‘Comparing apples to bicycles’: Indy Eleven criticizes state-backed study of stadium plans

The findings of a state-backed financial study on a proposed stadium district for Indy Eleven are being disputed by the project’s management, ahead of what could be a make-or-break day in legislative efforts to construct a new home for the team.

Backers of the Eleven Park proposal—first announced in January as a would-be $550 million public-private partnership between Keystone, several to-be-named parties, Indianapolis and the state—said they are skeptical of a study conducted last month by the state’s Legislative Services Agency that examined the development’s impact on local and state tax revenue.

The fiscal impact statement, published Jan. 21 to accompany Senate Bill 543, found the stadium district would generate between $1.8 million and $2.5 million in tax revenue each year. That money—up to $11 million per year—would be used until 2052 to pay off bonds used to build the stadium and other public infrastructure expected to cost about $150 million.

The numbers, considered conservative estimates, add up to a much longer repayment track for the stadium, compared to what the team has been eyeing, and could be viewed by lawmakers as making the project financially unfeasible.

In a statement to IBJ, Eleven Park spokesman Tim Phelps said the LSA study “presents a highly incomplete view” of the development that “does not include the full project scope.” He said the absence of certain elements drastically alters the estimated tax revenue expected to be generated within the district.

The analysis included estimates for income, food and beverage, innkeepers, admissions and sales taxes collected within a to-be-defined professional sports development area and tax-increment financing district.

However, the LSA report accounts only for a stadium, management office, hotel and a training facility—the last of which has not been discussed for the Eleven Park proposal, though it was part of the team’s failed 2015 proposal for an $87 million stadium.

The study makes a passing mention of proposed retail, office and residential developments planned for the district—which makes up a hefty portion of an expected $400 million private investment in the project by team owner Ersal Ozdemir and other investors—but does so only to note they would be permitted uses and to say they could also be located within the district.

The stadium in the fiscal impact statement, which appears to use similar language to a fiscal study from the team’s first legislative effort, also has an assumed capacity of 18,500, which is about 1,500 less than the 20,000-seat stadium in the actual Eleven Park proposal.

Randhir Jha, who wrote the financial analysis for the Legislative Services Agency, defended his study, stating “there is always an unknown aspect” related to bills involving expansive developments and he didn't want to make assumptions about the project's scope.

He said he relied on previous financial analyses for the study, and indicated the decision to not include all aspects of the project was made to avoid potential issues if those portions of the private development didn't move forward.

“You want to be careful because if we put a number based on something that … does not happen, that's another problem,” Jha said.

In the statement, Phelps also criticized the LSA study for not accounting for uses of the stadium beyond Indy Eleven soccer games. The analysis says the venue would be used for soccer games and “three other large events each year.”

As part of its push for support in the Statehouse last week, team management provided lawmakers with a draft version of an independent analysis it commissioned in December from Indianapolis-based LWG CPA advisers.

An Eleven Park official familiar with each financial analysis, who spoke on the condition of anonymity, said the differences between the two was akin to “comparing apples and bicycles,” adding the fiscal note seemed “like it was written for a different bill.”

Findings of the LWG analysis—which accounted for each component of the proposed Eleven Park project—found the development would generate far-higher revenue than what’s reported in the LSA study. 

LWG found the district as a whole would generate a little over $11 million in gross tax revenues in the first year, climbing to $21.5 million by the time the overlays expire in 2052. Not all of that money would go toward repayment of the bonds, and any excess of the upper threshold would be distributed through normal channels.

The team-backed study also shows at least 47 events could be programmed at the facility per year, including 19 Indy Eleven games, five concerts, three other professional soccer games, and 10 other events. The breakdown also includes 10 professional women’s soccer games—Ozdemir has repeatedly expressed interest in creating a women’s team associated with the Eleven club.

The LWG analysis shows the stadium would generate around $3 million to $5 million in total tax revenue starting in 2022 and a hotel would create about $1.5 million to 3 million per year in tax revenues.

SB 543 earlier this month was denied a vote in the Senate Appropriations Committee, but entered Thursday with a marginal chance of being folded a separate bill giving additional funding to the Capital Improvement Board.

The CIB bill is expected to be voted on late Thursday morning—with or without additions backing Indy Eleven’s stadium efforts.

State Sen. Jack Sandlin, R-Indianapolis, who authored the Indy Eleven bill said he had not had an opportunity to take an in-depth look at either study, but said he is confident the project was fiscally sound. He said he had not received any indication as of Wednesday afternoon whether the bill will be folded into Senate Bill 7 as advocates of the stadium plan hope.