Indiana legislature approves $712m in tax money for Pacers, Indy Eleven, but it’s “old” taxes so it’s okay

The Indiana state senate has approved Indiana Pacers owner Herb Simon’s $600 million worth of stadium renovation and operating subsidies, as well as Indy Eleven owner Ersal Ozdemir’s $112 million in stadium construction subsidies, because Indiana. The bill now heads for the desk of Gov. Eric Holcomb.

And because every bad stadium deal deserves bad journalism to go along with it, we have this from the Indianapolis Business Journal:

The legislation does not create new taxes, but it does extend the life of some existing taxes that would have otherwise expired and it expands the area where the CIB collects some of its tax revenue…

The bill extends the admissions and auto-rental taxes—which otherwise would have expired in 2023—until 2040 and expands what’s known as the professional sports development area, or PSDA, to include an additional eight hotels.

This is where that whole George H.W. Bush “no new taxes” kerfuffle has left American politics: Anything is considered acceptable so long as the taxes involved aren’t “new.” So even if extending an old tax for 17 years is functionally exactly the same for taxpayers as adding a new one for 17 years, or if siphoning off tax revenues from eight more hotels to pay for sports projects means that local government will have to raise taxes (or cut services) elsewhere to make up the difference, that’s no new taxes, check that box. And media outlets like the IBJ are obligated to repeat that language, because criticizing those in power would be taking sides and therefore wrong.

Anyway, two rich guys are about to get a whole richer at the expense of Indiana residents, and probably Indianapolis is going to get an MLS team eventually. Not that Indianapolis wasn’t going to get an MLS team eventually anyway — everybody is eventually going to get an MLS team — but now it’ll be sooner, maybe? This would all go a whole lot faster if MLS and the USL would just merge, but then MLS owners wouldn’t be getting all these expansion fees and cities wouldn’t be throwing money at would-be expansion owners to get MLS teams, so never mind, artificial scarcity is clearly the backbone of capitalism and I’m sorry I said anything.

Indianapolis is considering upping its Pacers subsidies to a cool billion dollars

If you’ve been following the Twitters, you have probably already heard that Indiana’s Marion County Capital Improvement Board voted unanimously on Friday to approve a new lease and new subsidies for the Pacers. And what subsidies: Between cash for upgrading the Pacers’ arena and cash to cover the team’s year-to-year operating costs, Indianapolis-area taxpayers would be on the hook for an additional $777 million over the next 25 years. Coming on top of $384 million in public money that the Pacers owners have already received since 1999, this would bring the municipal region’s total spending to $1.161 billion — or almost as much as it would take to buy the team outright.

Facts have been flying fast and furious since Friday, so here’s what we know at present:

  • The new public expenditures would include $295 million to upgrade Bankers Life Fieldhouse, $362 million in operating subsidies (paid out in installments over 25 years), and $120 million on “technology upgrades” over the next ten years. Since some of that money won’t be paid out right now, we really should calculate it in terms of present value, which comes to around $600 million — making the total public expense just under $1 billion. A bargain! (And yes, I should really adjust that whole $1 billion into 2019 dollars or something, which would make the total slightly higher, but life is short and division is long.)
  • At $600 million for 25 years, the new subsidy would cost Indianapolis $24 million a year for the privilege of having the Pacers not threaten to leave town for another generation. That would blow the doors off the record for most lucrative lease extension per year, which I currently had scored as the Carolina Panthers‘ $14.6 million per year.
  • The deal isn’t final yet, as the Indiana state legislature hasn’t yet determined how to pay for all this. The state house approved a package of Pacers subsidies on Thursday (and also Indy Eleven subsidies, can’t leave them out), but the state senate still needs to vote on it.
  • The Pacers owners would have to pay a fee of “as much as $750 million,” according to the Indianapolis Star, if they wanted to break the lease and leave early. (That figure, interestingly, does not appear anywhere in either the CIB’s press release or its “fieldhouse agreement” PDF.) Of course, they’d also need to kick themselves in the head for giving up $14.5 million in annual operating subsidy checks, but the way Indiana elected officials like to hand out public dollars, it might not be the worst thing to restrict team owners from coming back for even more cash in a couple of decades — assuming that’s what this agreement would do, which we can’t tell until we’ve actually read it.
  • Local sportswriters are on the case justifying this massive public expense, noting that while “it doesn’t sit right” to give money to billionaires that could be spent on actual public needs, it’s nonetheless justified by the “financial” and “cultural” and “symbolic” and “most of all magnetic” benefits of keeping Pacers owner Herb Simon from moving the team, which he doesn’t want to do, but which he, you know, could.

In exchange for their boodle, the Pacers marketing department provided a whole mess of new vaportecture renderings, which include images of a couple touring the arena site while holding their adorable baby in the exact same position wherever they go, fans walking into mysterious glass walls, and people walking around on an ice skating rink in the snow while wearing street shoes and carrying identical handbags. If that’s not worth $600 million, I don’t know what is. 

Indiana senate offers to pay $112m toward MLS stadium, team owner won’t commit to putting in $30m

The Indiana state senate on Tuesday night passed its bill to provide Indy Eleven with $112 million worth of soccer stadium subsidies ($8 million a year for 25 years, if you’re counting at home — here’s a present value calculator to get you the rest of the way there), plus an unspecified amount of money for even more renovations to the Indiana Pacers‘ arena and Indianapolis Colts‘ stadium. So of course, the Indianapolis Star headlines are all about how the team owners will have to put in money, too! Won’t anyone think of the team owners?

Indy Eleven owner Ersal Ozdemir called it a “good bill” — you’d hope he would, since it gives him a series of $8 million checks — but he still found things to whine about, namely that he wouldn’t get the cash until he landed an MLS franchise (the Eleven are currently in the USL) and that he would have to put in any money himself:

Ozdemir sees a scenario in which his team has its first game in a new stadium in three years. But he thinks the stipulations in the current bill — a down payment on the stadium and a Major League Soccer franchise ahead of time — could delay any debut…

In Wednesday’s interview, Ozdemir declined to say whether the team was willing or could afford to pay 20 percent of the construction cost, which would be about $30 million.

The bill still needs to pass the state house, but last time soccer stadium subsidies were proposed back in 2015, it was the house that approved it and the senate that rejected it, if that means anything. Also, last time Ozdemir was only asking for $82 million in stadium funding, and $112 million is a lot more than $82 million, but either stadiums have gotten a lot more expensive in the last four years or Ozdemir is seeing an opening for state funding and getting greedy — you make the call.

Also also, remember that people in Indiana hate this whole sports subsidy idea, not that anyone is asking them.

Indiana poll shows public opposition to Pacers and Eleven subsidies, pollster says if state pretends it’s not public money they should be fine

There’s a new poll out on what central Indiana residents think of plans to subsidize a new stadium for Indy Eleven and still more arena upgrades for the Indiana Pacers, and according to the Indianapolis Star, they don’t think much of them:

The poll found that 23 percent of respondents support taxpayer funds for a soccer arena, according to a news release. Thirty-four percent support subsidies for Bankers Life Fieldhouse, where the Pacers play.

According to the news release, 37 percent favor subsidies for the Indiana Farmers Coliseum and Victory Field and 31 percent for Lucas Oil Stadium.

That actually isn’t a very helpful way of putting it, Indianapolis Star: What were the “oppose” numbers? And what’s this “according to the news release” nonsense? Didn’t you at least ask to see the underlying poll numbers? Sure, it doesn’t appear to be on the pollsters’ website yet, but surely you could call or email these guys? (I just did, am currently waiting to hear back.)

Anyway, the more important news, according to both the Star and the pollsters at the IUPUI Sports Innovation Institute, is that we can ignore what the populace thinks if we’re clever enough about pretending that public money is really private money:

There may be a silver lining for sports teams. David Pierce, director of the IUPUI Sports Innovation Institute, thinks the use of the special taxing districts being proposed — rather than new or increased taxes directly paid by Hoosiers — have a better chance for support.

“The Indy Eleven strategy to predominantly shield taxpayers from the burden of funding the stadium through sales and tourist taxes and rather through tax increment financing in a sports development district will likely play better at the Statehouse than previous proposals,” he said in a prepared statement. “Given the tepid support for taxpayer funding shown in the poll results, the more private and the less public the partnership, the more palatable it will be.”

Right, tax increment financing is totally “more private” funding! Except for how it actually lets businesses take back their own property tax payments and spend them on private projects, to the point where the Milwaukee Bucks owners are collecting interest on a loan they made to themselves using their own property taxes. That will surely poll better — not that the Indiana poll seems to have asked anyone if they’d prefer a TIF, but we don’t need to bother busy regular folks with details like that, now do we?

Indiana preparing to throw more money at Pacers owner on top of $384m in public cash he’s already received

Good news for Indiana taxpayers: That plan to give the owner of the minor-league Indy Eleven soccer franchise $174 million in future tax kickbacks to fund a $150 million stadium now “seems like more of a long shot,” according to the Indianapolis Star. Much, much worse news for Indiana taxpayers: Instead the state legislature is expected to take up still more subsidies for the Pacers, who have already collected $384 million in public money over the last 20 years:

The Pacers’ current deal, $160 million in public money for a 5-year lease extension, expires in 2024. Sen. Ryan Mishler, chairman of the powerful budget-writing Senate Appropriations Committee, thinks there’s legislative will to broker an agreement to keep the team in town longer.

“There are communities out there that are willing to pay quite a lot of money to get sports teams,” Mishler said. “The goal should be to keep the Pacers here in Indiana. The entire state benefits from the Pacers, not just the city of Indianapolis.”

To recap: Indiana fronted $191 million, 96% of the cost of the Pacers’ new arena, in 1999 in exchange for just $1 a year in rent (Marquette’s arena lease site says $79 million, but Judith Grant Long’s book says $191 million in 1999 dollars, and Long usually accounts for more hidden costs so I’m going with that); demanded (and got) $33 million more in “operating subsidies” in exchange for not opting out of their lease in 2010; then got another $160 million for staying put through 2023. And now team owner Herbert Simon appears to be preparing for his biggest public payday yet, with money coming from “a mix of existing income, sales, innkeepers, admissions and auto rental taxes,” according to the Star. While the total dollar value is as yet unknown, there are bills in the legislature renewing existing taxes that provide $24 million a year to the state Capital Improvement Board while adding $8 million to $8.5 million a year in a new special taxing district, a pool of money that could provide as much as $500 million worth of present value to Simon (though obviously the CIB could choose to spend it on other stuff as well).

The Pacers’ deal is turning into a classic public gift that keeps on giving, in large part because former Indianapolis mayor Stephen Goldsmith agreed to give Simon an opt-out clause in the middle of his lease, and Simon knew exactly how to use it to extract more public cash to make his team wildly profitable. One would hope that this time, at least, the state of Indiana would force Simon to commit to more than a few years’ worth of lease extension if he’s going to cash another nine-figure public check, but given the way this conversation is starting — “There are communities out there that are wiling to pay quite a lot of money to get sports teams,” declared state senator Mishler, effectively establishing that he’s willing to extort himself for money — I wouldn’t hold your breath.

Friday fun: Draw your own Rays stadium, Pacers make money hand over subsidized fist, and more!

Oh, has it ever been another week! Some things that happened:

  • The Indiana Pacers revealed they brought in a record $13.2 million in revenues from non-sports events last year. “We’re trying to be a good steward for this venue,” said Rick Fuson, president of the team that is getting paid $16 million a year by the city to run its arena without sharing any of its revenues with taxpayers and also may ask for more public money for arena upgrades soon. “This is about an investment into the economic vitality of our city and our state.”
  • UC Berkeley is going to bail out its terrible football stadium deal with non-athletic department funds, though it can’t say where exactly the money will come from other than that it won’t be student tuition or state tax dollars. You guys, I’m starting to worry that UC Berkeley may have a lucrative meth-lab business on the side.
  • The University of Connecticut is spending $60 million on three new stadiums, which it will presumably totally pay for out of student tuition and tax dollars.
  • The NFL is opposed to the language in the GOP tax bill that would ban use of tax-exempt bonds for sports stadiums, because of course it is. “You can look around the country and see the economic development that’s generated from some of these stadiums,” NFL spokesperson Joe Lockhart said with a straight face, either because he doesn’t understand that any sliver of economic development in one part of the U.S. from stadiums just comes at the expense of economic development in another part, or because it’s what he’s paid to say, or both. Meanwhile, speaking of that tax bill, there are a lot of reasons to be terrified of it, even if that stadium clause would be nice.
  • The Oakland Chamber of Commerce polled 503 “likely voters” and found that a large majority supported the idea of an A’s stadium at “a new, 100 percent privately financed site, near Interstate 880, four blocks from Lake Merritt BART and walking distance from downtown.” Cue the opposition poll describing it as a “cramped site wedged into an already-developed neighborhood with existing traffic problems” in three, two…
  • A website commenter got sick of waiting for the Tampa Bay Rays to issue stadium renderings and drew some of their own, getting on SBNation for it despite having failed to find the Fireworks menu in their CAD program. No, I don’t know why it has an apparent non-retractable roof, or how people in that upper deck in right field will get to their seats, or what’s holding up those seats, or lots of other things.
  • FC Cincinnati president Jeff Berding says a stadium announcement is scheduled for next week and that it will involve Cincinnati Mayor John Cranley, so presumably the team owners are now focused on building in Cincinnati instead of across the river in Kentucky, using Cincinnati’s tax kickbacks instead of Kentucky’s. Poor Cincinnati.

Pacers owner prepares to add renovation demand atop $380m in prior subsidies, because he can

Indiana Pacers execs are once again talking about going back to the trough for yet another helping of public cash to help them, you know, make more money. The Indianapolis Business Journal reported over the weekend on how the Pacers’ publicly built and then publicly subsidized some more via “operating subsidies” Bankers Life Fieldhouse is doing in terms of booking concerts (better!) and in terms of making money on those concert bookings (they won’t say, and don’t have to, because they’re a private company and their lease doesn’t require them to report it!), before noting that:

Pacers officials are in the early stages of talking to CIB about improvements to the fieldhouse—although they haven’t specified what they want or how much it will cost. Some city officials have speculated the team will want to add more social gathering spaces and modernize the building…

[City officials] admit any renovation would certainly cost in the tens of millions of dollars. The fieldhouse cost $183 million to construct.

[Pacers president Rick] Fuson said it’s too early to determine a timeline or cost estimate on potential improvements. But he predicted that upgrades will help PS&E retain and draw more non-Pacers/non-Fever events as well as enhance the draw for Pacers and Fever games.

And then an IBJ editorial cited Pacers owner Herb Simon’s statement earlier this year that he wants a “major redo” of the arena, which sounds like it could be more than tens of millions of dollars.

The Pacers, to recap briefly, have been one of the most successful teams in sports history to turn an arena deal into the gift that keeps on giving, starting with $187 million to construct the building in the first place in 1999, then following it up with $33 million in subsidies to help pay to run the arena from 2010 to 2013, then another $160 million from 2014 through 2023, plus $3.5 million for a new roof to replace one that leaked, plus probably a few more sundries I haven’t kept track of along the way. And, because former Mayor Stephen Goldsmith is an idiot who wrote a terrible lease (or employed idiots who did so, anyway), Simon will once again in 2024 be free to threaten to take the Pacers elsewhere if he doesn’t get more taxpayer boodle.

One hopes that the increased concert revenue — all of which goes to the Pacers owners, because why would Indianapolis have asked for any of that in exchange for $380 million worth of public spending, right? — would help provide leverage for the city to tell Simon he should pay for a large chunk of his own damn arena costs, since he’s doing well now and he’s the only one who’d profit from any improvements anyway. But then, there’s that little problem that the Pacers only need to report revenues, not profits, so there’s no way for the city to do that. You think it’d be okay to rate Goldsmith without actually taking his Harvard course? Because some Pacers fans might want to say some things about him.

Pacers owner demands “a lot of money” for renovations, because he has everything else already

So what do you get for the sports team owner who already got a free $183 million arena, $33 million in operating subsidies, another $160 million in operating subsidies when those ran out, a free $3.5 million roof repair, free land for a a free $50 million practice facility, and a free $2 million tunnel to connect the free practice facility with the new arena? How about a “major” renovation of your now 18-year-old arena:

“For me to sign a long-term lease, which is what I really want to do for the city, we’re going to have to plan it for the 21st century,” [Indiana Pacers owner Herb Simon] said. “Things have changed. People’s viewing habits are different with more social environments. It takes a major redo because the bones are great and we want to keep it here. We love the feel that people get, but we want to enhance the fan experience and keep us current. That’s going to take a lot of money.”

That’s not quite a move threat, you’ll notice, but it is at least a glancing non-threat threat, since Simon is saying he won’t sign a long-term lease once his current one expires in 2024 unless he gets these “major” arena renovations. (If you’re wondering why the Pacers will be on their third lease renewal just 25 years after moving into a new arena, blame Stephen Goldsmith.) He also cleverly didn’t say how much money the renovations would cost beyond “a lot,” or how much of that he’d be requesting Indiana to pay for, though “a lot” seems like a fair bet there as well.

Given that the Pacers are already up around $430 million $380 million in subsidies for an arena that cost less than $200 million to build, getting even more public money for upgrades would easily push them into “sweetheartest arena deal in history” territory. I would say that the local government’s appetite for subsidies has to wear thin someday, but this is Indiana, so apparently not. At least the city of Indianapolis didn’t have to cut funding for arts programs and close public pools to pay for all this — oh wait, never mind.

Indianapolis sports-medicine developer says he’ll build 20,000-seat something for somebody

File this under “probably just trying to get publicity, but”: A developer who wants to build a $500 million (!) sports medical complex (!!) on the site of Indianapolis’s old airport terminal says he’s looking to build a 20,000-seat arena or stadium (!!!) as part of the plan. And Athletes Business Network Holdings co-founder Craig Sanders says he’s “having very active discussions with sports organizations outside of Indiana, professional and amateur,” though he wouldn’t say which ones.

Which ones is a huge question, since the Pacers and minor-league baseball Indians already have their own venues, and Sanders says he hasn’t had any talks with the owners of Indy Eleven, who want a new stadium but prefer it to be downtown. That leaves the NHL, maybe, but there’s been no talk of interest in Indianapolis by that league. The WNBA Fever are owned by the Pacers, so now we’re down to things like arena football and futsal, neither of which is going to be enough to anchor an arena. Nor are concerts, frankly, considering the venue would be competing with the Pacers’ Bankers Life Fieldhouse for events.

Still, as someone always on the lookout for outside-the-box ways to finance sports facilities that don’t involve massive public subsidies, “build it as a loss leader for a for-profit medical center” isn’t the craziest idea, quite. The airport board is expected to approve ABN tomorrow as the winning bidder to develop the site, so ball (or puck) is in their court now. They already have renderings!

Pacers to get $3.5m arena roof on top of $350m in prior subsidies, because Indiana

And now it’s time for the incredulous tweet of the day:

Answer: Yes, the $16 million a year that Indianapolis agreed to give the Pacers owners in 2014 only covers operating costs, and specific upgrades to seating, locker rooms, and scoreboards. So $3.5 million for a new roof will be on the public tab on top of that, bringing the total subsidy for the Pacers to … let’s see, $187 million to build the arena in the first place, plus $33 million in operating subsidies for 2010-13, plus $160 million for 2014-2023, and really we should present-value all of this but I don’t have the exact spending dates — should we say $350 million, maybe? For an arena that only cost half that to build? I still say the Pacers may have the sweetest subsidy deal in all of sports, though obviously there are lots of other contenders.