CIB, Visit Indy reducing executive pay to cope with pandemic losses

The city’s tourism bodies have implemented cost-cutting measures to cope with heavy financial losses expected from the COVID-19 pandemic.

The Capital Improvement Board of Marion County—which owns and operates the Indiana Convention Center and Lucas Oil Stadium—and Visit Indy said they are reducing executive pay for the remainder of the year.

It’s one of several maneuvers they hope will save money ahead of expected drops in tax revenue over the next several months. The entities also have frozen travel and non-essential purchases

The CIB’s executive director, Andy Mallon, lowered his $220,000 salary by 25% through 2020, and other CIB executives received at least a 20% pay reduction. The quasi-government agency also negotiated with its trades union to cut the work week for most of its hourly employees to four days, resulting in a 20% pay reduction. All other employees will see at least a 10% drop in pay.

“We’re really just trying to do what we thought was a balanced approach, so as to keep people on payroll and provide them some money—rather than having layoffs across the board at this time,” Mallon said.

Mallon said he did not have an exact figure for how much the board expects to save with its payroll cuts. But worker pay—not including benefits—accounts for about $16.5 million, or 11.5%, of the CIB’s operating budget of $143 million in 2020.

The CIB also is reducing its planned $13.5 million contribution to Visit Indy’s $16 million budget by 13%, or $1.8 million.

It’s not clear if the CIB plans to use its cash reserves, which exceed $100 million, for any shortfalls.

For its part, Visit Indy has reduced its executive salaries by an average of 26% and frozen executive bonuses, saving the group at least $533,000 for the rest of 2020. CEO Leonard Hoops cut his own pay—just under $680,000 in 2017, the most recent year figures were available—by 40% over the last nine months of the year.

And, in early April, Visit Indy moved all 62 of its employees to a four-day work week and paused all advertising efforts. Visit Indy expects it will save an additional $1 million from those and other cutbacks tied to travel and non-essential expenses.

The group will use some of its $6.9 million reserve fund to bridge any gap, said Senior Vice President of Marketing Chris Gahl. In addition to the CIB’s contribution cut, the bureau anticipates it will lose about $1.3 million in private revenue.

Gahl said central Indiana lost at least 88,000 hotel room nights with the cancellation of events slated for March and early April. The trend is expected to continue for the next few months, as conventions cancel or move to later into the year because of the virus—likely costing the area tens of millions of dollars in revenue.

At least 22 events scheduled at the convention center between March and May have been canceled so far, while another 13 have been postponed. 

“It’s a very fluid, very intense process because we are dealing with existing contracts and existing dates and space,” Gahl said. “It is really like a game of Tetris on how to fit as many pieces in as possible for the remaining remainder of the year to drive as much revenue as possible into the CIB.”

Uncertainty over when the threat of illness will subside puts the CIB and Visit Indy in a precarious spot, leaving them to brace for what could be big dips in revenue.

The May financial report for the CIB will be the first to reflect impacts on tax revenue since the virus began spreading through the state in March. 

The CIB is “trying our best to understand what we can do now that might be able to save expenses and keep our fund balances as robust as possible through this time,” Mallon said. “Our tax revenue lags about 45 to 60 days, so we don’t necessarily know [yet] exactly … what the revenue hit will be.”

However, the CIB plans to complete at least $38.3 million in capital projects by the end of the year, including improvements to the convention center and stadium, a new home plate club at Victory Field, work at the Virginia Avenue garage and renovations to Bankers Life Fieldhouse.

The CIB and Pacers Sports & Entertainment, which manages the fieldhouse, are discussing altering the first phase of construction—an estimated $130 million investment—to ensure work is finished ahead of the scheduled 2020-2021 NBA season start in early October.

During its monthly meeting Friday, the board approved a resolution to reimburse itself up to $60 million in borrowed funds for capital improvement projects occurring between March and the end of 2021, meaning projects planned for this year and next year can move forward as planned.

Mallon clarified that borrowing money to replenish its cash fund is one of the options on the table, and not the definite route the CIB plans to take.

“One of our goals here is to preserve our cash balances so that we’re able to maintain functionalities and operations to put on shows this year and next year without knowing exactly what the impact the virus may have going into the future,” Mallon said.

“But given the value that we see in having robust cash balances to get us through—just operationally—this year, we’re going to look at trying to debt finance some of those projects and save the cash.”

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