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Jim Lefko @jimlefko 1m
Pacers future in Indy now secure with new deal: http://indy.st/1kwOCsn
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Ronnie Ramos @RonnieRamos 1m
BREAKING NEWS: #Pacers, city reach $160M deal to keep team in town for next decade. IndyStar exclusive details: http://www.indystar.com/story/news/2...-indy/7562117/ …
Pacers future in Indy now secure with new deal: http://indy.st/1kwOCsn
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Ronnie Ramos @RonnieRamos 1m
BREAKING NEWS: #Pacers, city reach $160M deal to keep team in town for next decade. IndyStar exclusive details: http://www.indystar.com/story/news/2...-indy/7562117/ …
The Pacers will continue to play basketball in Indianapolis for at least another decade under a $160 million deal the team and the city plan to announce Monday morning.
The agreement locks the team into Banker's Life Fieldhouse for another 10 years, with three one-year renewal options, according to documents obtained by The Star. In exchange, the city will provide $160 million to cover operating costs and facility upgrades.
The city's Capital Improvement Board is expected to vote on the deal Monday.
The agreement locks in the Pacers through the 2023-2024 basketball season, and possibly through the end of the 2027 season. That coincides with the final debt service payments on the fieldhouse.
The deal sticks even if the Pacers begin to lose money.
The city's Capital Improvement Board will subsidize team operating costs to the tune of $3.7 million a year. That will cover things like liability insurance, security, and utilities. The CIB will also pay the fieldhouse's manager $7.1 million a year, with that amount rising 3 percent each year.
In addition, the CIB will provide $26.5 million dollars to the Pacers for upgrades to seating, new paint, and improvements to locker rooms and concessions. The CIB will also pay for $7 million in improvements directly to replace the floor, upgrade the cooling tower, and improve the facility's steam pressure control system.
Finally, the CIB will license the $16 million scoreboard and sound system the team bought in 2012. The CIB will pay $8 million over 10 years and will take title of the equipment at the end of the deal.
In exchange, the city's Capital Improvement Board will provide $11 million to $13 million a year in operating expenses, plus $33.5 million for capital improvements at Banker's Life. The city will also spend about $8 million to acquire the team's scoreboard and sound system.
The new deal also makes provisions in the event of the death of the team's billionaire owner, 79-year-old shopping mall magnate Herb Simon.
If the team's lenders call its current loans due, or if those loans mature, the Pacers must seek replacement financing that is secured by collateral, likely real estate. The CIB would have time to ask state lawmakers and the City-County Council to help the Pacers obtain such financing. If the team can't obtain such financing and the Pacers' parent company, Pacers Sports & Entertainment, decides to sell the team, the city is entitled to a right of first offer.
Supporters of the deal say it will continue to fuel the $208 million economic impact of Banker's Life by locking in its largest tenant for the foreseeable future.
Forbes values the Pacers at $475 million. The team brought in $121 million in revenue and $12 million in profit, the magazine reported.
The city leases Banker's Life, which opened in 1999, to the Pacers for $1 a year. The Pacers get to keep all game and non-game revenue.
The deal could also put a new strain on the CIB's already rocky financial situation. Since last year, the semi-independent municipal corporation's expenses have outpaced revenues, leaving a projected $33.1 million budget deficit this year.
Still, sports business experts say the average annual subsidy of $16 million for the team and the fieldhouse is typical, especially for small-market teams.
It's tougher for owners in big markets like New York or Los Angeles to move their team to places with smaller revenue pools. But Indianapolis faces competition from a variety of other cities — some of which have NBA-ready arenas just waiting for a tenant.
Highlights of the deal
Term: The agreement locks in the Pacers for 10 years, or until the end of the 2024 basketball season, with three one-year renewal options.
Funding: The city would pay about $160 million over 10 years, including $10.8 million a year for operations and $33.5 million for facility upgrades.
Termination: The Pacers would not be allowed to terminate the agreement due to operating losses.
Ownership: If team owner Herb Simon dies and the Pacer's loans come due, the team will be required to seek replacement financing. If they can't get it and the team is put up for sale, the city would have the right of first offer.
The agreement locks the team into Banker's Life Fieldhouse for another 10 years, with three one-year renewal options, according to documents obtained by The Star. In exchange, the city will provide $160 million to cover operating costs and facility upgrades.
The city's Capital Improvement Board is expected to vote on the deal Monday.
The agreement locks in the Pacers through the 2023-2024 basketball season, and possibly through the end of the 2027 season. That coincides with the final debt service payments on the fieldhouse.
The deal sticks even if the Pacers begin to lose money.
The city's Capital Improvement Board will subsidize team operating costs to the tune of $3.7 million a year. That will cover things like liability insurance, security, and utilities. The CIB will also pay the fieldhouse's manager $7.1 million a year, with that amount rising 3 percent each year.
In addition, the CIB will provide $26.5 million dollars to the Pacers for upgrades to seating, new paint, and improvements to locker rooms and concessions. The CIB will also pay for $7 million in improvements directly to replace the floor, upgrade the cooling tower, and improve the facility's steam pressure control system.
Finally, the CIB will license the $16 million scoreboard and sound system the team bought in 2012. The CIB will pay $8 million over 10 years and will take title of the equipment at the end of the deal.
In exchange, the city's Capital Improvement Board will provide $11 million to $13 million a year in operating expenses, plus $33.5 million for capital improvements at Banker's Life. The city will also spend about $8 million to acquire the team's scoreboard and sound system.
The new deal also makes provisions in the event of the death of the team's billionaire owner, 79-year-old shopping mall magnate Herb Simon.
If the team's lenders call its current loans due, or if those loans mature, the Pacers must seek replacement financing that is secured by collateral, likely real estate. The CIB would have time to ask state lawmakers and the City-County Council to help the Pacers obtain such financing. If the team can't obtain such financing and the Pacers' parent company, Pacers Sports & Entertainment, decides to sell the team, the city is entitled to a right of first offer.
Supporters of the deal say it will continue to fuel the $208 million economic impact of Banker's Life by locking in its largest tenant for the foreseeable future.
Forbes values the Pacers at $475 million. The team brought in $121 million in revenue and $12 million in profit, the magazine reported.
The city leases Banker's Life, which opened in 1999, to the Pacers for $1 a year. The Pacers get to keep all game and non-game revenue.
The deal could also put a new strain on the CIB's already rocky financial situation. Since last year, the semi-independent municipal corporation's expenses have outpaced revenues, leaving a projected $33.1 million budget deficit this year.
Still, sports business experts say the average annual subsidy of $16 million for the team and the fieldhouse is typical, especially for small-market teams.
It's tougher for owners in big markets like New York or Los Angeles to move their team to places with smaller revenue pools. But Indianapolis faces competition from a variety of other cities — some of which have NBA-ready arenas just waiting for a tenant.
Highlights of the deal
Term: The agreement locks in the Pacers for 10 years, or until the end of the 2024 basketball season, with three one-year renewal options.
Funding: The city would pay about $160 million over 10 years, including $10.8 million a year for operations and $33.5 million for facility upgrades.
Termination: The Pacers would not be allowed to terminate the agreement due to operating losses.
Ownership: If team owner Herb Simon dies and the Pacer's loans come due, the team will be required to seek replacement financing. If they can't get it and the team is put up for sale, the city would have the right of first offer.
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