You and I Pay So Teams Can Play In Our Backyard
Friday, April 24, 2009
The Indianapolis Star
Wednesday, April 22, 2009
Opinion column by: Peter Grossman, Clarence Efroymson Professor of Economics
It didn't take any sort of genius back in 2004 to predict the financial problems of the Capital Improvement Board, which runs Lucas Oil Stadium and Conseco Fieldhouse.
Not that government officials gave us any warnings. In 2004 local leaders were touting a study that suggested Lucas Oil Stadium would by a "conservative estimate" lead annually to $30 million in extra business for Downtown, hundreds of new permanent jobs, hundreds of millions more if we got a Super Bowl, and millions in painless tax revenue. Never mind that no project like Lucas Oil Stadium has ever paid a community back in terms of jobs and business development. The city's study said otherwise.
But, as I wrote in The Star at the time, the real choice we faced was this: "Maybe we really want to keep the Colts anyway because it means a lot to us to have them here. All right, let's hear what it will cost, let's find out the kind of taxes we'd have to pay to meet that cost."
We didn't find out then. The 2004 tax increases were small, hardly worth noting, unlikely to impact many Hoosiers. Only now are we getting an inkling of cost, but only an inkling. Five years later and it's not clear that we know the full cost of pulling the CIB out of the hole.
So how will the CIB's problems be solved? State and local leaders have made a number of proposals, including asking for more money from the Colts and the Pacers. That's a fine idea except for one problem: The Colts have no incentive to pay it.
The team has a contract with the CIB; it already pays something. Why pay more?
Will we actually stop going to Colts games if they don't pony up? Some people might sell their tickets in anger over this mess. But others will just as surely snap them up. We'll stop going to the stadium if the Colts start playing bad football, not because they haven't made what would amount to a donation of several million dollars to the CIB. After all, Pacer attendance has flagged not over CIB issues but because of the team's performance. In the meantime, the CIB won't close the stadium or kick the Pacers out of town whether or not they pay.
The only possible reason the Colts would agree would be for public relations. But, as they say, they already pay. In fact, the Colts have signed a contract that they live up to. The CIB is the one that wants to change the deal.
The Pacers pay $15 million a year for operation of Conseco Fieldhouse, but they want the city to pick up those expenses. Under several of the proposals, the Pacers would gain $10 million in annual savings but continue to contribute $5 million for the CIB.
But if the teams won't pay, who will?
Gamblers? The idea of Vegas on the White River has cropped up again, but it seems to have little support. It is highly doubtful that we'll be playing the slots on Market Street any time soon.
No, it seems most likely that you and I will be the ones who pay. There will be new taxes. That was always the way this game was going to play out. We'd get a stadium; the Colts would agree to stay for 30 years; but the residents of Indianapolis would take care of the bill.
So I guess I can say I told you so.
But I'm sorry I was right, especially since as a resident of this town and a taxpayer I'm one of the people who will pay.
Still, maybe there's a lesson we all can learn from this.
When politicians make a deal that seems too good to be true, you can be pretty sure it is. Be sure to get real numbers before the project starts.
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