Joined
·
3,403 Posts
In Colts talks, Indy is facing same fate as other markets that lack huge corporate, TV presence.
By Matthew Tully
[email protected]
From the moment Mayor Bart Peterson and his squad of stadium negotiators first sat down with Indianapolis Colts officials, they had little chance of overcoming a host of built-in disadvantages.
The mayor's plan as he walked into the team's Northwestside complex in 2002 was to persuade the team to eventually sign a long-term lease likely including a new stadium.
But the city lacked the attractions NFL teams love -- a huge television market, a massive fan base or a deep roster of Fortune 500 companies and wealthy locals eager to fill pricey club seats and luxury suites.
The city had no leverage.
And without that, Indianapolis taxpayers were likely destined from Day One to pay more for a new stadium than their counterparts in big-time NFL markets.
In fact, a review of financing plans for the NFL's 10 most recently constructed stadiums found taxpayers in the five larger markets paid about 45 percent of the bill. But taxpayers in the five smaller markets -- including Cincinnati, Pittsburgh and Denver -- paid more than 80 percent of the cost of new stadiums.
"Everything in negotiations is about leverage," said Indianapolis attorney Fred Glass, a close Peterson ally who led the city's negotiations with the Colts. "We had no leverage to say, 'Well, if you don't do a deal, we won't do a deal and you won't be able to be on TV in Indianapolis.' "
Smaller markets offer less of the revenue -- from local TV and radio deals, suite sales and sponsorship agreements, for instance -- that helps teams stand out in a league that shares billions of dollars in national television earnings. That, along with the desire of cities such as Indianapolis to have big-city attractions, gives teams muscle to ask for more.
"It's not an accident," Glass said, "that the smaller markets tend to have the less-positive lease arrangements."
Under the stadium agreement the mayor and Colts owner Jim Irsay finally reached late last year, the Colts would contribute $100 million to a stadium project costing about $625 million. But the contribution comes only after the city pays the team $48 million to break its current lease.
As state lawmakers near completion of a plan for financing a stadium, many critics question whether the Colts are giving enough. Others say the deal is an example of how the NFL takes advantage of cities eager to build their reputations and economic engines.
There is another, fundamental explanation for why teams get better deals in cities such as Indianapolis, said Allen Sanderson, a sports economist who studies stadium issues at the University of Chicago. He pointed to a rumor that has found its way to Indianapolis and a host of other cities as they moved to build new stadiums -- that teams in those cities were headed to NFL-free Los Angeles, the nation's second-largest city. That perpetual vacancy and its promise of vast revenues for any team that fills the spot further erode the bargaining power of other cities.
"The league presumably has more leverage in a smaller community because the threat to leave is more credible there," he said.
A fair playing field?
Phil Heimlich has heard all of the arguments about the financial challenges many teams face. But that doesn't make the Hamilton County, Ohio, commissioner feel better about the stadium deal his county reached with the Cincinnati Bengals nine years ago.
Taxpayers paid about 94 percent of the cost of the $453 million Paul Brown Stadium. The team, meanwhile, also receives money for nonfootball events and concessions, and the county could end up paying tens of millions of dollars for costs incurred on game days.
Heimlich said he was particularly annoyed when the Bengals received $119,000 generated by the Rev. Billy Graham's crusade at the stadium in 2002.
Indianapolis also has agreed to give the Colts money from nonfootball events, and from naming rights, parking and concessions.
Frustrated with their lease, the Hamilton County Commission voted last year to join a lawsuit against the Bengals and the NFL, accusing them of intimidating the county into a sweetheart deal. Heimlich said the league has a monopoly and, with threats to leave cities, uses that power "to extract outrageous lease terms."
A similar lawsuit in Pittsburgh -- among the league's smaller markets, like Cincinnati and Indianapolis -- was tossed out of court. In Cincinnati, stadium critics hope their case will succeed and help other cities.
"One argument the Bengals have made is that our deal is no worse than anyone else's," Heimlich said. "That's not much consolation. A lot of cities got held up."
But some say the lawsuit is political sour grapes. Andy Furman, who hosts a sports radio show in Cincinnati, said callers to his show are largely supportive of the stadium. The general feeling, he said, is: "The stadium is in. It's done. So why don't we just move on?"
The Bengals declined to comment.
In Indianapolis, the mayor and the Colts defend their stadium agreement. They emphasize their deal excludes the financial guarantees for the team that have proven so costly in the current lease. Small market or not, the Colts will have the burden of turning a profit in the future.
"It's all our responsibility," said Pete Ward, the Colts' senior executive vice president.
In the big leagues
In recent years, during a nationwide stadium boom, many negotiations have included a common argument. Consider this sentence from a 1998 Denver Post story, just after voters approved a tax increase for a new stadium: "Stadium backers tried to convince voters that a new tax-subsidized home for the Broncos would . . . ensure that Denver remains a 'big-league' city."
In Indianapolis and in cities such as Cincinnati, politicians and other stadium supporters also have warned that the loss of a team would mean losing valuable "big-league" or "major-league" status.
"We're still a city trying to establish our reputation as a great American city," Peterson said. "And we can't afford the setback of losing the Colts."
Kevin J. Delaney, a Temple University professor who co-wrote the book "Public Dollars, Private Stadiums," argues that both large and small cities pay too much for stadiums. But he said the pain is particularly sharp in smaller markets -- where government budgets have fewer dollars to spare.
The use of the term "big-league city" is an attempt to prey on the fears of taxpayers in smaller markets, Delaney said. Though fans in Philadelphia and Dallas love their teams, he said, they aren't worried about being seen as a backwater if abandoned by a sports franchise.
"But in a city like Indianapolis, it has some resonance," Delaney said.
Still, taxpayers in many top markets have chipped in generously for stadiums. While the New England Patriots and Washington Redskins built their own stadiums, taxpayers in Texas paid about three-quarters of the cost of a stadium for the Houston Texans.
Public spending on new stadium projects is appropriate, NFL Commissioner Paul Tagliabue said, because the venues and teams provide significant returns.
"The team is a significant economic asset to the community and the state," he said of the Colts. "So I think investment on all sides is warranted."
Colts officials have long talked about the struggle of competing while being located in Indianapolis. Across a series of financial categories, the Colts are looking up at other teams.
In 2004, Forbes reported the Colts' annual revenue of $145 million was the fourth lowest in the league, $100 million behind the Washington Redskins. According to Nielson Media, Indianapolis is the 25th-largest television market, behind cities such as St. Louis and Pittsburgh.
The Colts' ticket prices are in the league's bottom half. A list compiled by Team Marketing Report, a sports marketing firm based in Chicago, shows ticket prices across the league generally decrease with market size.
All of these statistics were sitting on the table when city and Colts officials formally began their stadium negotiations in late 2002. They played a key role in shaping the deal the two sides eventually reached.
But in the end, stadium backers say, the benefit is worth the cost.
"We don't have to do it," the mayor said. "No one is forcing us to do this. It's our choice: Do we want to be an NFL city or not?"
By Matthew Tully
[email protected]
From the moment Mayor Bart Peterson and his squad of stadium negotiators first sat down with Indianapolis Colts officials, they had little chance of overcoming a host of built-in disadvantages.
The mayor's plan as he walked into the team's Northwestside complex in 2002 was to persuade the team to eventually sign a long-term lease likely including a new stadium.
But the city lacked the attractions NFL teams love -- a huge television market, a massive fan base or a deep roster of Fortune 500 companies and wealthy locals eager to fill pricey club seats and luxury suites.
The city had no leverage.
And without that, Indianapolis taxpayers were likely destined from Day One to pay more for a new stadium than their counterparts in big-time NFL markets.
In fact, a review of financing plans for the NFL's 10 most recently constructed stadiums found taxpayers in the five larger markets paid about 45 percent of the bill. But taxpayers in the five smaller markets -- including Cincinnati, Pittsburgh and Denver -- paid more than 80 percent of the cost of new stadiums.
"Everything in negotiations is about leverage," said Indianapolis attorney Fred Glass, a close Peterson ally who led the city's negotiations with the Colts. "We had no leverage to say, 'Well, if you don't do a deal, we won't do a deal and you won't be able to be on TV in Indianapolis.' "
Smaller markets offer less of the revenue -- from local TV and radio deals, suite sales and sponsorship agreements, for instance -- that helps teams stand out in a league that shares billions of dollars in national television earnings. That, along with the desire of cities such as Indianapolis to have big-city attractions, gives teams muscle to ask for more.
"It's not an accident," Glass said, "that the smaller markets tend to have the less-positive lease arrangements."
Under the stadium agreement the mayor and Colts owner Jim Irsay finally reached late last year, the Colts would contribute $100 million to a stadium project costing about $625 million. But the contribution comes only after the city pays the team $48 million to break its current lease.
As state lawmakers near completion of a plan for financing a stadium, many critics question whether the Colts are giving enough. Others say the deal is an example of how the NFL takes advantage of cities eager to build their reputations and economic engines.
There is another, fundamental explanation for why teams get better deals in cities such as Indianapolis, said Allen Sanderson, a sports economist who studies stadium issues at the University of Chicago. He pointed to a rumor that has found its way to Indianapolis and a host of other cities as they moved to build new stadiums -- that teams in those cities were headed to NFL-free Los Angeles, the nation's second-largest city. That perpetual vacancy and its promise of vast revenues for any team that fills the spot further erode the bargaining power of other cities.
"The league presumably has more leverage in a smaller community because the threat to leave is more credible there," he said.
A fair playing field?
Phil Heimlich has heard all of the arguments about the financial challenges many teams face. But that doesn't make the Hamilton County, Ohio, commissioner feel better about the stadium deal his county reached with the Cincinnati Bengals nine years ago.
Taxpayers paid about 94 percent of the cost of the $453 million Paul Brown Stadium. The team, meanwhile, also receives money for nonfootball events and concessions, and the county could end up paying tens of millions of dollars for costs incurred on game days.
Heimlich said he was particularly annoyed when the Bengals received $119,000 generated by the Rev. Billy Graham's crusade at the stadium in 2002.
Indianapolis also has agreed to give the Colts money from nonfootball events, and from naming rights, parking and concessions.
Frustrated with their lease, the Hamilton County Commission voted last year to join a lawsuit against the Bengals and the NFL, accusing them of intimidating the county into a sweetheart deal. Heimlich said the league has a monopoly and, with threats to leave cities, uses that power "to extract outrageous lease terms."
A similar lawsuit in Pittsburgh -- among the league's smaller markets, like Cincinnati and Indianapolis -- was tossed out of court. In Cincinnati, stadium critics hope their case will succeed and help other cities.
"One argument the Bengals have made is that our deal is no worse than anyone else's," Heimlich said. "That's not much consolation. A lot of cities got held up."
But some say the lawsuit is political sour grapes. Andy Furman, who hosts a sports radio show in Cincinnati, said callers to his show are largely supportive of the stadium. The general feeling, he said, is: "The stadium is in. It's done. So why don't we just move on?"
The Bengals declined to comment.
In Indianapolis, the mayor and the Colts defend their stadium agreement. They emphasize their deal excludes the financial guarantees for the team that have proven so costly in the current lease. Small market or not, the Colts will have the burden of turning a profit in the future.
"It's all our responsibility," said Pete Ward, the Colts' senior executive vice president.
In the big leagues
In recent years, during a nationwide stadium boom, many negotiations have included a common argument. Consider this sentence from a 1998 Denver Post story, just after voters approved a tax increase for a new stadium: "Stadium backers tried to convince voters that a new tax-subsidized home for the Broncos would . . . ensure that Denver remains a 'big-league' city."
In Indianapolis and in cities such as Cincinnati, politicians and other stadium supporters also have warned that the loss of a team would mean losing valuable "big-league" or "major-league" status.
"We're still a city trying to establish our reputation as a great American city," Peterson said. "And we can't afford the setback of losing the Colts."
Kevin J. Delaney, a Temple University professor who co-wrote the book "Public Dollars, Private Stadiums," argues that both large and small cities pay too much for stadiums. But he said the pain is particularly sharp in smaller markets -- where government budgets have fewer dollars to spare.
The use of the term "big-league city" is an attempt to prey on the fears of taxpayers in smaller markets, Delaney said. Though fans in Philadelphia and Dallas love their teams, he said, they aren't worried about being seen as a backwater if abandoned by a sports franchise.
"But in a city like Indianapolis, it has some resonance," Delaney said.
Still, taxpayers in many top markets have chipped in generously for stadiums. While the New England Patriots and Washington Redskins built their own stadiums, taxpayers in Texas paid about three-quarters of the cost of a stadium for the Houston Texans.
Public spending on new stadium projects is appropriate, NFL Commissioner Paul Tagliabue said, because the venues and teams provide significant returns.
"The team is a significant economic asset to the community and the state," he said of the Colts. "So I think investment on all sides is warranted."
Colts officials have long talked about the struggle of competing while being located in Indianapolis. Across a series of financial categories, the Colts are looking up at other teams.
In 2004, Forbes reported the Colts' annual revenue of $145 million was the fourth lowest in the league, $100 million behind the Washington Redskins. According to Nielson Media, Indianapolis is the 25th-largest television market, behind cities such as St. Louis and Pittsburgh.
The Colts' ticket prices are in the league's bottom half. A list compiled by Team Marketing Report, a sports marketing firm based in Chicago, shows ticket prices across the league generally decrease with market size.
All of these statistics were sitting on the table when city and Colts officials formally began their stadium negotiations in late 2002. They played a key role in shaping the deal the two sides eventually reached.
But in the end, stadium backers say, the benefit is worth the cost.
"We don't have to do it," the mayor said. "No one is forcing us to do this. It's our choice: Do we want to be an NFL city or not?"
