City to subsidize Pacers arena costs

INDIANAPOLIS -- A new deal designed to keep the Indiana Pacers at Conseco Fieldhouse through at least 2013 calls for Indianapolis to spend at least $33.5 million to help the team's owners operate the arena and pay for improvements to the franchise's home.

Under the agreement announced Monday that amends the Pacers' current lease with the city, Indianapolis' Capital Improvement Board will pay the team $10 million each of the next three seasons to help maintain and operate the 18,000-seat downtown Indianapolis arena.

The board, which runs Indianapolis' sports stadiums and convention center, also will pay for a minimum of $3.5 million in fieldhouse improvements.

If the team leaves the city after the 2012-2013 season, the Pacers must pay back at least $30 million of the money. But the deal, which capped negotiations that began two years ago, calls for that amount to decline for each season they remain in Indianapolis. If the Pacers stay through the 2019-2020 season, they won't have to repay any money.

Indianapolis mayor Greg Ballard said critics questioning the deal's benefit to taxpayers and calling it a bailout of the professional sports team are overlooking the economic impact and civic pride the Pacers bring to the city.

Ballard said the Pacers are responsible for about 900 jobs and $55 million in annual economic impact on Indianapolis businesses. If the Pacers left the city, those jobs and that business income would vanish along with $18 million in annual tax revenue, he said.

"It's a vital link that keeps all of these people employed downtown in the convention and hospitality areas. It does affect us -- our neighborhoods, everyone would be affected by the loss of that revenue," he said during a news conference.

The agreement supplements the team's existing Conseco lease agreement, which runs until 2019 and includes other fees if the Pacers decide to leave early.

CIB president Ann Lathrop said the board will pay the Pacers out of its operating fund and the deal specifies that team can use the money only for the costs of running the arena.

The cash-strapped panel has made deep budget cuts since the 2008 opening of Lucas Oil Stadium and captured more sales and income taxes from an expanded sports tax district.

Herb Simon, the Pacers' billionaire owner, has maintained he wants to keep the team in Indiana.

But the Pacers, who have sought more substantial changes to their arena lease, have said they can't continue to pay the fieldhouse's $15 million in annual operating costs because they are losing too much money.

Pacers Sports and Entertainment president Jim Morris said it's very difficult to operate a pro sports franchise in a small market like Indianapolis. He said the team had expected to receive help from the city last year but the negotiations dragged on.

He called those negotiations between the Pacers, the city and the Capital Improvement Board the most difficult he's ever been involved in.

Morris said the team had hoped for a long-term agreement covering up to 30 years and for the city to give the team the money outright.

"We badly wanted a long-term deal," he said. "We wanted to make a commitment for 20, 30 years to stay here. My hope is that we'll eventually get there."

Ballard spokesman Robert Vane said the deal is a good one because the city would have to pay up to $20 million a year to run the 11-year-old fieldhouse if the Pacers left.

The Pacers ranked 27th in the 30-team NBA this season with average attendance of 14,202. Indiana finished with a 32-50 record, its worst record since 1988-89, and missed the playoffs for the fourth straight year.