Indianapolis Capital Improvement Board expects Pacers to renegotiate lease

By Scott Olson, The IBJ

solson@ibj.com

The city's Capital Improvement Board, which already faces a major operating deficit, expects to take an additional $15 million hit next year from a provision that allows the Indiana Pacers to renegotiate their lease after 10 years.

CIB members met this afternoon to begin tackling the organization's $43 million annual operating shortfall, which includes Conseco Fieldhouse expenses that the CIB anticipates it will begin absorbing next year.

"The challenge is to renegotiate," CIB President Bob Grand said of the lease. "[The Pacers] have an option to have these discussions."

The Pacers likely will seek to sweeten a lease deal with the city to help subsidize recent financial losses. The Pacers lost $1.3 million in 2006-2007 and $6.5 million in 2007-08, according to Forbes Magazine. Home attendance last season averaged 12,221, last in the National Basketball Association.

Pacers officials declined to be interviewed this afternoon, but issued a statement from Rick Fuson, chief operating officer of Pacers Sports & Entertainment.

"Conseco Fieldhouse is one of the state's most important public gathering spaces, and its continued success is so critical to all of us," the statement said. "We have enjoyed a great long-term partnership with the Capital Improvement Board, and we are extremely grateful that they are addressing  these difficult issues. The CIB is early in their effort, and we will work faithfully with them to be as helpful and supportive as we can."

In addition to the $15 million Conseco Fieldhouse expense, the CIB's shortfall includes a $20 million deficit for Lucas Oil Stadium, $5 million for other CIB operations, and $3 million in additional funds for the expanded Indiana Convention Center.

The CIB's finance committee this afternoon recommended cutting its operating budget by 8 percent and instituting a travel ban, as well as salary and hiring freezes, to begin chipping away at the deficit. Those actions would account for roughly $6 million in savings.
 
"We're going to continue to review this," Grand said. "If 8 percent isn't enough, we'll have to cut further."