Bankers Life Fieldhouse is a public entertainment venue that is owned by the Capital Improvement Board and operated by Pacers Sports and Entertainment. The venue hosted over 500 events last year, and economic activities generated by the Fieldhouse employ more than 4,000 residents
and produced $152 million in wages last year. The total economic significance of the facility is in excess of $370 million.
The Fieldhouse is twenty years old and the CIB believes the Fieldhouse can be updated and save significant tax dollars. This agreement represents a fairly taxpayer-friendly proposal that will carry the Indiana Pacers forward in the Fieldhouse until 2040 for the next generation of fans and through the next generation of the team’s ownership.
This new agreement will require no tax or fee increases. The Council will be asked to extend excise taxes – two types: auto rental and admissions. It’s important to note that these taxes impact visitors and everyone who attends events at CIB facilities. The changes to the state-authorized Professional Sports Development Areas (PSDAs) will have a minimal impact on local income taxes, and will result in a significant and new influx of state sales tax revenues.
What the Council is being asked to consider:
(1) Extend sunset dates on admissions tax and supplemental auto rental tax;
(2) Resolution(s) to extend the life of the Sports-related PSDA and expand
the boundaries of the Hotel-related PSDA;
(3) Resolution to approve CIB financial plans.
Deal Term: The agreement between the Pacers and CIB would have a 25-year term, beginning in 2019 if legislative approvals by the General Assembly and Council are granted by 8/1/19.
Capital Improvements to the Fieldhouse: The CIB and Pacers have agreed to a $360 million plan for capital improvements to the Fieldhouse, which would be phased from 2019-2022 so that the team can continue to play in the building during the NBA season. This plan will involve the Pacers and City partnering to create a new public plaza space that will connect to both Georgia Street and the Cultural Trail.
- CIB/State contribution: $270 million
- Pacers contribution: $65 million
- City Infrastructure / Plaza contribution: $25 million
Reduced Operating Support + New Pacers Obligations: The agreement will modify the current operating support payments. Roughly, the current agreement includes payments in the $13 million range, with a 3% escalator on an annual basis. If we had simply extended the old deal 25 years, the annual payments would have more than doubled over time. The new agreement would lower that payment to $12.5 million, and include new obligations for the Pacers that taxpayers have traditionally been responsible for. (Example: the new operating
agreement will have the Pacers assume long-term maintenance obligations for the exterior plaza improvements that will be done around the Fieldhouse as part of the capital project. Currently, that would be a CIB responsbility.)
This initial $12.5 million payment would remain flat for six years, and then rise to roughly $13 million for an additional six years. In year 13 of the agreement, operating support would rise to roughly $16 million for the remainder of the 25-year agreement. The effect of this restructuring is an estimated savings for taxpayers of nearly $90 million in operating support under and against the current agreement if it had simply been extended for 25 years.
Capping Technology Improvements + New Pacers Obligations: Unlike the current agreement, the new agreement would resolve periodic capital expenditures associated with technology within the building. Traditionally, these issues have been dealt with on an ad hoc basis as new technologies became available or necessary. That meant negotiating “side deals” when technology needed to be updated. Because this agreement intends to plan for 25 years of technology development, the plan has baked in fixed amounts of money that will be available to be invested in the building for the purposes of replacing obsolete technology – a broad category that runs the gamut from security and safety equipment, internet switches to sound equipment to high-end scoreboards and video boards.
These CIB investments in the Fieldhouse would begin in 2025 and last for ten years, totaling roughly $113 million. In return for these fixed investments in the facility, the Pacers for the first time ever have agreed to assume maintenance and replacement responsibilities for this broad category of technology items. This is an important point because it provides for technology improvements in the Fieldhouse that aren’t predictable today, while protecting taxpayers by capping our technology investment total.
Protecting Taxpayer Investment: The agreement is intended to secure the Pacers’ presence in Indiana over the long-term. Additionally, this agreement will include important protections should the team attempt to leave prematurely. Prior deals have only included injunctive relief if the team attempted to leave – in other words, the CIB could sue to keep them here. If we approve to fund the agreement, the Pacers have acquiesced to the largest liquidated damages provision in the NBA. These damages begin at $750 million for the first ten years of the agreement should the team attempt to leave, $500 million for the next ten years, and then taper off by roughly $100 million a year over the last five years. These amounts fully secure the public investment in the CIB’s efforts, and would in effect allow for “make whole” funding to be available at any point in the deal should the team leave while debt is still on the books.
Community Benefit Agreement (CBA): Given the size of commitment to the Pacers in this current agreement we feel it is imperative to secure for Marion County taxpayers funding for social impact projects such as reducing food insecurity and youth employment opportunities among others called a Community Benefit Agreement (CBA). As an example, just last year the City of Phoenix negotiated a CBA when the owner of the Suns and the city council improved the original deal by including a requirement
whereby the Suns spend $10 million on community benefits (either through nonprofits or city programs), including at least $2.6 million to the city’s Head Start preschool program. The Council seeks to work with the Pacers, the CIB and communities throughout our city to craft a CBA that will have a lasting and substantial positive impact.