Wednesday, November 01, 2006

The Stadium; and, the Toll Road

The Indianapolis Star ran an article earlier this week about the current home of the Colts. While we're in the process of justifying financing the $950 million Lucas Oil Stadium and convention center expansion, it's good to look back at the last time our elected officials bought a stadium for the Colts. The Hoosier Dome (now the RCA Dome) was built in 1984 for about $77 million dollars (less than 10% of the cost of the new stadium; that's inflation!). Of that, two private charities contributed $30 million, and the city financed the remaining $47 million. So, after 22 years of paying down the $47 million dollar debt, how much do we still owe? $75 million dollars. I'm astonished. Our public officials have spent the last two decades refinancing the debt over and over again, and they're now expecting to pay off 1984's 30-year debt in 2021. Assuming they don't decide to refinance again. That means we'll be paying for the old dome for 13 years after it's torn down.

I'm also starting to call into question the new stadium's financing. How much can we trust these same organizations that say we'll have the new dome and convention center paid off on time, for only the $1.8 billion dollars they say it'll cost? Do we have any guarantees that they won't decide to refinance it again? A lot of people are pretty unhappy with the deal the city got on the new stadium. As I understand the deal, the stadium is essentially a gift to the Colts' owner, Jim Irsay. He pays none of the operating costs, and about 15% of the construction cost. He pays nothing for its use, he collects all revenue for other events that will rent the new Dome, and he owes the city none of the revenue produced by or in the stadium. Irsay isn't the owner of the new stadium; that would mean he's responsible for its problems. He just gets all the benefits, including the revenue, and the city gets all the bills. Our mayor has received a lot of grief over the details of the stadium deal, but he really didn't hold any of the cards; Jim Irsay set the deal, and the city could take it or leave it. And not giving the Irsay gang what they wanted meant losing the Colts. Cities gain coolness points for having pro sports franchises, and apparently nobody wanted to lose them.

Every single seat is more expensive in the new dome than in the old dome. I haven't heard what final single ticket prices and season ticket prices will be, but everyone seems to agree that the cost will go up. I suppose this is the Colts' gift to the fans for spending almost two billion dollars of public money to keep the team here: thanks, fans!

But, I have a solution for the stadium financing. The state just received a 3.85 billion dollar payment for the 75-year lease of the Indiana Toll Road in northern Indiana. I don't have a lot of faith they'll actually spend the money on infrastructure; why not use some of it to pay for the new stadium, and save over a billion dollars in finance charges?

The toll road is a touchy subject, too. The company that's managing the toll road figures on making almost $50 billion dollars on the contract, for which they paid $3.85 billion. Nice investment. I've never bought into the conventional wisdom that says private management is more efficient that public management. And even if it is a little more efficient, it can't possibly be $660 million dollars a year more efficient to have a private company manage a toll road....

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