Indy Eleven owner again asking for $87m for minor-league soccer stadium

All the MLS expansion talk of late has focused on Las Vegas and Minneapolis and Sacramento, but Indy Eleven owner Ersal Ozdemir isn’t giving up without a fight. Ten months after throwing in the towel on his plan to ask the state legislature for $87 million for a new stadium — partly because his ticket tax revenue projections were completely nuts, but likely more so because the head of the state senate told him he’d have a better chance in the 2015 session — Ozdemir is back, and raring to be having the state cut some checks with his name on them:

The Indy Eleven’s quest for funding for an $87 million downtown soccer stadium will resume Thursday, with Rep. Todd Huston, a Republican on the House Ways and Means Committee, expected to submit a bill with a funding measure for the facility.

Team officials expect the bill to get a hearing by the House Ways and Means Committee sometime in mid- to late January. If the measure is passed by this year’s General Assembly, Indy Eleven officials believe they could be playing in the stadium as soon as 2017.

In case you’d forgotten the details of Ozdemir’s stadium plan since last year — and you’ve got to think Ozdemir is hoping you have — the state of Indiana would send him annual $5 million payments, which it would recoup by collecting a 10% ticket tax on seats sold at the stadium. Except that the average MLS team only sells about $8 million a year in tickets, which would only bring in $800,000 a year in tax revenue; the research arm of the state legislature says it would be more like $200,000-400,000 a year. If that’s the case, the state would be left paying off the team’s stadium costs by kicking back income and sales taxes that otherwise would go into state coffers like normal people’s income and sales taxes do.

Ozdemir is touting the team’s sellout of all 14 home games last year as a minor-league franchise as a selling point, which is all very nice, even if Advance Indiana points out that a lot of these tickets weren’t so much “sold” as “given away.” It doesn’t explain why Indiana should give him $5 million a year for his project, though — if the Eleven are doing so well at IUPUI’s 10,000-seat stadium, doesn’t that make the case that they don’t need taxpayers to build them a new one to draw fans? Or if he really thinks he can sell six times as many tickets as other teams in MLS (without an actual approved MLS franchise, mind you — this deal wouldn’t be contingent on getting a big-league team), maybe Ozdemir could take out a bank loan, raise ticket prices by 10% in lieu of a tax, and do the financing himself? I’m talking crazy talk again, aren’t I?

Indy Eleven owner: Wait till next year for $87m stadium request

The owner of Indy Eleven, the minor-league soccer team that hasn’t even played a game yet but is already looking for an upgrade to a major-league-size stadium, says he’s giving up on his quest for $87 million in state funding — for now:

“Having not been given a red card, we remain committed to working with legislators with an eye toward coming back next session and continuing the discussion about Indy Eleven’s successful launch and its economic impact on our community and state,” [Ersal] Ozdemir said.

A soccer stadium bill had already overwhelmingly passed a state house committee, so what happened? Notwithstanding the Twitterer who tried to credit me for the stadium’s momentary defeat (I did point out problems with Ozdemir’s ticket tax revenue projections and tell the Indianapolis Business Journal that they were “completely insane” — but then, a state agency later did a similarly gloomy analysis of ticket revenues, and economist Victor Matheson called the projections “absolutely crazy”), what seems to have happened is that the Senate president decided it’d be better to consider the bill next year:

Earlier Thursday, Senate President Pro Tempore David Long, R-Fort Wayne, said in a news briefing there seem to be more questions than answers about the proposed Indy Eleven soccer stadium and that it would be better handled next year, when the legislature passes a state budget.

“My take on it right now is this may be a good idea,” Long said. “It doesn’t seem like it’s completely worked through yet. I think it would be wise for everyone to take a deep breath, step back and look at it.”

Note that Long is from Fort Wayne, and the Indianapolis soccer bill was presented as an amendment to a bill to expand the Fort Wayne Coliseum, and Fort Wayne legislators didn’t want to risk messing with that. So instead everyone is agreeing to reconvene in 2015, when either the question of how to pay for $5 million a year in arena bonds with $200,000 a year in ticket taxes will be “completely worked through,” or enough time will have passed that everyone will have forgotten that the numbers are crazy insane.

Study: Indy Eleven stadium would generate less than 10% of promised ticket taxes

When the owner of the fledgling minor-league soccer team Indy Eleven said that a new $87 million publicly financed stadium could pay for itself by generating $5.1 million a year in ticket taxes, I did a little math: Even if the team jumped to the major-league level, I estimated, it couldn’t expect to generate much more than $8 million a year in ticket sales, which would mean $800,000 a year in ticket taxes, which would mean a whopping big budget hole for the state.

That analysis took me about two minutes. Now somebody with actual time to do some real research has conducted a more in-depth projection, and it is so much worse than even I had predicted:

An analysis by the Legislative Services Agency, an independent body advising the legislature, estimated this week the soccer team would generate just $2 million to $4 million a year in ticket sales, significantly less than the team’s estimate of $51 million.

Yeah, by a little bit. The LSA study was based on average ticket sales in the NASL (the minor league that Indy Eleven currently plays in), not the MLS, which is one reason its numbers are lower than mine. But no matter how you slice it, it’s inconceivable that Indy Eleven would get within shouting distance of generating enough ticket tax to pay off the public stadiums bonds — as the Indianapolis Business Journal notes, to reach the $5.1 million target for ticket-tax revenue, the soccer stadium “would have to sell in tickets alone more than four times the total revenue of the [minor-league baseball] Indianapolis Indians. The well-established Indians reported a record $11.8 million in revenue in 2013, including tickets and concessions.” (They also play 72 home games a year compared to 17 in MLS, one reason the Indians sold more total tickets than all but one MLS team in 2013.) The IBJ also reports that team owner Ersal Odzemir “did not immediately respond to an IBJ request for a breakdown of how much of his estimated revenue would come from non-soccer events.”

As a reminder, if the ticket-tax money falls short, as now seems inevitable, the next revenue stream would be income and sales taxes paid by the team, most of which would be cannibalized from existing tax revenues. (Unless people in Indianapolis are suddenly going to find a giant pile of new spending money as soon as they have soccer tickets to buy.) So this is really the difference between a project that could pay for itself and an $87 million gift to a team that hasn’t even played its first game, and has gotten no indication that it will even be allowed to apply for a jump to the majors. The soccer plan has only just begun to move through the legislature — a bill to increase by $2 million a yeae the amount of sales and income taxes that can be diverted to Marion County’s Professional Sports Development Area has passed the state house, but that money doesn’t have to be used for a soccer stadium — so hopefully legislators will actually look at the numbers before rubber-stamping the plan. Even if this is Indiana.

Indiana house votes to help fund stadium for minor-league soccer team that hasn’t played a game yet, because Indiana

Speaking of crazy-ass subsidy demands, what’s up with that push for stadium subsidies by the soccer team that claims it’s going to join MLS even though it hasn’t even started minor-league play yet, the one whose owner is projecting $5 million a year in ticket taxes in a sport whose teams average about $8 million a year in ticket sales, your very own Indy Eleven? This is Indiana, people, so of course it’s going gangbusters:

The House Ways and Means Committee voted 18-2 Thursday afternoon in favor of a bill that would facilitate a new downtown soccer stadium for Indy Eleven.

The vote came without discussion, but Chairman Tim Brown amended it in a way that he said will give the Senate a chance to weigh in on the proposal.

The bad news for Indy Eleven owner Ersal Ozdemir, such that it is, is that the bill only raises the Indianapolis Capital Improvement Board’s debt limit by $2 million, which 1) doesn’t actually provide Ozdemir with any money just yet, though the CIB could presumably hand it over without asking the legislature and then turn around and say, “Sorry, out of cash, need more,” like it has in the past, and 2) isn’t enough to pay for the $87 million stadium that Ozdemir says he wants. (He’s asking for $5 million a year from the state.) So, a potential IOU for $2 million passing almost unanimously with no disucssion? That’s a nice haul for a team whose only claim to fame so far is that 7,000 people have put down $25 deposits for season tickets. Clearly I should get out of this whole web journalism business and start up a minor-league soccer franchise … though on second thought, that’s more of a Shelbyville idea.

Indy Eleven owner promises $5m a year in ticket taxes from team that would sell maybe $8m in tickets

Speaking of outrageous demands, expansion minor-league soccer team owner Ersal Ozdemir went before an Indiana state house committee on Thursday to ask for $87 million to build a major-league-ready stadium for his Indy Eleven, and this happened:

Several members of the House Ways and Means Committee thanked Ozdemir for investing in the North American Soccer League franchise Indy Eleven, which begins its inaugural season in April. While members had questions about the proposed financing of the 18,500-seat venue, they did not question its impact on other taxpayer-supported venues downtown.

(That reference to “impact on other taxpayer-supported venues” is a reference to the fact that the stadium is proposed to be a concert venue, which could end up drawing acts away from the Pacers‘ Bankers Life Fieldhouse.)

The funding plan for the proposed stadium would require the state to provide $5 million a year to pay off the stadium bonds, drawn from ticket taxes (estimated at $5.1 million a year) plus sales and income taxes paid by the team (estimated at $4.1 million a year). The latter would largely be a taxpayer subsidy, thanks to the substitution effect, but if the entire nut can really be provided by ticket tax money, that wouldn’t be so bad, since ticket taxes largely come from team owners’ pockets (by lowering the face value that teams can get away with charging).

That’s assuming that the $5.1 million a year projection for ticket taxes is legit, of course. If Indy Eleven tickets are taxed at the current 10% rate that other teams are charged, that would require $51 million a year in ticket sales. The average MLS team sells about 300,000 tickets a year, at an average of $26 a ticket, which comes to … just shy of $8 million. That would generate just $800,000 in ticket taxes, leaving $4.2 million a year to be paid off by sales- and income-tax kickbacks.

It’s possible that Ozdemir intends on holding tons of concerts and other events at the stadium as well, though that isn’t really the case for any other MLS stadiums. Hopefully this was one of the financial questions that state legislators had for Ozdemir — though if it was, the Indianapolis Business Journal didn’t bother to report on it.


Minor-league soccer team that hasn’t started play yet already wants a state-funded stadium upgrade

It’s official: Every single minor-league soccer team in North America now has a plan for joining MLS by getting a new stadium built. The latest candidate: The Indy Eleven, a team in the third-tier minor-league NASL that hasn’t even played its first game yet, but whose owner Ersal Ozdemir said Friday that it could totally join MLS if only it had an $87 million, 18,500-seat stadium.

And who’s going to pay for it?

Ersal Ozdemir said Friday night that he understands why Indianapolis taxpayers wouldn’t want to pay for yet another sports venue.

“I totally get that. People are just tired of that,” said Ozdemir, a local real estate developer. “Because of that, really, we were being very thoughtful of that.”

Right. And who’s going to pay for it?

Lobbyists are trying to find a lawmaker willing to shepherd a bill that would allow the team to capture ticket-tax revenue, plus sales taxes and state and local income taxes, to help it finance the project.

So by “very thoughtful,” Ozdemir meant “we’re still going to use tax dollars, but we’ll be thoughtful about actually coming clean to the public about this.” (He told the Indianapolis Star that, in their words, “debt for stadium construction could be paid off by accruing taxes from the downtown Professional Sports Development Area,” aka a TIF, aka developers’ favorite confusing hidden tax subsidy.) Though at least that’s more thought than he put into coming up with the team name.