Category: Indiana Pacers

Indiana Gov. Eric Holcomb signed legislation on Monday approving a steady stream of checks for the Pacers and the Indy Eleven USL team, and here’s how the Associated Press reported it:

The dedication of nearly $400 million in public subsidies toward two Indianapolis sports stadium projects has been signed into law.

Close! As discussed here last week — citing coverage in the Indianapolis Star, so it’s not like it was exactly secret information — the total is actually $712 million: $600 million in arena renovation funds and operating subsidies for Pacers owner Herb Simon, and $112 million in stadium subsidies for Eleven owner Ersal Ozdemir. In fact, the Pacers piece is actually $777 million over 25 years, but it’s fairer to call it $600 million because that’s how much it’s worth in 2019 present value since some of the payments are way in the future.

The AP seems to have left out the $12.5 million in annual operating subsidies for the Pacers (rising to $16 million by the year 2031) and $10 million a year in “technology upgrades” for ten years on the grounds that that’s not technically part of the bill Holcomb signed, but rather the lease Simon agreed to on condition of Holcomb signing the bill. (Only in the sports world does one get to say, “Okay, I’ll let you pay me more than $20 million a year to play in the arena you built for me — but only if you first give me a check for $295 million.”) Which is misleading to readers, especially readers who are stuck relying on a brief AP report, because nobody in the rest of the Indiana and national media appears to have assigned anyone to write about the bill signing.

At least one national outlet did cover the Pacers situation in depth on Monday: Deadspin, which assigned me to write about the spread of pay-to-play deals in pro sports and how local elected officials set them up by giving team owners lease opt-outs that let them demand new subsidies every few years. You can read the whole thing here, but for now I’ll just share the thoughts of two people with inside knowledge of sports negotiations — longtime sports administrator Jim Nagourney and former Anaheim Mayor Tom Tait — on why mayors keep doing this to themselves:

After one meeting, [Nagourney] recalls, he spotted Steve Hill, the chair of the [Nevada] stadium authority, and “suddenly there’s a dozen reporters sticking microphones in his face, like he’s general manager of the team. It’s a very heady feeling, for someone who’s been in the concrete business. And the teams know it.”…

“Everyone’s at the party, and you don’t really want to be the guy not at the party,” says Tait. “It’s groupthink, and you gotta really be pretty comfortable with yourself to say ‘none of this makes sense.’”

It’s a sobering notion that the main reason mayors love sports stadiums has less to do with economic consulting reports or grubbing for campaign donations or what have you, and more to do with peer pressure, but that really does look to be how it works. The main value in being very rich is that you can hire people (okay, lobbyists, but they’re sort of like people) to hang out around City Hall and talk incessantly about how these subsidies have gotta happen, you’d be crazy not to do it, like used car dealers who somehow invited themselves over for dinner night after night until you forget that they’re not your friends. American democracy is truly a strange and broken thing.

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.

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?