanism is pbulic subsidies. Of course, those who don't enjoy sports don't receive as much value as those who do, and thus they object to these subsidies (although quite frequently those who object to public subsidies for sports are often the loudest voices calling for public subsidies for NPR, local museums, and the performing arts). In the end, sports organizations will move to whatever community is willing and able to pay the most for the product with those payments coming from a variety of sources, with public subsidies being an important part of the overall revenues. So calling it welfare for the rich simpy misses the mark. Public subsidies for sports teams are merely part of the price the residents of a community are willing to pay to have the team there lest it move elsewhere. (The real question fans should ask is why there are such a limited number of teams -- why are leagues allowed to keep the number of franchises less than the number of communities that would support them which given the principle of supply and demand has the effect of driving up the price any community has to pay to have a team.) But as long as there are a fixed number of franchises, there will be public subsidies; the only debate is over how large they need to be.
    • I have an IDEA
      Why can't the Speedway impose a $5 or $10 tax on it's OWN ticket structure to collect the money? A $10 tax on all tickets would raise an estimated $5MILLION per year (at an estimated 500,000 ticket sales per year). I'm sure lovers of the speedway would pay this or more to finance the renovations and take the heat off the back of the taxpayers (many who may not give one iota for the speedway or the 500, no less paying for lights for NASCAR). A $25 ticket tax nets a cool $12.5MILLION. Let the fans pay for it...
    • extortion
      I fully agree with Gary Robert's comments regarding supply/demand of a limited resource (sports teams). If leagues aren't allowed to expand, then communities compete for teams via public contribution. It's unfair, but the reality of competition (i.e. Baltimore Colts...) However, the Indianapolis 500 brand is derived from it's name. Can IMS threaten to pull stakes and move to Baltimore? Will there be any brand value in the Baltimore 500? Absolutely not! Simply stated, there is no possibility of relocation of the Indy 500, and therefore no need to supply public funds. If the IMS wants to buy out all the surrounding properties, add lights, new jumbotrons, or whatever, they can do so on their own dime. The Indy 500 ran for ~90 years as a sole race. In 1994 they added Nascar, then motorcycles. Three races a year should generate enough revenue to survive.
    • Much Bigger Picture
      The one aspect that eludes the grasp of many is the economic redevelopment of an entire area. This relatively small amount of infusion could pay big dividends through gentrification of an area that has seen better days. It would be nice if folks would cease pigeonholing this as good for only IMS. The amount of money being used pales in comparison to the verifiable economic contribution IMS brings. Look at the whole forest and not just a few trees.
    • Truth is...
      ...IMS needs public funds to survive. For now. But the dozer awaits, poised and ready. And the dozer will roar.
    • What redevelopment?
      Didn't the local government issue a bond for the Dallara coffee house? Isn't there a plan already being executed to redevelop the whole area? What is IMS part in all this? Sit back and have the taxpayers fork over $100 million that will be squandered on this 100+ year old folly? Burl is right...IMS needs PUBLIC funds to survive. Pathetic.
    • Why $100 Million
      Please explain how the "modern updates" to the speedway are going to change anything? The thing sells out...with supposed broken down stands. Maybe they should put a roof around it so they can get the whole 10 days on May in. Or will it be less days because teams can't practice because they are so poor and the cars are all the same anyway so why bother?
    • Back to Basics
      You're trying way too hard to work a bunch of unrelated slamming in, and that is expected. The biggest change will be making the physical plant ADA compliant. That is good. When rational adults balance the economic impact against the relatively small amount of public funding being considered, what results is what is commonly referred to as a 'no brainer.'
    • So why have they waited
      Why did they wait so long? The speedway has been fighting these changes for years and if they had won the lawsuit they might not have pursued it even today. It's a "no brainer" if they use PRIVATE FUNDING. This public carrying the load for inept businesses is absolute stupidity. They are not the Indians, Pacers or Colts. Do private businesses own the facilities those sports teams play in? Is the IMS willing to allow the public to make decisions on the Speedway's fate? I hope so....
    • Followup to my point
      "As a public entity, the citizens of Marion County, Indiana, are its stakeholders. There are no private stockholders or investors." Yes, that is the Capital Improvement Board...they run the stadiums in and around Indianapolis. Thus, the citizens essential run the stadiums. Hmmmmm, who owns the giant stadium at 16th and Georgetown in Speedway, Indiana? Did ya know it's NOT the citizens of Speedway, Indiana? In fact, the family of Anton "Tony" Hulman have owned speedway since 1945!! Yes, it is a PRIVATE business. So, what do the citizens get in return for "financing" a PRIVATE business? Ownership state in running the facility? Can Disciple please answer these questions....Thansk in advance.
    • Chief, since you are actually, somewhat trying to discuss this on facts and not your emotional issues caused by your failure to get a personal apology from TG, I will answer your questions. What does Eli Lilly's, Rolls Royce, Anthem, Marsh, and many, many others? They are non taxpayer owned companies that have benefitted from TIF's and tax abatements. What did the City gain from those? Increased tax payments, jobs, and increased development. What will Indiana get from granting taxes back to IMS? Increased tax payments, jobs and increased development. Does that answer your question?
    • Ditto
      It probably won't, but you answered the question for me Indyman. Thanks.
    • Justification
      I love how the people say this is a great investment when we the public are in fact not getting anything quantifiable in return for the money we "invest." Who lends money on that basis? As far as the comment about TIF districts, the poster is wrong. TIF throughout Marion County are underperforming. When they do that they have to pay the bonds they float from the base or other revenues. We have been bailing out the TIFs in Marion County to the tune of several million dollars a year.
    • To tax or not to tax, to be or not to be...
      ...that is the question. Without the public funding, the IMS was not to be long for life. The rumors going around were the place was to to be torn asunder for redevelopment or taken over by the government and contracted out with an entertainment/sports group to run the annual "500". The truth is always somwhere in the middle, it seems, and I think this latest news of public funding speaks that very well. How about a quasi-public/private partnership that manages all aspects of the Indianapolis 500 and perhaps a few other events scattered about to bring ROI? The Brickyard race will go away. It will. Unless NASCAR is comfortable with the notion of running an annual event in front of thousands of empty seats.
    • Take a Breath
      Let's be clear, kids. The total economic impact of the facility in question to the state of Indiana approaches one billion dollars every year. Any dark fantasy one might harbor that it is in danger of failure, imminent or otherwise, is among the most ignorant, clueless speculation ever concocted. The 500 preceded the lives of most everyone on the planet, and will be here long after all of use, even the obsessed kids, are pushing up daisies. Modernizing the plant to bring it into ADA compliance is noble and good. Gentrification of the area surrounding the track is good for future growth, especially economically. I find it particularly humorous that the most vocal critics are mostly those who have never even been in the area. As a property owner near turn 4 I applaud and support the effort wholeheartedly. I urge you to learn the facts before spouting off. Healthy debate is encouraged. Abject stupidity is not.
    • So, why don't they pay for it themselves?
      Wait...I know the answer. Because everyone else is fleecing the public tax dollar so why not IMS. Got it. If the economic impact is ONE BILLION annually, and the Speedway is raking in money hand over fist....it would make sense they would be able to make the improvements THEMSELVES. Just like they always have. But, they are not. Why?
    • The big lie
      The original press release concludes with: "IMS officials indicated that the Motorsports Investment District as proposed would not financially impact the local school funding formula because it would not be funded through property tax collections." Horse hockey...if IMS wants taxpayer support for this, then they should at least educate themselves as to the realities of public school funding in Indiana before making such an ignorant statement. In 2008, Public Law 146 removed school operating expenses from local property tax levies. That's why Hoosiers pay 1% more sales tax now and it was possible to cap property taxes. How quickly the management at IMS forgets...and apparently expects Indiana taxpayers to forget. IMS's claim isn't a matter of simple "spin" or semantics...it's an odious and outright misstatement of fact. Since the passage of that law, Indiana has devoted 32-34% of its spending to education. If IMS gets $100 million in rebates of sales and income tax generated there, $33 million for education is lost. I want to see a clear, transparent, and believable business plan that shows exactly how improvements at IMS will generate more than $100 million in tax revenue for the state to replace that lost revenue. I also wonder why IMS now charges, on average, less for a ticket to "The Greatest Spectacle in Racing" than do the Colts for a single game ticket downtown. Maybe the product isn't what it claims to be?
    • Product is Great
      When was the last time the Colts sold 275,000 tickets to one game? I believe that in conjunction with capital improvements at IMS and the surrounding area, and an IMS guarantee there will not be a shortfall, this is a no-brainer.
      • It's only a no-brainer...
        ...once the business plan is revealed and shown to be viable. If IMS is ignorant enough to casually toss out a lie about school funding in their initial attempt to garner public support and assume they won't be called out on it, I think it's wise for their plan to undergo substantial scrutiny before approval for similar misinformation and obfuscation or ridiculous assumptions.
      • Can't See The Obfuscation
        Or, we could imagine an alternative in which they just shut it down. Then what? I have a feeling that once the politicians take up the matter the granular details will be available for the scrutiny of critics.
      • Re the Colts comparison
        Of course the Colts don't sell 275k to a single game...but there are at least 10 pre- and regular-season games every year that provide 624,000 game seats...and they sell out. And those crowds certainly don't have nearly the same share of out-of-town fans as does the 500. Did IMS not charge enough for its product to fund operating expenses and plan for the future, or has its product not been deemed worthy of a price that would guarantee a profitable future in a competitive marketplace?
      • Gentrification
        The expenses we're talking about are capital expenditures, most significantly the ADA compliance hit. The reluctance of the private company to go down this road is widely known, but if the state is going to continue to reap the economic benefits of that place as it has for decades long before the Colts or Pacers or most any other entertainment entity in the area why not contribute to its growth? Portrayal of the family as anything close to destitute is what seems foolish. But with regard to ADA compliance...if they funded all that is now required how are they going to be expected to improve anything else to drive product growth? Handicap-accessible ramps won't make the product more attractive unless you get around in a wheelchair. Besides, the entire issue is bigger than just the Speedway, and constitutes virtually no risk for the state of Indiana.
      • Big Difference
        There's a big difference between money spent to build a publically owned stadium and money given to improve a privately owned stadium. Will the George family give up some ownership interest for this 70 million, or will it remain their private fiefdom? Do they really expect they can get this kind of money from the public with just blue sky promises in return?
      • Money Spent Wisely
        It's not a public company, and the intent of the family is to stay private. The payback is guaranteed. There will not be much hesitation among lawmakers.
        • 25/8
          IMS* makes billions but can't come up with $30 million in ADA improvements so let's stick the taxpayer. From the Star: The proposal, authored by Sen. Mike Young, a Republican whose district includes the Speedway, would set aside up to $5 million annually of the tax revenue generated in the district for 20 years. The money would help the Speedway pay off bonds that would finance up to $100 million in improvements at the iconic facility at 16th Street and Georgetown Roads. Those include lights for evening events and changes to make the facility more handicap-accessible to satisfy an agreement recently reached with the federal government. The proposal was first reported Friday on IndyStar.com "We've worked with the Speedway people for almost two years now (on this plan,)" Kenley said. "They were very hesitant to come to state government, but they don't see where they can find the capital resources they need in any other way. We think we've refined it down to the point if they succeed with this, the state will get a return on their investment in terms of more tax dollars being raised than were before."
        • Payback is guaranteed by what?
          There is no specific wording in SB91 that requires IMS to reimburse the state should tax revenues fall short. http://www.in.gov/legislative/bills/2013/PDF/SB/SB0091.1.pdf
        • "The payback is guaranteed"
          Horse apples the payback is guaranteed. How about the state of Indiana gives me 70 million. I guarantee I'll create new jobs and put new money into the local economy too. I've lived, worked, and paid taxes in Indiana for 50 years. I deserve it.
        • I Could Use 70 Mil Too, But My Dreams End When I Wake Up
          I'm willing to bet you don't directly provide a billion dollars a year in economic impact to the state, though. All the state of Indiana is likely to say is 'go find yourself a job, and thanks for the taxes.'
        • As Previously Stated, A No-Brainer
          Oh, and by the way, according to the author of the legislation, Michael Young, there is some insurance for taxpayers. If the proposed taxing district in a given year were to fail to raise the expected $5 million then IMS would step in to cover the gap. This is in addition to $2 million per year for which they are already committed.
        • As Previously State, A No-Brainer
          Oh, and by the way, according to the author of the legislation, Michael Young, there is some insurance for taxpayers. If the proposed taxing district in a given year were to fail to raise the expected $5 million then IMS would step in to cover the gap. This is in addition to $2 million per year for which they are already committed.
        • Tell me, Disciple...
          where is that guarantee laid out within SB91, and if you cannot find it there (I certainly cannot) where and how does Michael Young say it be established in an enforceable way?
        • Are We Talking About The Same SB91?
          Of course you can't. SB91 deals with bias crimes and requires law enforcement officers to receive training in identifying, responding to, and reporting bias crimes. It Allows an individual who suffers a personal injury or property damage caused by a criminal offense to bring a civil action to recover damages, including punitive damages, if the person who committed the offense knowingly or intentionally selected the victim because of: (1) the victim's actual or perceived color, creed, disability, national origin, race, religion, sexual orientation, gender identity, sex, or homelessness; or (2) the actual or perceived color, creed, disability, national origin, race, religion, sexual orientation, gender identity, or sex of an individual affiliated or associated with the victim. It makes commission of a crime because of: (1) the victim's actual or perceived color, creed, disability, national origin, race, religion, sexual orientation, gender identity, sex, or homelessness; or (2) the actual or perceived color, creed, disability, national origin, race, religion, sexual orientation, gender identity, or sex of an individual affiliated or associated with the victim; an aggravating circumstance that may be considered by a judge when the judge imposes a sentence for the crime. It defines 'homeless individual.'
          • Wheels in Motion
            Oh, by the way...it has passed committee 11-0. Now on to 2nd reading. So far so good.
          • Can't follow a link, Disciple?
            If you simply clicked on the link I provided, you would see the following: DIGEST OF SB 91 (Updated February 11, 2013 11:33 am - DI yl) Citations Affected: IC 4-4; IC 5-1. Synopsis: Motorsports investment district. Provides that the Indiana finance authority (authority) may adopt a resolution establishing a motorsports investment district. ...
          • Thanks for the Link
            Interesting read. It appears the committee it was in unanimously approved it. Smart move.
          • Great editorial in NW IN Times today
            "Nothing reinforces disparaging comments about the Hoosier Holy Land ignoring the far corners of the state quite like Senate Bill 91." http://www.nwitimes.com/news/opinion/editorial/editorial-race-money-here-for-cline-avenue/article_2f99e6bf-fc80-53b3-9d8d-1231d86d22d6.html
          • Another reinforcement
            I was able to email State Senator Young with questions about SB91 on the day of the proposal via a contact form on his official in dot gov web page. I received no response, but thought of another question...and found that in those few days, Young removed all capability to email him via either a direct email link or a form on his official state web page. He's the only State Senator in Indiana to do that, and it smacks of arrogance.
          • Understanding the Issues
            Perhaps he simply does not want to deal with Internet whack jobs without a firm understanding of the economics. The state of Indiana is fortunate in that it still has a large budget surplus. Why not fund improvements that could substantially increase tax revenues at little to no risk? I am certain Young would engage in dialog with folks who understand the issues, but not pointless arguing with Internet keyboard jockeys.
          • This Just In
            Indiana Senate: 37 Aye; 12 Nay. Passed.

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