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Thread: Tbird analysis: A discussion of Pacers ownership, now and in the future

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    Default Tbird analysis: A discussion of Pacers ownership, now and in the future

    In 1983, at the urging of then mayor of Indianapolis Bill Hudnut, the brothers Mel and Herb Simon bought our beloved Pacers, and with that decision and with the help of others along the way began a revitalization and rejuvanation of downtown Indianapolis that continues today. There is little doubt that these Indiana loyalists and business titans helped usher in a future that made Indianapolis a destination spot for sports entities around the country and even the world. Without them, the landscape of sports in the Hoosier state would be much different today I believe.

    27 years later, Indianapolis is a different place, and the NBA landscape is much different as well. Time waits for no one, and it hasn't waited for the Pacers owners. Mel Simon is gone now, and his brother soldiers on owning a team that once was a labor of love between two close siblings in the prime of life, but now just must feel like a burden. Hemorraging money, dwarfed by another sports franchise right down the street, a small market team in a struggling league, surrounded by a once rabid fan base that is now mostly infected with apathy. Add to that an economic downturn and a society that in general is less patient and more demanding for results, trapped in a system that makes making those type of quick turnarounds more difficult than ever. Doing this alone at his age must make our owner wonder why he is doing this.

    Herb Simon has no family members interested in continuing the legacy. His nephew David has never been a big fan or involved with the sports franchise, instead focusing his talents and interests elsewhere. Herb is in his 70's now, and he must know by now as he looks at a life nearing sunset that the team he owns needs a solid future than he cannot provide for it in perpetuity. Loyal to the land that he truly loves, there is no doubt in my mind that Herb will never ever move the Pacers to another location....I believe him and the others when he makes statements to that effect.

    But that doesn't mean that he won't sell the team to someone else. Assuming that the Pacers staying in Indianapolis is as important to him now as it was in 1983, I think we can infer some other basic ideas I have to be true.

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    I believe that Simon is greasing the skids to make the Pacers look more attractive for a prospective buyer that would keep them in Indianapolis. When you look at all moves and decisions both basketball and business related from here on out, I recommend looking at them through that prizm instead of how you may normally judge them. It is for this reason that I have alot of trouble complaining much about what Bird does on a day to day basis....I expect there is alot more going on and many more limitations set on Bird than we all know about. For instance, I believe that Bird would likely fire O'Brien if it were up to him, but that is not being approved from above, as it would mess up slightly the financial plan in our owner's mind.

    1. If you had a plan to sell the team, wouldn't it be smart to cut payroll as much as you could to make your team more attractive to a potential buyer?

    Of course it would! A new owner would want to be able to buy it with as much of a clear balance sheet as possible. Both from a business standpoint and a basketball one, you'd not want to inherit a bunch of long term committments to players and personnel that you didn't choose yourself.

    The Pacers will have their payroll drastically reduced after this next season, as over $30,000,000 of payroll I believe will be eliminated with the expiration of salary committments of our highly paid veterans Ford, Foster, Murphy, and Dunleavy.

    The Pacers scouts, assistant coaches, head coach Jim O'Brien, and President Larry Bird will all have their contracts up as well, enabling a new owner to start fresh with his own people from a management and organizational standpoint. This is exactly what you'd do if you wanted to make your team look as attractive as possible to a potential buyer.

    2. If you were planning to sell the team but have it stay in Indianapolis, wouldn't you also want to get as attractive of a stadium deal as possible?

    The Pacers playing hardball with the Capital Improvement Board is absolutely the right thing to do from their perspective. A potential new owner doesn't want to be hamstrung with a bad lease and lots of expenses he can't control, you'd as a seller want to make it as easy as possible for a buyer to look at his new potential investment as a great opportunity, so doing the hard work for him now only makes sense.

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    What are some other moves you might make if you were the Simon's and wanted to discreetly get the team sold without having to openly put it on the market?

    One thing you'd want to do is try to cultivate a buyer who you truly knew would keep the team here and represent the best of the city. How could you do that?

    First you'd no doubt be working with the league office, and particularly commissioner Stern, to identify and convince whomever you deem worthy that this would be a good thing to do from both a business and civic standpoint. You would definitely want to sell to an owner that was stable financially, had deep Indiana roots, and that would be approved by the league.

    Speaking of Stern, he could really help us with this St Louis Spirits/ABA problem. I know all of those who read PD know what I am talking about. Wouldn't it be a huge burden off of our franchise if the league itself (out of tv revenue or some other source) helped pay that ransom that our team and the three other franchises have to pay each year? I actually look for that to happen in someway soon. Not sure how exactly, but I think Stern will find a way to help some of the small market ABA franchises somehow ease that burden.

    Next, as discussed earlier, you'd want to make the product as debt free as possible, so the new potential investor would look at owning us as a greater opportunity financially than it might look presently. You'd want to get as many new sponsors and income flow going as you could as well. You'd want to have as few long term financial committments as possible.

    Finally, you might consider selling a PART ownership to your new investor, both to alleviate the present day financial burden from yourself, and to sort of ease in whomever this ends up being to eventually becoming sole owner upon your death, or whenever you see fit to finally give up the reins entirely.

    This "owner in waiting"/investor scenario has yet to take place yet that we are aware of, but I think in the next few months or so it could begin to happen. A slow turnover process in our ownership makes too much sense to not happen. Depending on who it ends up being, this could be one of the greatest things that happens to our beloved Pacers, or it could be one of the worst....in this, we just have to trust. That is why it so important to do these things and make decisions at such a deliberate pace. Whether this person actually becomes a part owner before buying in fully remains to be seen, but I definitely think there is a person out there preparing as we speak to own us.

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    To me, this is the coup de grace of the much discussed "3 year plan". First, rid the team of it's bad image players.

    Secondly, establish a clear chain of command with an Indiana legend running the basketball side, and a true businessman and mover/shaker running the business side in Jim Morris.

    Thirdly, continue to purge as much debt from the franchise as possible whole trying to remain somewhat competitive enough to keep a flicker of interest going.

    Fourth, only make small long term investments in people, or if you make a big committment financially to someone, make sure it is someone really worth it (Granger)

    Fifth, solve the major business problems with the city involving the fieldhouse.

    Basically, we look on track to get all of that accomplished by April of 2011. So next April, we will be an extremely attractive franchise to own for a man who loves basketball and has deep ties to Indianapolis: we will have alot of roster spots open and plenty of cash available to spend, whoever this is will likely have a good idea from the commissioner what the future outlook for a CBA business model will look like, whoever this new owner could be will be able to not pay any severance pay to former employees and will be able to bring in fully his own people to run the team. And this person will have a favorable lease on Conseco Fieldhouse, the best venue in the NBA.

    On top of that, he will be viewed as a savior to a beloved franchise, if the story is sold the right way, gaining much needed good will that he will need as the years go by.

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    Anybody want to guess a name?

    I think Jeff Smulyan makes alot of sense. A very rich man, Smulyan owns Emmis Broadcasting, among other companies around the globe. A Shelbyville native, he has had a long interest in sports and in fact did own the Seattle Mariners for a short time many years ago. I believe Smulyan is from Shelbyville, and I think he actually still lives there.

    Smulyan would be a new generation of owner, one that is media savvy and more sports loving that the old school hands off style we've had for 27 years now. Not as wealthy as the Simons, Smulyan would likely be more involved and caring in day to day operations of the team, which could be good or bad I suppose.

    I could definitely see a scenario where Larry Bird remains and has a small ownership part of the team as well, along with some various other small investors to help foot the bill.

    New ownership is coming to Pacer land eventually. Tomorrow waits for no one, not even a billionaire named Simon. As the true franchise diehards, we need to think about what this might mean for our team both short and long term. I guarantee you, what Herbert Simon does this spring and summer is alot more important and vital than anything Larry Bird and Jim O'Brien do.


    As always, the above is just my opinion.

    Tbird

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    Default Re: Tbird analysis: A discussion of Pacers ownership, now and in the future

    Well written, as always.

    I too have been thinking a Smulyan/Bird ownership group could be a possibility. I don't know if they have a relationship or not, but they are two names that make sense.

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    Default Re: Tbird analysis: A discussion of Pacers ownership, now and in the future

    There was a quote from Bird's press conference that I interpreted as a signal of this - he mentions that by the end of next season pretty much everybody in the Pacers organization will be out of contract except a core of young players. Let me look it up:

    All the coaches, all the scouts, myself, everybody will be up (after next season). Herb (Simon) will have the money for free agency and a core group of young guys so that's a decision he'll have to make. Whether we like it or not we'll have to live with it.

    So yeah, if they strike a favourable deal in regards to the arena, they'll be an attractive franchise for a buyer.

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    Default Re: Tbird analysis: A discussion of Pacers ownership, now and in the future

    A good summary of the situation. Re the flickering interest of formerly rabid Pacer fans, I've talked with friends who still live in Indy and consider themselves lapsed Pacer fans over the past year about their waning interest. It's not that you can't be a Colt and Pacer fan simultaneously, but I think they fall into the category of "distracted". So many basketball fans in Indy have lost their way and have no idea of who's on the Pacer roster outside of Granger, Hansborough, and possibly DunMurph and Hibbert. They have little or no idea of what the Pacers are up to. But when I bring up how precarious the Pacers' financial situation is and the real possibility of Indy losing them, they seem genuinely surprised. Here's hoping that we can recapture these folks and not have to wait until Manning retires to "re-enlist" them as Pacer fans. The 5 point plan as outlined by T-Bird sounds great, but will it be enough for the lapsed fans?

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    Default Re: Tbird analysis: A discussion of Pacers ownership, now and in the future

    While this all sounds good, some things don't quite point to it...

    1) In the NBA, if you are serious about it, is player payroll really a completely discretionary cost? It seems to me that, while being over the cap is a handicap, being far under it means you probably aren't fielding a team that is competitive - or, at least, that will remain well under the cap when the current underpaid players need to be paid better in order to stay. I think franchises find themselves WAY under the cap only every so often, and I think the franchises that are constantly a rotation player salary or more under the cap aren't really getting the best personnel.

    This would mean that savings on player salaries (even, as some snidely infer, to make up the $15M operating cost of the Fieldhouse) is false savings in the long run. New ownership would have to be aware that a current low payroll is not an ongoing state of affairs.

    2) The renegotiation of the Conseco operations costs was not driven by the current environment but by the coming due of a clause written before 1999. An intelligent business takes advantage of that clause in ANY situation other than one where it would be somehow clear they could end up paying MORE of the costs, which is hard when they were already paying all of them.

    3) The steps outlined are steps required for any business to put itself on sound financial footing, whether or not it is planning to be bought out or simply keep operating.

    4) The more attractive the profit potential of the Pacers, the more likely they are to be bring a buyer who wants to move them, because the penalty clause is affordable (leveraged, if you will) by the now-profitable team operations. So, just like a good company getting rid of its debt and finding itself the victim of a leveraged buyout, this does not necessarily mean the field of buyers would be limited to people who would actually keep the team in Indy - remember the empty promises that were made to Seattle.

    5) If the team remains merely competitive (or less, see this year), the local fan base becomes more disaffected. A local buyer would likely find this a turn-off rather than an incentive. I don't know how many Simons there are out there that will do what they did in 83 for a team with the record at that time.

    While I think it is true that most of these actions would make it easier to find a local buyer, I think they are quite independent of that thought process. Simplicity suggests that getting the franchise healthy from personnel and financial perspectives is the pure goal, and once they are healthy they become something Herb can enjoy for many more years rather than having to sell immediately.
    BillS

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    Default Re: Tbird analysis: A discussion of Pacers ownership, now and in the future

    Quote Originally Posted by RomanGabriel View Post
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    So many basketball fans in Indy have lost their way and have no idea of who's on the Pacer roster outside of Granger, Hansborough, and possibly DunMurph and Hibbert.?
    I don't worry about them, I worry about the ones who clearly think the current team is still full of guys shooting up downtown and being pulled over for passengers burning funny herbs. Your guys will come around as soon as anything positive starts to happen. The other ones have to correct their cranio-rectal inversions first.
    BillS

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    Artificial Intelligence wintermute's Avatar
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    Default Re: Tbird analysis: A discussion of Pacers ownership, now and in the future

    Quote Originally Posted by BillS View Post
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    1) In the NBA, if you are serious about it, is player payroll really a completely discretionary cost? It seems to me that, while being over the cap is a handicap, being far under it means you probably aren't fielding a team that is competitive - or, at least, that will remain well under the cap when the current underpaid players need to be paid better in order to stay. I think franchises find themselves WAY under the cap only every so often, and I think the franchises that are constantly a rotation player salary or more under the cap aren't really getting the best personnel.

    This would mean that savings on player salaries (even, as some snidely infer, to make up the $15M operating cost of the Fieldhouse) is false savings in the long run. New ownership would have to be aware that a current low payroll is not an ongoing state of affairs.
    i don't think tbird is saying that a low payroll will attract a buyer. rather, it's the blank slate - cap space for the new management to fill as they like. most importantly, no overpaid players with long contracts hanging like millstones on the payroll.

    as to your other point, i guess you're right, these are steps any sensible business would do. so it might not necessarily mean anything. i agree with tbird though that the timing of all these factors (simon's age, cleaning house, etc) make his inference quite possible.

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    Default Re: Tbird analysis: A discussion of Pacers ownership, now and in the future

    Quote Originally Posted by wintermute View Post
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    i don't think tbird is saying that a low payroll will attract a buyer. rather, it's the blank slate - cap space for the new management to fill as they like. most importantly, no overpaid players with long contracts hanging like millstones on the payroll.

    as to your other point, i guess you're right, these are steps any sensible business would do. so it might not necessarily mean anything. i agree with tbird though that the timing of all these factors (simon's age, cleaning house, etc) make his inference quite possible.

    Yes, that was my point exactly. We seem to be preparing ourselves to be more attractive to potential buyers, with our players cap situation just a nother part of a many pronged plan.

    I just think that we need to all keep our eye in the ball here. Mr. Simon is not a young man, and it appears the younger generations of Simons aren't interested in being involved with a sports franchise at all. A new owner of the Pacers is inevitable, and there are alot of things happening that lead me to believe it could happen sooner rather than later.

    We need to hope I am right and a plan is at least somewhat in place for another prominant local owner to come to the forefront, because if not we are going to be a prime target for deep pocketed and aggressive cities, such as Kansas City and Las Vegas.

    If that happens, draft arguments and rants about Jim O'Brien will be the least of our concerns.

    Tbird

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    Default Re: Tbird analysis: A discussion of Pacers ownership, now and in the future

    Quote Originally Posted by thunderbird1245 View Post
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    We need to hope I am right and a plan is at least somewhat in place for another prominant local owner to come to the forefront, because if not we are going to be a prime target for deep pocketed and aggressive cities, such as Kansas City and Las Vegas.
    Kansas City can't even fill the stands for its two pro franchises, two of the worst in sports at the moment. Sure they have the Sprint Center but the KC metro area isn't much bigger than Indy's.

    ANd if any team is moving to Vegas, it will be the Kings, for obvious reasons.

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    Default Re: Tbird analysis: A discussion of Pacers ownership, now and in the future

    Here is an old article I found from Feb 2000 about Bird's interest in buying the Pacers. The part about being able to get a group together in a day was about the Celtics but I wonder if it is true for the Pacers too.

    http://www.nytimes.com/2000/02/22/sp...l?pagewanted=1

    IN THE NEWS: INDIANAPOLIS
    IN THE NEWS: INDIANAPOLIS; Bird Doubts Being An Owner
    Published: February 22, 2000
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    Larry Bird, one of the greatest players in Boston Celtics history, said yesterday in Indianapolis that he would prefer owning the Indiana Pacers.

    But Bird, who has announced plans to leave as coach of the Pacers at the end of the season, said he did not anticipate becoming an owner of either team.

    ''The Pacers are not for sale, the Celtics are not for sale,'' he said. ''I know that. I knew that eight years ago that they weren't for sale. You can't buy something that's not for sale.''

    The Boston Globe reported Sunday that Bird had indicated interest in buying the Celtics.

    ''I could get people together to buy the team in a day,'' Bird told the newspaper. The Celtics' owner, Paul Gaston, has said publicly that the team is not for sale.

    Bird has been offered an executive position in the Pacers' front office.

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