NBA lockout could leave city's CIB exposed

July 1, 2010
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Conseco Fieldhouse could be dark during the 2011-12 NBA season even if the city’s Capital Improvement Board and Indiana Pacers hammer out a new lease agreement for the facility.

That’s one point that has not been brought up much—if at all—during ongoing CIB-Pacers lease discussions. Pacers officials said they’d like to have a deal done by the end of their fiscal year, which was June 30. That hasn’t happened. And since CIB President Ann Lathrop’s voice mail says she’s on vacation until July 7, I wonder if a deal is imminent.

The Pacers are seeking $15 million annually to operate the Fieldhouse. The city’s payoff: $55 million in economic impact from 41 Pacers home games plus pre-season and post-season games.

But if NBA owners and the players’ union can’t iron out a new collective bargaining agreement before the current deal governing player payroll expires at the end of the 2010-11 season, the CIB could be left paying $15 million and getting less than it bargained for in return.

Right now NBA Commissioner David Stern and players union boss Billy Hunter are doing lots of posturing. It’s difficult to say what will happen before the current deal expires July 1, 2011, but all signs point toward a protracted, if not outright testy, negotiation.

And owners have been clear that they’ll lock the players out if they don’t get a deal done in 365 days. The concern is real, and that’s why you see the likes of Dallas’ Dirk Nowitzki and Boston's Paul Pierce opting out of the last year of their deal. They know the owners are going to try to bring down player salaries significantly, and they want to get their deal done before that bloody battle is fought.

CIB members are not commenting on the lockout element, which is a telling sign. I think they realize they’re at risk. The Pacers too would take a beating during a lockout, forfeiting the $500,000 plus in per-game ticket revenue for every game lost.

But the teams are somewhat sheltered because they’re not paying players. That hefty savings is likely enough to offset any losses. And it’s not completely clear, but it appears that at least some of the NBA and its teams’ TV revenue is guaranteed even if there is a lockout.

Does a lockout sound far-fetched? Surely, they'll get a deal done. Well, consider this; In 1998, after the owners and players couldn't come to an agreement, the NBA owners locked out the players. The season was delayed until a new collective bargaining agreement was finally hammered out in January, 1999.

Play didn't resume until February, and the NBA played a compressed 50-game schedule. That's far fewer than the 82 games they'd normally play. A similar scenario would cost the city 16 home dates plus pre-season. Sources close to the league said this time around it could be much worse given the current rancorous discourse. League officials say if they can't play at least 50 games, they'll scrap the season.

The CIB, if it agrees to give money to the Pacers, is certainly at risk. If a 41-home game regular season has a $55 million economic impact on the city, it would stand to reason that a compressed 25-game home schedule (if it plays out like it did in 1998-99) would carry a $33 million economic impact. That's $22 million sliced out of the city's pie.

There are lots of assumptions here, I grant you. But that doesn't diminish the reality of the risk. And it's a risk that city officials have zero control over.

Though city officials are reticent to publicly comment about the lockout, surely they know the threat is real. And surely they’re including protective clauses into any agreement they’re constructing with the Pacers.
 

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  • another look
    Who knows if the CIB is even aware of the situation regarding the collective bargaining agreement. They get all their information from the Pacers.
  • something happening
    Sounds like we need another economic impact study. Justification on this decision should be an interesting one.

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