INDIANAPOLIS (WISH) Indianapolis will remain an NBA city for at least the next decade, as the city’s Capital Improvements Board of Managers backed a new financial stake to keep the Pacers in town.
That 9-0 vote was recorded just before 4 p.m. Monday, following an earlier news conference that doubled as a sales pitch. City leaders and Pacers officials made a joint case on the $164 million, 10-year agreement, promising it can all be done without a tax increase.
The deal, reported by 24-Hour News 8 last week, also includes three, one year extension options that could lock the Pacers and Fever into Bankers Life Fieldhouse through 2027.
The deal also removes the team’s ability to leave Indianapolis because of economic losses.
CIB President Ann Lathrop called the agreement a “bargain” for taxpayers.
“I think it is, without a doubt,” she said. “Of the $160 million of the deal, over $40 million of that is going into capital [improvements], in a building that we own. And that will stay with us.”
During Monday’s news conference, Pacers executives and city leaders pointed to an Indiana University School of Public Policy analysis that found the Pacers generated a $234 million economic contribution to downtown Indianapolis last year. That figure is $208 million, on average, over the last five years. Of that money, $111 million would not have occurred if the Pacers were not tenants at Bankers Life Fieldhouse, the study found.
20 percent of all Pacers tickets were sold to out of state patrons, according to figures from the Pacers. Home games and Pacers related events also directly support up to 2,500 jobs, the study also found.
Outside entertainment bookings, like concerts, at the Fieldhouse also generate additional revenue, though Pacers Sports and Entertainment President Jim Morris said the organization only saw “about $5-6 million” in annual profits from them.
“A huge percentage of the ticket revenue goes with the act and with the promoter,” Morris said. “The amount that stays here to help operate the building is very small and very insignificant. But, we would not have a chance in the world to operate the Pacers and the Fever and to do the community events we do if we did not have the revenue that came from the entertainment activities. We have about 30 of them a year.”
Under the new terms, the Pacers will create a separate entity, “Fieldhouse Management LLC,” to manage and operate the Fieldhouse. The new entity would be run by the Pacers, but fully funded by the city at a cost of $7.1 million dollars a year.
On Monday, Morris said that public-private partnership would ensure critical operations of the building would be transparent.
“There would be no change in personnel from what we have now,” he said. “This was just done to isolate the core costs of Bankers Life Fieldhouse operations to enhance transparency.”
The Capital Improvement Board would also pay for operational costs like utilities, security, and liability insurance, totaling about $3.7 million dollars a year under the new deal.
The CIB would also pay $26.5 million dollars toward capital improvements at Banker’s Life Fieldhouse over the life of the new contract, for improvements to locker rooms, seating, concessions and other cosmetic improvements. Under the deal, the city agrees to also pay $7 million dollars to replace “major items” like carpet.
Some, however, have criticized the city for giving up too much under the new deal.
They point to things like the Fieldhouse’s new $16 million scoreboard and sound system, which was bought outright by Pacers Sports and Entertainment in 2012. Under the new agreement, the CIB will cover half of the cost, in exchange for ownership of the scoreboard at the end of the 10-year lease.
Morris said Monday that was always the team’s intention.
“Herb went ahead and bought the new scoreboard, understanding that in our deal with the city, the city was responsible for major repair and replacement of key systems, of which the scoreboard is one,” he said.
Indianapolis City-County Council President Maggie Lewis, a member of the CIB, said overspending on the deal worried her as well. But, one thing swayed her vote.
“For me, it does go back to the jobs. You can only put Disney on ice in Bankers Life Fieldhouse so many times. So, it’s important that we have that long term commitment,” she said.
Mayor Greg Ballard also addressed critics Monday who have questioned why the city is proposing to spend more than $160 million on a sports team, instead of using that money for public works projects or public safety.
“By law, that money can’t be used for that,” he said. “This is kind of like city econ 101. You’re trying to generate economic activity for more tax dollars. That’s the whole point of it all, so that you can provide more police and pothole [repair.] That’s what we’re trying to do. We’re trying to put more people to work. We’re trying to increase property taxes, and all these things. But, you have to generate economic activity around all that so that you can pay for the police and potholes and everything else.”
Other terms of the deal include a provision that gives the city the right of first refusal in the event owner Herb Simon’s heirs put the team up for sale after his death.
The city last signed a three year deal with the Pacers in 2010. They extended that by one year at the end of 2012.
Final approval from Pacers Sports and Entertainment is expected later this week.