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$100 Million “Contribution” My A$$

I finally had some time to work on the Indianapolis Colts’ $100,000,000 “contribution” to Lucas Oil Stadium.

The Indianapolis Colts say they contributed $100 million to building Lucas Oil Stadium.  It all depends on how you define “contribute”.

Let’s just say for sake of argument they did write a check for $100 million.  First of all the Stadium cost about $750,000,000.   Which meant the Colts only picked up 13 percent of the tab.

In order to break the lease on the old RCA Dome so the Colts would have a new place to play, the city paid the Colts $48 million, but the Colts don’t want to give up $5 million.

The Colts got $121 million in naming rights, but don’t want to pony up $5 million.

The Colts get about $41 million in stadium annual revenue, but don’t want to part with $5 million.

The Colts also get up to keep up to $3.5 million  for non-game events and the CIB picks up the operational costs of the Lucas Oil, but the Colts don’t want to pay $5 million to ease your tax burden.

They do pay $250,000 a year in rent and make reimbursements to the CIB to the tune of $800,000 to $1,000,000 a year.

So let’s do some math.  The Colts put in $100 million + ($250,000 x 30 years in annual rent payments) + (1,000,000 x 30 years of annual reimbursements) = $137,000,000 in total Colts contribution over the life of the lease.

Here’s what they got back.  $48,000,000 (lease payback) + $121,000,000 (naming rights) + ($41,000,000 x 30 years of annual revenue) + ($3.5 million X 30 years of non-game revenue) = $1.57 billion over the total life of the lease.

So the Colts put in $137,000,000, they get back nearly $1.6 billion and they don’t want to contribute $5 million a year ($150,000,000 over 30 years; less than 10 percent of their total revenue stream) and would rather see your taxes go up.

Oh and this does not even include a $74 million dollar loan the Colts took out a couple years ago to make that $100,000,000 contribution.  Which by the way, the Colts did not float the bonds on their own, they used the City of Indianapolis’ good credit to do it.  That means the $74 million loan is at the municipal interest rate of 5.9% as opposed to the market rate of 8-10%.  So they’ve saved millions in interest on your good name, but they don’t want to pay $5 million to help keep the lights on.

Way to go team.  I wonder if it’s too late to become a Patriots fan?

  • Think Again

    To answer your last question: yes. It’s always too late to become a cheating Patriot.

    Your math sounds about right to me. Polian was the architect of it all. His body language at the legislative hearing last week said, basiclaly, “don’t eff with me.”

    Which we should promptly ignore.

    Fuzzy math is nothing new for NFL teams. One slight correction: the loan they took out a few years ago, is being repaid, at bonded interest rates. At the time of the loan, they could’ve gotten a decent regular-market rate, below 8%. But the bonded rate saved them money. I’ve got no problem with it.

    If you calculate the money they saved by using the city’s bonding rate, over the term, it’s…ready for it? About 5 million.

    Reminds ya of an ungrateful child, doesn’t it?

  • http://www.hoosiersforfairtaxation.com Melyssa

    Ogden proposed a solution over at OgdenOnPolitics.com
    .
    The solution? Bankruptcy. It’s an honest answer at a time when we most need it.
    .
    We’ve got to break out of the way we’ve done business in the past and the best way is to start over with a fresh slate.
    .
    If Ballard has any leadership ability whatsoever, he’ll lead the charge to propose bankruptcy.

  • John Howard

    What ‘We are losing money’ means when a team owne says it is ‘I’m not making as much as the other team owners.’

  • pascal

    And,so, all will be coffee and doughnuts if these sharp practioneers come up with the $5,000,000? Love to play shell game with lawyers-you don’t even need shells!

  • Taxpayer 834512

    You lost part of me and some other people on Obama, Abdul. But, whatever the heck you are, writer, broadcaster, “opinion” guy- you reap more info than we get from most other sources. From seeing you and/or Chris at darn near every major political and civic event I’ve been able to make over (three?) or so years, I think it’s called hard work.
    .
    Thank you again. We’re lucky to have you as long as we do.
    .
    Too darn bad the Colts aren’t getting enough return on their investment to cough-up 5M, huh?

  • Wilson46201

    What’s Governor Mitch Daniels proposed solution for this financial crisis? The State of Indiana built the new stadium — what’s his idea to pay for its continued operation?

  • Wayne Kirk

    If your numbers are accurate, what is happening is criminal–totally criminal and insulting!

    Just wait until the public hears about this deal…

  • KarenK

    I am sitting here LMAO at the thought of just not paying for that hulking monument to greed and excess…Is there a way to do that? Just let it become a repo like much of the rest of Marion County…..

    I know, I know the city’s credit rating would go down and it would become harder and costlier to borrow….Good….quit borrowing is my answer to that question.

  • Taxpayer 834512

    KarenK for Mayor

  • John Howard

    The governor took the burden of the construction finance off of the city’s plate, leaving the CIB with a much smaller ‘problem’ for which to find the funding.
    .
    Not having taken that action, we can only guess how much worse our financials would be today.
    .
    If only Barton’s guys hadn’t given away the farm in the first place, we’d be in much better shape. What a legacy to leave behind.
    .
    It sure looks like the old Mayor and the CIB had their Ponzi scheme yanked out from under them in 2007. The crazy bookkeeping might have continued on for several more years before it was discovered, and been much worse.

  • http://bigdawgtales.blogspot.com/ BigDawg65

    I really don’t have a problem becoming a Bears fan again as I have been one more of my life than a Colt’s Fan….Let Jimmy boy take them to LA. Maybe they will put pigskin flooring and a $2000 toilet in his office there also to match his one in Lucas. Bye Bye Colts as the Stadium is a great place to watch college football so let’s add to Circle City Classic and Bring ND,IU, Purdue and other games to Lucas. Oh and the Pacers can work out a deal and will.

  • Greg

    Wilson, stop posting. You only show how little you know, or how partisian you are. This is neither a Dem or Rep issue. Combined, they are all in this together. This particular issue was all a product of our beloved past mayor. Daniels was only a willing partner in the deal. Peterson and his evil lot own this, lock, stock and barrel. Unfortunately, our new mayor, green, inept or lacking in courage, is not up to the task he has before him. The hole is deep enough. Stop digging. Get rid of all those who have been on the CIB board for more than one year. They as well are either corrupt, or inept. If they cannot make it, then bank bankruptcy is the answer. At least people will gain some degree of respect for Indianapolis as a city with courage in the face of a financial mess. Time to take away the public subsidy for the chosen few in this city who want to maintain their power. Look at the membership of our major boards. Appointed all. Quite an inbred group. What do you eventually get with inbreeding? Right, now you have it.

  • Greg

    Oh, forgot. Thanks Abdul for an excellent post regarding the numbers. It is refreshing to work from real data. With this we can focus on the issue and not allow emotions to carry the day. Thanks.

  • Former Colts Fan

    With math skills like that Bill Polian should get a job working for the United States Treasury Departmant!

  • http://www.ogdenonpolitics.com Paul K. Ogden

    Terrific post, Abdul. I wish you would have been grilling Polian rather than our Senators who were dazzled by his Super Bowl ring and didn’t even bother to ask if the Colts’ would actually make the $5 million contribution Kenley claimed was part of the deal.

  • http://www.ogdenonpolitics.com Paul K. Ogden

    Just to reitterate…your analysis assumes they actually made the $100 million dollar contribution. As been pointed out before, the $100 million claim is nothing but smoke an mirrors.

  • Think Again

    Someone needs to ask Polian publicly, to detail the $100 million. S-l-o-w-l-y.

    As for fault, it is worth paying attention so that it does not happen again:

    About 75% of the Pacers’ current dilemna is due to decreased ticket/event revenue, which is due to the economy. And thuggish Pacer players who’ve lost the public’s confidence…I’m not sure it matters which came first or worst, frankly. It behooves us to remember, that the Pacers, as a small-market team among NBA cap cheaters like The Lakers, has little margin for error in its cashflow. Four successive post-Reggie seasons, including the Detroit mobscene, have done more to their bottom line than anything. The economy chipped in here lately…

    Most of Lucas’s problem, tho, is shoddy dealmanship. And most of that is put squarely at the feet of the Republicans, who demanded that Bart Peterson not claim a “victory”, and demanded that he surrender control of the construction/operations scheme, including cashflow management.

    Lest we forget, in the middle of it, one of the larger subs, Frank Irish Co., went belly-up, and the state’s response to that was costly, tardy and stupid.

    They had zippo experience in this type of deal structure. And it showed.

    Rewriting history won’t help. We’d likely be in trouble if Lucas had been funded the old way…just not nearly so bad.

    It amazes me that Mitch has dodged most of the blame for this, and has avoided much of the public debate. He sent Kenly into the frey, and Kenley’s typical repsosne has been confusing and multi-leveled.

    After all, not every state senator can claim a Harvard business degree and, single-handedly preside over the demise of a family grocery business. It’s the Harvard bling that distracts most.

    Not me.

  • moneyguy

    Lets not forget the stupidity of putting a retractable roof on the stadium. The huge cost for it was just a boy toy, it truly serves no purpose since it will only be open a couple of times a season. I’m sure just opening and closing it is not cheap and has to be a pain to maintain.

  • John Doe

    The more these greedy folks continue to support more taxpayer fleecing, the more I say it is time for the City of Indianapolis to just declare a bankruptcy and take the horrible Peterson contract to a judge. Let the judge re-write the contract so that the Colts get nothing in terms of ad revenue, naming rights, and non-Colts events _until_ a certain threshold is reached. That threshold would be what it takes to run LOS in the most frugal way possible (ie: CIB can just go out and hire in a bunch of insiders and pay them $100K/year for make work jobs). Then after that threshold is reached, give the Colts every single dime after that.

  • Shorebreak

    Here’s the plan:
    Someone start printing up flyers showing names and addresses of the folks who draft the CIB bailout, and the recipients who will see revenue streams as a result. Start putting them up at unemployment offices and other state and city agencies. Write the follwoing at the top:
    .
    .
    We cannot help you because political leaders decided to raise taxes to benefit wealthy folks instead of lowering taxes to help make your life easier.
    .
    These are the people who took your money: xxxxxxxx
    .
    And these are the people who are living comfortably with your money: xxxxxxx
    .
    Good Luck

  • Greg

    Shorebreak, you are spot on. Time for accountability. Bring them out from behind the curtains.

  • Wayne Kirk

    I love that idea Shorebreak!
    We need to start protesting in front of their homes.

  • Concerned Taxpayer & Citizen

    I say file bankruptcy! Let the Colts leave! Hell, MAKE the Colts leave.
    The stadium is used mostly for other things anyway, not Colts games. But of course “the nose” gets the money for it.

  • Taxpayer 834512

    Aye to SB’s idea. Who were these people? Who thought the Colts were in need of “up to 3.5M for non-game events”?

  • John Howard

    If the LOS holds off on a date with Controlled Demolition Inc. for 20 years, at 5 ‘opens’ a year, that puts a price tag on each one at $1,000,000 (not factoring any of the maintenance and/or repair cost).

    Dems can blame Mitch, Repubs can blame Bart if they want but the bottom line is too damn much was given away to appease the greed of Jim Irsay. That was the CIB’s fault and they clearly – CLEARLY – were inept and knowingly signed up to terms that they knew would the CIB bankrupt.

    There’s plenty of cash flowing through the system, the problem is almost none of it goes to the CIB. Can there be ANY doubt the deal makers always figured on tapping the tax payers down the road when the house of cards collapsed?

  • Dianne

    I have an idea-why don’t we let the people who truly use the venues such as the colts’ fans and the pacers’ fans pay the bill with ticket prices and the food/drink at the events and leave the tax payers alone. Let the fans who actually go to the games foot the bill along with taking some of the ball players’ salaries to help foot the bill for Lucas stadium. you know in 43 years of my life as a hoosier, i have been been to the convention center once. I was born and raised hoosier but I root for the local high school sports more. Pro ball players make too much money for their couple hours of fame.

  • Shorebreak

    Dianne – the problem with your suggestion is that when you add all of the costs into ticket prices and concessions, it’ll price a fair percentage of the fans out of the game.
    .
    To me, this is an example of the dog standing on a bridge looking at the reflection of the dog below with a bone in his mouth. The Colts already had a stadium. They got greedy and snatched up another one, and now they’re gonna be further behind than they were 3 years ago – if the mayor and the other elected officials do the right thing and say “no new taxes for CIB”.
    .
    FYI – I don’t want to see anyone fail in honest business or government. I just want to imprison all of the folks who used government or influence to take our tax dollars as a means to finance or benefit private industry.

  • http://none Mauri

    SB: Most fans are already priced out of the game. Who wants to go see a bunch of second rate basketball players when they can go to a Butler or Purdue or IUPUI game or local high school game and really see competition and skillful play at a reasonable price.!!!

  • Robert – NW Side

    -
    “I just want to imprison all of the folks who used government or influence to take our tax dollars as a means to finance or benefit private industry.” — Shorebreak @ 27
    -
    Shore, sounds good to me. This solution would, of course, need to include members OF government who willingly went along with this boondoggle.

  • IndysOwn

    Missing one important point:

    The Colts left about $200 million on the table.

    They were promised – by Mayor Goldsmith and Pat Early – that they would receive $30 million a year every year starting in 2005 until the lease ended in 2012. Guess what? That means they would have collected our money and then could leave for another city, with us having nothing to show for it, except for a $210 million payment.

    The Colts left A LOT of money on the table. Sorry. It’s true. Check the original star story.

  • Bart Flies

    Institutional Memory:

    1. Kenley and Daniels knew about this problem when they took over the project. EXTREMELY well documented. I’ve heard Kenley say, “we found out about this with a week left in session.” Some excuse. They’ve done more in a day over there. Remember riverboats in ’93?

    2. Kenley and Daniels ignored it. When they took it over, they needed an excuse. Daniels’ regional tax was a good one. But they also said they could do it cheaper and quicker than Bart could. They claimed Bart padded his budget with this “operating cost.” They ended up skimming off costs left and right, so they could say they were doing it cheaper. They even flirted with taking out the retractable roof. Turns out that Bart’s numbers were right.

    3. Why did Kenley and Daniels ignore it? They figured they would be screwing BART, not one of their own.

    4. I’ll actually defend Ballard on this one. This is not his fault. He hasn’t been anything close to a leader, but it’s not his fault.

    5. The sad thing in all this is that Bart had a way to pay for all of this, but Kenley and Daniels didn’t want Bart to get away with not raising taxes.

    6. You broke it, you bought it.

    I am having so much fun watching them squirm. Wait until the City-County Council…

  • Bart Flies

    BTW, let’s just say this thing passes…(which is no guarantee).

    This goes before the City-County Council. If Melyssa and the Chicken and the Bart Lies and the Tea Party Party don’t show up and make it a circus like it was in 2007, then you’re all hypocrites.

  • John Howard

    Bart Flies doesn’t apparently like citizens taking an interest in their government. But the comment made sense once I considered what flies are drawn towards.

  • Scott

    Someone correct me if I am wrong, but it seems to me that I recall reading back when all of this stadium financing started that $50 million of the Colts’ $100 million was actually from the NFL. If that’s the case, and $48 million was from a co-called termination of lease, then Colts’ contribution is $2 million.
    I can’t seem to find any info on that anywhere.

  • Scott

    Just found some info. Apparently it is a loan from the NFL from some construction fund they have called G3 Program. Still a little disingenuous to say they are contributing $100 million when it is actually half of that. Broken lease? Please.

    The Colts will contribute $100 M, with $33.3 M coming from a G-3 stadium loan from the NFL.
    http://law.marquette.edu/cgi-bin/site.pl?2130&pageID=3463

    http://www.sportsbusinessdaily.com/article/95034

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