Home playoff games could help Pacers turn a profit

May 15, 2013
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As the Indiana Pacers draw within one win of their first Eastern Conference final since 2004, the team also draws closer to profitability.

This franchise has come a long, long way in erasing the red ink from its ledger in the last three years, and has some important opportunities in front of it. So far, the Pacers have hosted five home playoff games. That equates to a significant revenue bump over a non-playoff team.

If they get one more home playoff game in the New York series and three more in the Eastern Conference finals, that bumps the number of home games this season more than 20 percent. The Pacers have 41 home games per regular season.

While there are added expenses in hosting playoff games, those are usually not as great as the added revenue.

"In a small market like Indianapolis, each home playoff game should mean an additional $700,000 to $800,000, so they've brought in some meaningful money," said Marc Ganis, a Chicago-based sports business consultant who counts several NBA teams as clients.

Sports business experts agree that the additional playoff revenue plus a $10 million subsidy from the city's Capital Improvement Board to operate Bankers Life Fieldhouse should get the team close to break-even or even bring in a small profit.

But bigger financial rewards could await the Blue and Gold. Much bigger. The team is using this year's playoff run to sell season tickets for next year, and the Pacers' sales boss, Todd Taylor, said that effort is gaining momentum.

The buzz in the fieldhouse has been noticeably louder in the Knicks series than it was in the first-round series against Atlanta. The two Knicks games were packed with hardly an empty seat in the house. And the crowd was loud.

Demand for playoff tickets is clearly on the rise. This year's playoff run is also starting to generate a buzz among sponsors and potential sponsors, Taylor said. In terms of sponsorship sales, this run couldn't be coming at a better time.

Next fall, the Pacers, along with other NBA teams, will start selling ad space on team jerseys. Already, several local companies, including The Finish Line, said they'd be interested in paying to put their corporate logo on the Pacers' jerseys.

The ads, likely a small patch on the upper corner of the front of the jersey, won't be in place until the 2014-2015 season, but the selling process will start next fall, league sources said.

Sports marketers think a small-market team like the Pacers could command $1 million to $6 million per year for the jersey ad.

"If your team is hot and creating a buzz in the community, they're going to score a lot closer to that high end," Ganis said. "That can make a big financial difference for a team operating on tight margins like the Pacers."

It could even be the difference between a profit or loss.

  • Pacers
    What do you consider a small profit? For the average guy that might be $5,000 or for owners it could be $1,000,000. Give us some guidelines so that we can comprehend.
  • Great Entertainment
    The team winning and being likeable are huge factors. The last two games were just an awesome environment. My company will be buying season tickets after a 5 year break. One downside is the concessions. They are ridiculously slow. If you are a fan that doesn't want to miss any action, you can't buy anything outside of before the game and half-time. The cashiers don't seem to know how to operate the cash register and then they have to go get the drinks and food. I can tell you, they could sell a lot more if they had a speedier process.
  • What constitutes a profit?
    Do their revenue numbers include the $10 million a year the city pays in extortion money to keep the team here? Just wondering. There are a lot of other "not profitable" organizations that could use that $10 million and probably put it to better use than a basketball team that more people DON'T follow and benefit from than do.
  • Operating Profit vs Subsidies
    This article isn't close to accurate. You are talking only of operating profit. This says nothing of the millions that the Pacers will receive each year in subsidies from teams like the Lakers as a result of the most recent NBA bargaining agreement with players. The Lakers are over the cap and will incur around $80M in luxury taxes that are then distributed to the budget-minding small market teams. This is important to note because in future years, the Lakers will operate at a loss, but will make money from TV deals, etc. The Pacers may have a slight operating profit this year, but will actually make millions of dollars from big market team subsidies alone!
  • Show Us The Books
    Anthony, If you are going to make assertions about the profitability of the Pacers, or the lack thereof, you need to back your assertions up with hard numbers. Regurgitating Jim Morris' talking points is not reporting. To my knowledge, the Pacers have never publicly released audited financial statements for the franchise or Pacers Sports & Entertainment. Yet you reports Morris' talking points as if they are fact. If you are going to rely on his assertions without independent verification, then you should make that clear in your reporting. Don't report something as fact that you have not independently verified. Anyone familiar with how the Simons conduct business knows that they didn't become billionaries by continuing to operate businesses that lose money year after year. If a mall is losing money, they shutter the doors and stop the bleeding. If it truly was the money loser Morris claims it is, Herb wouldn't have quickly snatched up Mel's 50% stake when he died from his estate. Have you tried to ascertain how much Herb paid for Mel's 50% stake? That would be a piece of information your readers would be interested in knowing.
  • Get a clue Indy Guy
    As someone who has worked in NBA circles for 25 years, I can tell you for a fact, Indy Guy, that you have your facts wrong. Better re-check them and get back to us.
  • Indy Sports Strategy Is Broken
    The Pacers are very profitable despite years of contrary statements from the team spokespeople. Not only do they use the Bankers Life Fieldhouse for zero rent, plus a $10 million annual taxpayer subsidy from TIF, plus all revenue from EVERY event held in the venue,all naming rights & advertising revenue, boosted playoff revenues, a much better NBA TV revenue sharing deal,plus a new NBA Players Union contract. What we need now are government servants that have the fortitude to fix Indianapolis's broken sports business model instead of throwing increasing amounts of money into more taxpayer subsidies. It would be a good start to not let the Simon's get away with lying to the public.

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