Indy Eleven takes big gamble with stadium finance plan

January 27, 2014
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In the year since local businessman Ersal Ozdemir announced he was launching a professional soccer team in Indianapolis, the feedback has been overwhelmingly positive.

In my 16 years covering sports business at IBJ, I seldom have seen a start-up sports enterprise quickly gain so much momentum. The groundswell of support for professional soccer and this franchise has been amazing to watch.

Ozdemir is to be lauded for his timing and overall strategy for his soccer initiative.

The team found 7,000 people willing to put down deposits for season tickets, signed deals with credible sponsors and caused quite a stir when it unveiled its name, Indy Eleven, with a nod to the state’s past.

That wave of positivity was put to the test on Friday when Ozdemir unveiled a plan to seek state aid to build a new, $87 million stadium. Readers who posted comments on IBJ's online story were largely negative toward Ozdemir’s idea. And even though Ozdemir pointed out that Indy Eleven merely was asking for tax money generated by the team's operation, posters, and hard-care soccer fans I heard from over the weekend, were leery of the financing plan.

The response was predictable. Ozdemir is far from the only sports executive to get criticized for seeking public funds for a privately run sports team. Indiana Pacers owner Herb Simon and Indianapolis Colts owner Jim Irsay have taken more than a few arrows over the years for playing in publicly financed facilities and getting additional tax money on top of that.

The Hulman-George family took some heat when Hulman & Co. lobbied the Indiana General Assembly last year and was granted $100 million in captured tax money over 20 years.

The funds will be used to improve the Indianapolis Motor Speedway. It marks the first time the Hulman-George clan has asked for public funds for any motorsports endeavor. Before last year, the family was constantly lauded for paying its own freight. Not anymore.

Asking for tax money is a calculated risk for any sports franchise operator. The money clearly helps make the business more viable. But operators of those enterprises have to know the request is going to generate some ill will in their home market.

So Ozdemir was faced with a difficult decision. Should he seek government aid that he thinks he needs to play in an 18,500-seat open-air venue?

The Indy Eleven will play its first season or two at the IUPUI stadium, which will seat just more than 11,000 for soccer matches. But Ozdemir is convinced his team needs its own venue set up for soccer to maximize its potential here.

It’s no secret Ozdemir harbors a dream to one day turn the Eleven into a Major League Soccer franchise. To do that, he has to show folks this is a big-time operation. Maybe his idea for a new stadium is an important step in that direction.

But it’s also a gamble. And Ozdemir could be wagering the future of his franchise.

The good will a team builds up in its home market is one of the most valuable commodities a franchise can have. Ozdemir, the head of Keystone Construction, is an experienced businessman. But he’s new to sports team ownership.

There’s a chance he doesn’t fully understand the value of that good will. The fact that Indy Eleven's good will came so fast might have have led him to miscalculate its value.

Or maybe he feels he really, really needs that stadium, and this is genuinely the best way to get it.

Either way, the game now is truly on.

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  • Potential
    Even if this was tax payed by the public in general (which it isn't) I would support this. One area Ersal has already bid on is the old GM plant. This is a huge amount of land.There would have to be more development than just a stadium (hotels, restaurants, bars, shops) and this could create multiple jobs for the area and a new area that attracts people. Just think how that would even improve our super bowl bid...
  • I hope it works out!
    The Indy Eleven may have a bright future in Indy. I do know that there is a lot of support for this new franchise in the Bloomington / Bedford area. The team's request is more about an investment from the state, instead of a tax or a handout. This is about economic development in an area that can use it. The demographics are also in place as soccer becomes more popular by the year. Lastly, this could be the next step to joining Major league Soccer. With teams in Chicago and Columbus, Indy would be the catalyst in creating local rivalries for all three teams.
  • $$$
    I simply cannot understand why we cannot wait a few years to measure the actual demand before giving out millions of dollar? What if we build the stadium and the demand isn't there? Who is left on the hook?
    • The demand is there
      The Eleven have already demonstrated demand by selling out their 7000 season tickets very quickly. Peter Wilt has said they would be above 10,000 season tickeys if they hadn't capped it.
    • How long to wait?
      Tim - every year the team waits to start down the road of building a new home (the need for which they have mentioned publicly since day one and is blindsiding no one that has been paying attention) is another year the team is stuck in an outdated track stadium that doesn't do the sport - or the fans who want to enjoy it - justice. The demand in year one will prove that the 11,000 set-up at Carroll (for which they are providing 5,000 new seats to make it "soccer-friendly") will not be adequate. Every year they wait is another year that Indy misses out on events like the Men's/Women's NCAA College Cup and/or lacrosse championships, US Men's and Women's National Team games, international club soccer matches and potentially dozens of other concerts and sporting events that an appropriately-sized downtown venue such as the proposed stadium could attract.
    • Before the Colts...
      I can't help but point out that we built the Hoosier Dome before there was even a team to play in it. Seems to have turned out okay for Indy in the long run. This will too.
    • MLS
      If we want to go to the MLS we need to pull the trigger now so we can prepare a bid to join the league. They are close to choosing the last few teams to join the league
    • I think these posters stated my first point. It is dangerous to go by the comments of anonymous posters on your blog. It seems the vast majority are negative of all things. Be it the design of a building or the need for a new stadium. It is easy to have courage on an anonymous blog. While I would support the new stadium, maybe try to somehow work it with the new music venue proposed for the same site, but if he can't get traction on the tax idea, why doesn't he place his own surcharge on the tickets to pay for the stadium. I am sure he is wanting to use the City and/or States good credit and high bond ratings, but their must be a way he can partner with someone to pay for it without having to run the gauntlet of anti tax crowd.
    • Ramz
      Hello? There's an almost $800 million dollar monstrosity called LUCAS OIL STADIUM which seats 62,000-65,000 so why would you want another open "air" stadium when clearly you can have the window and roof open for the open air feel. This guy built the Broad Ripple parking garage, we all know how that turned out. Between this and the GM stamping plant it is hard to figure out which is the dumber idea.
    • What's wrong with ...?
      What's wrong with the Broad Ripple parking garage. I use it all the time. Very convenient. Anyway, it doesn't take a genius to understand you can't hold an event that's going to draw between 15,000 and 20,000 spectators in a 67,000-seat venue. First, it'd be too expensive to operate and second, playing in such a large venue would kill the atmosphere. So Lucas Oil Stadium is not a viable solution. As for Victory Field, far too many scheduling conflicts and far too difficult to change the configuration from baseball to soccer. Plus it doesn't have nearly the intimacy a soccer-specific venue is going to have.
      • Broad Ripple Parking Garage
        Davis, What is wrong with the Broad Ripple Parking Garage. Well, we taxpayers paid over $6 million to build it and we get no ownership of the building, no revenue from parking and no revenue from the commercial rents. Very few people park there. We taxpayers built Ersal Ozdemir a commercial building for which we get taxpayers get nothing.
      • Running Out of Money
        Everyone knows this is nothing more than Corporate Welfare. If this team is a great investment and has sold so many tickets, why can't they get a bank loan or find investors? Government is running out of money and these deals in the long run will raise out taxes. Keystone/Ersal has received enough government money already from Indianapolis and Carmel. It is time he funds his projects with his own money. No proof this will work. If there was they could get money from the private sector. It is not like investing in a proven entity that will generate money for government. This is what makes it difference from the Colts and Pacers.
      • Money for gov't
        John, I would like to see the calculations that show the Colts and Pacers making money for government (city, state, whatever). The Colts play in a stadium that is operated by the CIB and all the revenues from Colts games go to the Colts. 50% of all revenue from non-Colts events goes to the Colts. Unlike LOS, Pacers personnel manage Bankers Life but, like LOS, the CIB pays for O&M. Where's the money generator for government?
      • Why Not
        Ozdemir is a high profile business man. He knows what he is doing. If every other sports club can receive funding, why would the pro soccer team be any different. How awesome would a nice European looking soccer stadium look downtown? Pretty nice.
      • Downtown Stadium
        Please make the stadium downtown. MLS teams with downtown arenas fair better. The MLS fan likes to congregate in areas and walk together to the stadiums!

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      1. The east side does have potential...and I have always thought Washington Scare should become an outlet mall. Anyone remember how popular Eastgate was? Well, Indy has no outlet malls, we have to go to Edinburgh for the deep discounts and I don't understand why. Jim is right. We need a few good eastsiders interested in actually making some noise and trying to change the commerce, culture and stereotypes of the East side. Irvington is very progressive and making great strides, why can't the far east side ride on their coat tails to make some changes?

      2. Boston.com has an article from 2010 where they talk about how Interactions moved to Massachusetts in the year prior. http://www.boston.com/business/technology/innoeco/2010/07/interactions_banks_63_million.html The article includes a link back to that Inside Indiana Business press release I linked to earlier, snarkily noting, "Guess this 2006 plan to create 200-plus new jobs in Indiana didn't exactly work out."

      3. I live on the east side and I have read all your comments. a local paper just did an article on Washington square mall with just as many comments and concerns. I am not sure if they are still around, but there was an east side coalition with good intentions to do good things on the east side. And there is a facebook post that called my eastside indy with many old members of the eastside who voice concerns about the east side of the city. We need to come together and not just complain and moan, but come up with actual concrete solutions, because what Dal said is very very true- the eastside could be a goldmine in the right hands. But if anyone is going damn, and change things, it is us eastside residents

      4. Please go back re-read your economics text book and the fine print on the February 2014 CBO report. A minimum wage increase has never resulted in a net job loss...

      5. The GOP at the Statehouse is more interested in PR to keep their majority, than using it to get anything good actually done. The State continues its downward spiral.

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