A month or so ago I was invited to the Fox 59 studios to debate local political blogger and attorney Chris Worden in regard to the Pacers bailout. I was in favor of it—under the precondition that the Capital Improvement Board and Mayor Ballard take a firm stand against the Simons, and negotiate the terms of the loan in such a way that a temporary investment turns a long-term profit.
I was not in favor of a bailout which gave Herbert Simon, who is worth 1.1 billion (Forbes), an interest-free loan of $30 million and an additional $3 million of walkin'-around money.
While the editors at Fox studios did a brilliant job of editing out my 13 minutes worth of “um’s,” “ah’s,” and general discomfort, they also chopped out my more aggressive comments in regard to Mayor Ballard. I called him a coward after spewing off a series of profane insults about his mother.
Or I just challenged him to stick up for the city against the Simons and call their bluff, while managing to negotiate a deal that keeps the Pacers in town at a profit. I can’t really remember.
But today the terms of the agreement were released, and it seems that the CIB (and all of Indianapolis, as a result) is going to get a beat-down the likes of which not even the Pacers have seen in the last decade.
That is the last time I set aside my political partisanship and believe that the Mayor is going to act in the best interest of the city. I admit that I still have a lot to learn about local politics, but I convinced myself that since prudent spending was the entire foundation of Ballard’s rise from obscurity to office, he would be able to negotiate a reasonable bailout of the Simons.
Instead, the Simons pulled off a sheepish, gluttonous deal that not even J. Wellington Wimpy from “Popeye” could have haggled. Herb Simon will gladly pay Mayor Ballard Tuesday for 30 million hamburgers today, without collateral, interest or precondition.
But they might pay it back. If they have it. And it’s convenient. And they feel like it.
The arrangement is lopsided, to say the least; even IF the Pacers manage to become profitable, pay back the loan, and stick around for a few years. The terms are baffling: Indianapolis gives the Simons a $30 million loan without interest, and pays another $3 million for a new scoreboard and some carpet. In return, the Pacers might stick around two or three more years. And since there is a 90% probability of a lockout in the 2011 season, the city is in effect going to pay the Simons $33 million for 41 more home games. And then the world is ending the following year. Fiddlesticks.
No one wins, except for the Simons, who reserve the option of running away gaily from the Indianacolypse (why isn’t that the name of a death metal band yet?) with a big burlap sack full of our cash after a couple more mediocre seasons.
Even if the CIB, which just received its own bailout from the State in 2009, is in a position to be loaning that kind of money, the Pacers could still leave in another three years. If the settlement isn’t going to lock up the Pacers indefinitely, I would rather just get it over with and have them leave now, so that we could use that $30 million to bring in a winning franchise, or invest in the arts or the thousand other things that can bring revenue downtown.
In the debate with Worden, one of my arguments was that the NBA does not need to create a demand for basketball in Indiana, so that with even semi-competent leadership, the sport could easily become profitable to both owners and taxpayers alike. However, any incentive the Simons once had to show some competence has just been eliminated.
Mayor Ballard released a letter stating the importance of the agreement, but it lacks any practical information about the terms of the bailout, and does not address the most obvious questions. The Simons have somehow managed to skate through this whole situation without giving any real insight into why they’re losing money, what can be done to cut their budget to stop the bleeding, or what the $30 million is going to go toward, other than “operating costs.” Something stinks.
The letter cites that some $55 million dollars of income to the economy would be lost without the Pacers in town—but there are not any details given as to the source of this projection or what assumptions it makes.
It certainly doesn’t assume a new franchise, for which Indianapolis would certainly become the obvious top contender. A great empty stadium, an enthusiastic sports town and hundreds of thousands of angry basketball fans who would show up every night, if only to stick it to the Simons. It also doesn’t state if the study used for that projection assumes a season like 2010, where tickets could hardly be given away. It also may assume that all those basketball fans are just going to stay inside and mope over the Pacers team that no one has cared about for the last half decade.
The most suspect and irritating aspect of this entire negotiation has been the Simons slippery evasion of any and all comment or insight. If they are not to blame for their own profit loss and it truly is the city’s responsibility to pick up the tab, then we can deal with that. But it’s humiliating for our politicians to buckle at the knees and simply take them at their word that they need our money. At the very least, I expect the loan/bailout/bullying to be handled the same way the Simons—or any lending company— would with one of their lease agreements.
Show us the books, and ask nicely. Then we’ll see what we can do. With interest.
If not, you can try to find another city to lose in. It takes a place with a very special affinity for basketball to put up with the kind of embarrassment and failure the Simons have thrown at us. There are other NBA franchises that need Indianapolis a lot more than Indianapolis needs the Pacers.