Boosterish Indy Media Let Readers Down on Sports Financing

April 6, 2009

For release noon April 7 and thereafter (733 words)

The Indianapolis Capital Improvement Board (CIB) realized a few months ago that operation of its new Colts football field would run an estimated additional $10 million annually. Now we hear another shoe drop — an extra $10 million for the field itself.

Considering this and other CIB shortfalls, including those for a basketball palace, the “unexpected” costs currently total $43 million. The proposed solution is to double the statewide liquor tax.

All of which make it a good time to review the history of the board’s operation. There are lessons here for many Indiana communities, and they begin with this headline from the April 1, 1984, Indianapolis Star:

“City to Make $1.39 Million Annually from Colts’ Move.”

An April Fool’s joke? No, the history of the CIB and its media coverage is so full of exaggerated revenue estimates and general misinformation, disinformation and downright deception that multi-million dollar “surprises” are almost expected.

The Indianapolis Food and Beverage Tax, originally set to expire in 2013, was levied exclusively to build the RCA Dome. In 1991, however, with little publicity, the tax was extended (William Hudnut, then mayor, said it was hard to tell whether it would ever expire).

At about the time the decision was made to raze the Dome, Indianapolis citizens were belatedly told that 25 years worth of the Food and Beverage Tax had been spent not on the construction cost of the Dome but on something else entirely. In April of 2005, then-Mayor Bart Peterson informed them that the tax was being used instead to pay off a debt of “about $496 million.” (Public participation in the original cost of the Dome, you may recall, was supposed to be only about $50 million.)

The original Dome debt apparently had been rolled into the debt for the Colts’ new stadium. But the agreement between the state, the CIB and the Colts back in September 2005 called for financing to be in part “the one-percent food and beverage tax increase in Marion County.” Apparently, that original one percent is still a long way from being applied as intended.

A large share of the blame can be put on the Indianapolis news media. The editors and news directors, accepting press releases as fact, did not investigated the even the most suspicious CIB operations or even ask serious questions about the expensive and frequently secretive operations of the board. Indeed, Mayor Peterson was able to deny for years that there were even any plans for a new stadium.

In September 2002, the head of the CIB, questioned by a reporter about the purchase of land now a part of the new venue, “refused to discuss any long-range plans for the land his agency owns.” And that was the end of it. As was the rule, there was no follow-up question or investigation. This incident is noteworthy only in that a meaningful question had been asked in the first place.

Now the basketball team, having a bad year, wants to reopen negotiations on its lease for the field house. The team pays $1 per year rent and keeps all revenues from all activities at the venue. One can only assume that the owners hope to begin renegotiation with a demand to be paid to play here.

The football team pays the same as its lease of 25 years ago and keeps all football revenue, all naming rights and signage income plus $3.5 million of non-football revenue. Understandably, the team does not want to renegotiate; its deal could hardly be fatter.

All told, it is difficult to find an independent observer following these events who believes general circumstances justify such massive additional public support for what are profitable private ventures. Rather, sentiment is growing, especially out state, that the owners of the teams need to face the reality of a new economy and “ladle back some of the gravy” they have been living on all these years.

I will repeat a suggestion I made previously: Indianapolis, while continuing to pay off the bonded indebtedness on these projects, should make an outright gift of the two properties to the respective teams. Let them assume operational and maintenance cost as any ordinary business would be expected to do.

In addition to ending a seemingly endless draw on the public treasury, the move would add about a billion dollars worth of real estate and improvements to the property-tax rolls. You would think that might make a news story.

Fred McCarthy, an Indianapolis resident and adjunct scholar with the Indiana Policy Review Foundation, is a  past president of the Indiana Manufacturers Association.



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