Indy Eleven’s own projections show $50 million ticket tax shortfall, state committee okays plan anyway

The Indiana state assembly’s ways and means committee voted 20-3 yesterday to move a bill forward to fund an $82 million stadium for the minor-league Indy Eleven soccer team, because that’s what they do in Indiana. The committee did, at least, discuss some new details of how team owner Ersal Ozdemir expects the stadium to generate $5 million a year in new ticket taxes:

The team released a report by KSM Consulting of Indianapolis that says the 18,500-seat stadium would open in 2018.

The report estimates 66 events per year, including 15 professional women’s soccer games and 10 concerts.

The report also estimates average paid attendance and average ticket prices for various events:

—Indy Eleven: 16,500 at $29.50.

—Women’s professional soccer: 8,500 at $17. (There is a nine-team National Women’s Soccer League.)

—Concerts: 10,000 at $55. (There is another outdoor concert venue planned for Downtown.)

The report estimates six events as “other soccer,” five as “other events, exempt” (from ticket taxes such as school sports) and 10 as “other events.”

The Indianapolis Star, which is where that’s from, didn’t do the math on what all that would add up to, so let’s do it for them. Let’s see, 15 Indy Eleven home games times 16,500 tickets per game times $29.50 per ticket (for minor-league soccer? okay then) times a 10% ticket tax is $730,000. Fifteen women’s soccer games would generate another $217,000. Concerts would provide $550,000. Even if you’re optimistic about those 16 “other” taxable events, then, you’re still looking at around $2 million in ticket taxes, tops, not even enough to repay half the state’s costs.

The headline here really should have been, well, the one I put on this post. Or at least “Indy Eleven stadium to need hotel tax money to supplement ticket taxes,” which is something else that came up at yesterday’s hearing. Instead we get “Indy Eleven stadium bill moves on, but lawmakers express reservations,” because journalism is all about reporting what Important People think, not giving readers the information to decide for themselves. Apparently.


18 comments on “Indy Eleven’s own projections show $50 million ticket tax shortfall, state committee okays plan anyway

  1. A two-year old franchise, owned by a multi-millionaire with no previous ties to its home city, asking for an eight-figure handout from the local/state government for the construction of a stadium whose costs they could easily front by itself, and said government gleefully forking over the money without any guarantee that their “investment” would be rewarded with a place in the big boy table…

    … AKA “building the right way” toward MLS expansion.

    But really, this is “MLS 3.0” in a nutshell. Expansion fees, NFL/Big Four owners, taxpayer-funded venues, and a heinously unequal wage structure. That’s it. That’s the entire MLS business model.

  2. You are right to point out the revenue is inadequate even if they get the estimates but I feel compelled to ridicule the estimates. Which, if any science went into them at all, are all extreme estimates at the favorable 1000-1 type tail.

    The Indy Eleven averaged 10K a game last year so the estimate is 16.5K. Portland average 11K in women’s soccer but the rest of the league averaged 3K so the estimate is 8.5K. The concert business I am not sure of but that seems optimistic about number of events (more than average per event). They will not get 6 “other soccer events” per year as no one gets that many.

    Anyway, I can 100% guarantee they will not get 100,000 people at $20 a ticket at “other events”. I suspect they could get a “tent revival” every year or two but the concept is largely consultant fantasy. My alma mater built an arena 10 years or so ago and their revenue estimates included 2 “academic events” per year that were going to generate considerable revenue. I laughed at the notion and hubris of the consultants. There have 0 large academic events in the whole of the 10 years since and none planned.

  3. Meanwhile, in England… Fan-owned FC United of Manchester will soon move into a self-financed 5,000-seat stadium that was built for 5.5 million pounds or so. I also looked at the plans for fan-owned AFC Wimbledon to build its own 11,000-seat ground. They’re planning to finance it privately to the tune of 16 million pounds (about 25 million US).

    Does anyone have thoughts about why these clubs are able to plan stadiums at much lower price points? One wouldn’t think UK land is cheaper, particularly in London.

  4. Have you been to lower league/non-league match in England? These are not ‘stadiums’ they are ‘grounds’. They are small, no amenities and often don’t have actual seats.

  5. David, I have to believe that the reason UK stadiums appear to be almost entirely financed by private funds (appear to be – I have no solid info) – is that the clubs can’t threaten to move. If any English football club wants to move, where would they go that doesn’t already have a club and wouldn’t completely alienate the existing fan base? And if the club has to finance the deal themselves, of course they are going to be more realistic and settle for a “good enough” ground with realistic revenue projections as opposed to American clubs that can get the palace of their dreams while spending other peoples’ money.

  6. Chris, that makes sense. If you’re spending your own money, you’re more likely to skip the bells and whistles. Furthermore, these soccer stadiums aren’t intended to be multipurpose venues, so they can be designed for the express purpose of hosting people for an unvarying two-hour event.

    Michael, I’ve been to a number of them. Wimbledon’s ambition is to return to the Premier League, so the 11,000-seater is designed to be expanded to 20,000 as circumstances. In any case, they’re planning to build a top flight-quality “ground” very efficiently.

  7. Ambition aside, I think they are floating somewhere around the middle of League 2. And I don’t think they’ve ever finished higher than about 15th (albeit in a relatively short history). So there are roughly, what, 70 teams above them and I would imagine many if not all of them would also like to get to the Premier League. Don’t get me wrong, it’s great they are paying for their own ground and are doing it with an hope about the future. But if this (Indy) is really being done with an eye toward the next round of MLS expansion, then it’s not totally analogous as you can literally buy your way into MLS. You cannot buy your way directly into the EPL (unless I guess you buy an EPL team).

    Regarding the financing… Arsenal financed their own stadium, and it is full of bells and whistles. Of course they are one of the top sides in England. But having to take on the debt themselves absolutely impacted their competitiveness for about 6-7 season. In fact it’s only been in the last couple of transfer windows where they have not been forced to sell off their best players. Manchester City were basically handed the City of Manchester Stadium (now the Etihad), which was built for the Commonwealth Games. Technically I think they rent it. Something similar is happening for West Ham with regard to the Olympic stadium in London. It’s being converted and the Hammers will be the main tenant. Liverpool opted against a full replacement for Anfield and are going to do some upgrades. So there is a mix. If you’re the a lucky team in England you can still get a stadium largely built with public money. But I don’t think London will be hosting an Olympics again any time soon, so the luck for everyone else has pretty much run out for another 60-plus years.

    Be interesting to see what happens with Tottenham. They were trying to get the Olympic stadium but got shut out. Now that the next TV rights deal has been done, there will be a ton of cash coming to teams. They might decide to put a chunk of that toward a new stadium without having it cripple their competitiveness. Of course that’s something they don’t need help with, being Spurs and all.

  8. Most of the legislators on the Indiana House Ways and Means Committee expressed reservation with the proposal. They also claimed a yes vote merely allows further debate with all House members on the House floor. At least one member noted that the legislation simply “enables” the City of Indianapolis to make such changes and does not commit the State to funding. However, the Indiana Legislature has never shied away from controlling local government in the past. And the analysis presented to the Committee by the independent Legislative Services Agency showed revenues about 1/10 of the Indy Eleven’s consultant – far short of the required amount to fund the stadium. Given those factors, those members approving this legislation should be embarrassed.

  9. Sasha, $29.50/ticket does sound high. How is the average calculated? Does the average include adjustments based on the number of tickets available at each price point? And any calculation must deduct for the number of dicsounted and free tickets – many MLS clubs give away hundreds of freebies each match so I assume NASL clubs do the same. What about the fact that season tickets are often sold at a discount? And the odds of them selling out every match seem unlikely.

  10. This is the same old same old political cronyism we people of Indianapolis expect. The owner of the Indy Eleven has spread his campiagn contributions around to the decision makers and the connected elites. He even has the state’s ethnics committeer chairman on his payroll. (Source Advance Indiana; http://advanceindiana.blogspot.com/2015/02/house-ethics-committee-chairman-on.html). What do you expect from a city that built two football stadiums and two basketball areanas largely at taxpayers expense for billionaire owners. Hey we even have a cricket field, cost of six million dollars, but we don’t have a cricket team.

  11. New Math:

    17 + 15 + “10” (oh ya right) = 66.

    Um. No, actually.

    They might draw 5-7k for 15 home games, with the womens club drawing 3-6k for 12-15… and the concerts, well, they might have 3 in a good summer, and might make a little money on each.

    so 17+15+10 becomes 15+15+3, with the total attendance predicted likely divided by 2 or 2.5 in practice.

    If built, this facility is far more likely to generate $700-850k annually than the $2m+ predicted.

    But when have voters ever used their brains? Or been given an opportunity to in our great democratic society?

  12. Re: voters using their brains…in this case the bad math is coming from our own state assembly. Got to wonder how they can do a state budget if this bill shows their aptitude for math.

  13. On the $29.50 average ticket price, that most certainly not high. The cheapest single game tickets currently are $10, while the highest are over $100. Considering most tickets are $20+, the $29.50 is not a high number.

  14. David–most stadiums in England are, to put it bluntly, horrific dumps that represent a legacy of very utilitarian 19th century architecture–some of which in modern times have even been fatal to the spectator. The exceptions to those are the stadia that have been replaced in recent years, like Arsenal’s.

    The challenge is that many of these clubs grew up from neighborhood teams and resources for making large, bright stadia were often never there. Only now, with a global market for English soccer, are resources there to squander on a large number of mediocre players–but this rarely gets to upgrading the ground.

    That said–it is possible for a team to self-finance a facility that safely and comfortably allows supporters to watch the actual match–if that is the priority. When the priority comes to building luxurious suites, having massive in-stadium stores or “museum experiences,” or having a flat screen television every 10 feet, costs go up significantly.

  15. GDub–I’m well aware of the many outdated, derelict stadia in England. Post-Hillsborough, the most dangerous were renovated or closed, although there are ancient dinosaurs like White Hart Lane still operating at the highest level. Nonetheless, “horrific dump” is an overstatement in many cases, where facilities are indeed old and spartan but also dry, safe and adequate as long as you’re there to watch live soccer rather than sit in VIP suites or watch the action on a flat screen.

    You’re right that clubs are loath to invest in their grounds, because they (and their fans) would rather see the money spent on players. And they can’t get the public to pay for it because they don’t have what American sports owners have: an artificially scarce franchise that they can threaten to relocate.

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