Hot-Button Issues: Paying To Play

Editor’s Note: From gay marriage to Glenda Ritz, Obamacare to Sunday booze, we’re presenting 10 topics that Hoosiers will be fired up about this year—and what you need to know before jumping into heated cocktail-party discussions.

Update: On April 11, 2014, the Indiana Pacers and Indianapolis’s Capital Improvement Board were set to announce that they had reached an agreement on extending the team’s lease at Bankers Life Fieldhouse through 2024. According to the terms of the deal, the CIB reportedly will spend $160 million over 10 years on subsidies and upgrades at the facility. 

The Skinny

Are you a flinty-eyed entrepreneur looking to finance a professional sports franchise? Then have we got a deal for you in Indianapolis (No money down? No problem!). Never mind that our outsize subsidies eclipse our small-market means: Taxpayers footed a combined bill of close to a billion dollars for Bankers Life Fieldhouse and Lucas Oil Stadium (roughly the size of the city’s entire 2014 budget, if you’re keeping score). Building Lucas Oil alone set us back more than $600 million—86 percent of the overall capital costs. Before that, in 1997, the city stepped up to the plate to pay 96 percent of the capital costs for Bankers Life, to the tune of $222.6 million. According to a 2012 analysis by Harvard University researcher Judith Grant Long, the average taxpayer burden for funding the construction of sports venues nationwide is 78 percent, making Indy one of the most free-spending sports towns in the country (even as it struggles with paying cops to stay in the game).

In 2010, Pacers Sports & Entertainment (PS&E) inked a deal with the Capital Improvement Board (CIB)—which owns and operates the buildings on behalf of the city—for $10 million in annual operational subsidies for three years, in addition to $3.5 million for facility improvements. The agreement was extended one year before expiring in 2013, and the City-County Council approved $11 million in its latest budget for the CIB to underwrite the Pacers in 2014. Indianapolis Colts owner Jim Irsay—who did chip in a cool $100 million for Lucas Oil—also had his hand out last year, requesting (and getting) a $2 million suite expansion for his six-year-old football palace. And lest he miss out on the action, Ersal Ozdemir, owner of the city’s new Indy Eleven pro soccer team, just this month asked state lawmakers to help finance an $87 million stadium.

Winners and Losers?

Hard to tell, as some benefits of pro sports—civic spirit and national profile, for example—are intangible. A 2012 Rockport Analytics study found that Super Bowl XLVI alone brought $384 million to the city. A 2010 report by a Chicago consulting firm showed that the Pacers and Fever administer a $55 million economic booster shot to the local economy each year. During ongoing negotiations for a long-term contract, PS&E provided privileged information to CIB officials showing the extent of its financial woes, but those figures have not been made public.

The Players

CIB president Ann Lathrop, whose day job at accounting firm Crowe Horwath makes her a seasoned number-cruncher on the city’s behalf … Ryan Vaughn, Greg Ballard’s chief of staff, who’s running point for the mayor’s office in negotiations … PS&E president Jim Morris and owner Herb Simon … Democratic councilman Frank Mascari, a vocal opponent of upping the CIB’s budget.

When It Will Go Down

Although Lathrop said last year that the CIB hoped to have a long-term deal with PS&E on future subsidies and Bankers Life lease terms in place by the end of 2013, none has been reached. “We continue our negotiations and hope for a resolution quickly,” she tells IM. The board’s next meeting is scheduled for February 10.

The Upper Hand

Sports owners. Virtually no city official wants to lose a pro franchise on his or her watch—especially with a bid to host another Super Bowl in 2018 still in play.

Whose Team Is He On?

“Nobody wants to admit this, but … the Pacers paid for the running of Bankers Life Fieldhouse, on their dime, for 10 years. Show me another city in the nation where that was true. They did that for 10 years, and then they finally said, ‘We can’t do that anymore. We’re losing too much money.’ Everybody thinks we subsidized the Pacers. The fact is the Pacers subsidized the city for 10 years.” —Ballard, quoted in The Indianapolis Star

Follow Along

@VoteVaughn / @MascariF / @JakeQuery / @IBJTheScore

A version of this article originally appeared in the January 2014 issue. Reporting by Adam Wren.