Venue-management titans emerge as CIB front-runners

Back to TopCommentsE-mailPrintBookmark and Share

Indianapolis only recently started to consider privatizing management and operation of its professional sports and convention facilities. But industry experts already have concluded that just two of the 12 groups responding to a city solicitation have a real shot at landing the overall contract.

They peg the front-runner as a unique four-way partnership between Pacers Sports and Entertainment, the Indianapolis Convention & Visitors Association, Los Angeles-based AEG and Philadelphia-based Global Spectrum. The latter are the second- and third-biggest names in the stadium-and-convention-center management industry.

Experts say the other major contender for the Indianapolis privatization contract is Philadelphia-based SMG, the largest company in that industry.

None of the other proposals is in the same league, said Mark Rosentraub, the University of Michigan’s Bickner Chair of Sport Management.

“This is in some ways like saying, ‘I’ve got the Yankees and the Red Sox on the field. And I’m going to see the Indianapolis Indians?’” he said. “As a baseball fan, I know where I’m going.”

On Oct. 20th, Mayor Greg Ballard, a Republican, released a “request for information” from businesses interested in operating Lucas Oil Stadium, the Indiana Convention Center and, perhaps, Conseco Fieldhouse, which currently is managed by Pacers Sports and Entertainment. Replies were due Nov. 24th. City officials think privatization might trim expenses for cash-strapped CIB—which oversees all three venues—and boost revenue by increasing bookings.

In response to a public records request, the city provided IBJ copies of the dozen responses it received. Sports business experts say SMG is a formidable competitor, with management contracts for more than 200 venues.

But even it will have a tough time triumphing over the Pacers/ICVA partnership. It teams AEG and Global Spectrum—possibly for the first time ever—and Indianapolis partners who hold a treasure trove of knowledge of their venues and local market conditions.

In short, it appears the Pacers and ICVA are attempting to front-load the bidding process with a team so dominant others simply can’t compete.

“We know the city, we know the customers,” said ICVA CEO Don Welsh. “And we feel as though the four of us are very well equipped to handle this—if the city and the CIB want to go this route.”

The Pacers already work directly with AEG, which keeps a consultant based at Conseco Fieldhouse, said Greg Schenkel, the team’s vice president of corporate relations.

Schenkel said the Pacers also interact regularly with Global Spectrum. He called the two companies “literally worldwide industry leaders that can bring all sorts of possibilities to the table.”

As strong as the partnership may be, don’t count SMG out, said Jim Grinstead, publisher of the Nashville-based trade publications Revenue from Sports Venues and Convention and Conference Facilities. But together, AEG and Global Spectrum are just as strong, if not stronger. And he said the four-way partnership’s local connections would prove invaluable.

Pacers Sports and Entertainment President James Morris, for example, has long been a player in local and national Republican politics. Before he joined the Pacers, he served in President George W. Bush’s administration as head of the United Nations World Food Programme. ICVA receives 75 percent of its funding directly from CIB.

“Often, AEG and Global Spectrum bid against each other. It’s a very interesting thing to see [them partner],” Grinstead said. “I think they’re going to have some inside information. ICVA … as well as Pacers Sports, will give them local market experience which otherwise you’d have to gather on your own.”

The company line from the Ballard administration is that all 12 responses to its request are still under full consideration and no decisions have been made. Many of the other businesses that submitted qualifications are national or global and have strong general credentials in managing business facilities.

They just don’t boast the same kind of experience in convention centers or stadiums as SMG, AEG and Global Spectrum. And they don’t book talent, a key concept in attracting more national entertainers to Lucas Oil Stadium and Conseco Fieldhouse.

“It’s like saying you’re going to have the Colts and the Patriots in the bidding, but you’ve also got a few upstart teams who could win the Super Bowl,” Rosentraub said. “The city can’t go wrong.”

Some of the respondents don’t even want to take on the full management responsibility. Instead, they propose specific services, such as new IT systems. Locally based ProLiance Energy LLC wants to cut CIB facilities’ cost for gas procurement.

Michael Huber, Ballard’s director of enterprise development, said the next step will be for the city to pursue some of the easier ideas businesses suggested, such as contract consolidation, or energy-efficiency audits.

It then will analyze whether to go forward with a broader “request for proposals” soliciting bids for a larger CIB facility management deal. That request might be released in late spring.

“You’ve got some folks whose RFI response basically says, ‘We think we can run everything, and we think we can do it well.’ And you’ve got folks who basically said, ‘We’ve got a great facilities management and janitorial solution,’ [or], ‘We’ve got a great energy savings solution.’ ... There’s a huge variety of responses,” Huber said.

“We might even decide to go down a path where we pick three or four or more individual solutions from the RFI respondents.”

Ballard’s team will have to be careful if it wants to maximize the results that SMG or the Pacers/ICVA consortium can bring, sports management experts said.

A piecemeal approach could undermine the mass buying power SMG, AEG and Global Spectrum enjoy from managing hundreds of sports and convention facilities across the globe.

“If you’re going to saddle them with the job of reducing your costs,” Grinstead said, “you can’t immediately tie their hands and say, ‘You’ve got to do it this way.’”

Sports business experts consider it unlikely Ballard would decide not to hire either SMG or the Pacers/ICVA consortium and stick with the status quo. That’s because, no matter how much CIB trims from its expenses—with or without the help of business partners—it can’t keep up anymore in the competition to book national entertainers.

In the last 10 years, Rosentraub said, SMG, AEG and Global Spectrum have grown dominant in that area, even as Midwestern competition for concerts and events has increased. The only other major player in the field is San Antonio-based Clear Channel.

SMG, AEG and Global Spectrum might be able to draw musical acts with regional drawing power that now perform instead in St. Louis, Cincinnati or Louisville. The Pacers/ICVA consortium suggested in its submission that it also could pursue other events, such as international championships in tennis and figure skating or made-for-television special events.

Neither the Pacers/ICVA consortium nor SMG quantified how much revenue they thought they could add or expenses they could cut.

Indianapolis should get a lot out of its CIB privatization effort, Rosentraub said, as long as it doesn’t expect a panacea.

“As good as AEG and SMG are, they can’t end the recession, and they can’t put millions of people into the Midwest,” he said. “There’s no question that those … organizations have the best management efficiencies out there.”

“Just assume the road is going to be bumpy as a given,” he said. “This is absolutely the exact way to go. Because you’ve got to get through that bumpy road. And it will be easier with an AEG or SMG on your team than it was going alone.”•


  • Its a Business Model Thing
    The CIB has no Business Model to "Make a Profit". It never did. Its a legislative enacted body. An outside "Management Company" will still have to deal with the CIB and its "No Business Model". And you didn't even mention the impact this may have on the employees of the CIB.

    The CIB needs to go with a "Stake Holder Capitalization Model". Every one that has a real financial stake in these venues should put up the Operating Capital.

    And one more thing:
    The Colts organization doesn't OWN the Lucas Oil Staduim. The Indiana tax Payers do. And the Colts are not the only "TEAM" in town. Any number of NFL teams or expansion teams would love to have a new stadium.

    The Colts should understand that the health and wellfare of LOS is directly related to their existance in Indianapolis, IN.

    My 2cents

Post a comment to this story

We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
You are legally responsible for what you post and your anonymity is not guaranteed.
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
Subscribe to IBJ
  1. How much you wanna bet, that 70% of the jobs created there (after construction) are minimum wage? And Harvey is correct, the vast majority of residents in this project will drive to their jobs, and to think otherwise, is like Harvey says, a pipe dream. Someone working at a restaurant or retail store will not be able to afford living there. What ever happened to people who wanted to build buildings, paying for it themselves? Not a fan of these tax deals.

  2. Uh, no GeorgeP. The project is supposed to bring on 1,000 jobs and those people along with the people that will be living in the new residential will be driving to their jobs. The walkable stuff is a pipe dream. Besides, walkable is defined as having all daily necessities within 1/2 mile. That's not the case here. Never will be.

  3. Brad is on to something there. The merger of the Formula E and IndyCar Series would give IndyCar access to International markets and Formula E access the Indianapolis 500, not to mention some other events in the USA. Maybe after 2016 but before the new Dallara is rolled out for 2018. This give IndyCar two more seasons to run the DW12 and Formula E to get charged up, pun intended. Then shock the racing world, pun intended, but making the 101st Indianapolis 500 a stellar, groundbreaking event: The first all-electric Indy 500, and use that platform to promote the future of the sport.

  4. No, HarveyF, the exact opposite. Greater density and closeness to retail and everyday necessities reduces traffic. When one has to drive miles for necessities, all those cars are on the roads for many miles. When reasonable density is built, low rise in this case, in the middle of a thriving retail area, one has to drive far less, actually reducing the number of cars on the road.

  5. The Indy Star announced today the appointment of a new Beverage Reporter! So instead of insightful reports on Indy pro sports and Indiana college teams, you now get to read stories about the 432nd new brewery open or some obscure Hoosier winery winning a county fair blue ribbon. Yep, that's the coverage we Star readers crave. Not.