Indianapolis is likely to take over operations at the arenawhere the National Basketball Association’s Indiana Pacers play after the team said it can’t continue to cover annual operating costs.
A deal is expected to be announced within the next 30 to 45 days, officials said.
The Marion County Capital Improvement Board owns the 10-year old, $200 million Conseco Fieldhouse as well as the city’s two other sports venues and convention center.
The move would mean that the CIB would take on roughly $15.4 million in annual operating expenses in addition to paying for the stadium’s capital improvement projects and debt service on its outstanding debt.
The announcement follows months of negotiations between the city and the Pacers as the CIB struggled to overcome its own financial difficulties. Last year, the board warned that it faced a projected $47 million shortfall.
Under the current agreement with the Pacers, the team pays for annual operating expenses and the CIB pays for capital improvements and debt service on its outstanding debt. The team keeps revenue from games and other events held at the 18,165-seat arena.
After cutting roughly $34 million from its $78 million budget and securing new revenue sources from the city and the state, the CIB has not only erased its structural deficit but would be able to take over Conseco operating costs, said CIB president Ann Lathrop.
“The funding that would be made available for this is tied back to the cost-cutting measures that the CIB took throughout 2009 as well as additional revenue sources made available to us through the last legislative season,” Lathrop said.
The new revenue includes a 1% increase in the city’s hotel-motel tax and an expansion of the board’s Professional Sports Development Authority, allowing the CIB to capture tax revenue from four hotels connected to the Indiana Convention Center.
Together, the two revenue sources are expected to generate an additional $11.5 million a year, Lathrop said.
Last year’s cost-cutting measures led to a $4 million surplus, she added.
The state also loaned the CIB $9 million last year — interest payments begin in 2013 and feature a 10-year bullet maturity — and said it would also make loans available in 2010 and 2011.
The possibility that the CIB would take over the Pacer’s annual payments has been on the table since late 2008, Lathrop said.
Last year, as the board warned the Legislature that it faced a projected $47 million deficit, officials said the deficit included more than $15 million in Conseco operating expenses.
“We said at the time that taking over these expenses was a possibility, and we didn’t want to say, we have a problem today and then say, oops, we also have a problem a year later,” Lathrop said.
The Indianapolis Star reported that Pacers officials said if a deal is not reached by June 30, the team would consider leaving town.
“We’re continuing to have vigorous talks with the Pacers,” Lathrop said.
A report in the Indiana Business Journal said that some of the debate stems from the recent opening of the Lucas Oil Stadium where the National Football League’s Indianapolis Colts play. The new stadium is attracting a lot of the events that typically would be held at Conseco, the report said.
In December 1997 the city sold $220.3 million of excise-tax lease rental bonds through the Marion County Convention and Recreational Facilities Authority to finance the arena.
A $275 million expansion of the Indiana Convention Center remains on track, officials said.
Indianapolis Mayor Greg Ballard is considering privatizing the management of the CIB. Last year the city issued a request for proposals from companies interested in managing the board, but the proposal has not moved forward.