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Can Indianapolis afford an NFL franchise?

Additional Reading

Can Indianapolis afford an NFL franchise?
by Kurt St. Angelo
@ 2005 Libertarian Writers' Bureau

Since at least 1997 – only 14 years after the 63,000-seat Hoosier Dome was built for $82 million – Indianapolis Colts owner Jim Irsay was publicly lobbying for a new stadium to host his team.

Although pushed back by the Pacers’ $175 million taxpayer-supported Conseco Field House deal, he said his turn would come. He has repeatedly said that his NFL franchise “cannot survive” on the revenues provided from the RCA Dome, and that a new stadium is needed “sooner or later.”

It’s tough making big money on an NFL franchise in a market this size without taxpayers subsidizing much of the costs. Taxpayers coughed up $20 million in 1998 to enlarge the RCA Dome’s suites and enhance the value of its expensive box seats. This actually cut the dome’s capacity to 57,900 seats, making it the smallest stadium in the league. In 2003 the team ranked 27th out of 32 NFL teams in terms of revenue and 29th in value.

"We're significantly, significantly below the average (in revenue), and that disparity is growing,” Irsay told Indianapolis television viewers. “Yet the average determines what our expenses are with the salary cap. That's what makes things so difficult."

However, as the Cincinnati Bengals have proven, a new stadium does not ensure a better profit. Even with a new stadium, the Bengals were 24th in revenue in 2002, with only $4 million more in revenues than the Colts.

The Colts’ lease at the RCA Dome runs until 2013, but the team can break the deal after the 2006 season if its revenues aren’t greater than or equal to the median in the NFL in two out of the next three seasons. Indianapolis could require the Colts to stay by paying the difference between the team’s revenues and the league’s median.

In 2002 the Colts fell short by about $13 million. Under this arrangement, Indianapolis taxpayers presently pay the Colts about $12 million per year in direct subsidies.

The long-term solution, Irsay proposes, is a new stadium with more expensive suites, club seats and ticket prices. He says the team’s future in Indianapolis depends on “the ability … to market yourself and sell seats, particularly the expensive suites and club seats.” Agreed.

The RCA Dome has 104 suites. The league’s top franchise, the Washington Redskins, offers 280. The difference in revenue between the Colts’ and Redskins’ luxury suites likely exceeds $15 million annually. Total team revenues were $137 million and $227 million, respectively, in 2002.

Certainly it behooves Irsay to shop his team to the city that gives him the best deal. During the past decade, 21 of the league’s 32 teams have received new or renovated stadiums. An average sweetheart deal is a $323-million stadium, paid 65 percent by taxpayers , that holds 69,200 spectators.

But here are the $66,000 questions for Mr. Irsay: Even with an average $323-million stadium funded two-thirds by taxpayers, can the Colts sell more suites at greater prices to bring team revenues above the NFL median? Likewise, can the central Indiana football market sustain more suites, box seats and higher prices to keep the Colts in town?

I’ve been thinking of recommending that the Libertarian Party buy the naming rights to the next Indianapolis Colts’ stadium, but now I’m having second thoughts.

At a recent sold-out home game, I was unable to sell the two extra $45-seats that I had – at any price. There was no one besides ticket scalpers to give the tickets. I swallowed the $90 in losses, not to mention two grossly expensive $6 beers during the game. (Hey, I was thirsty and now have my third plastic commemorative Colts cup!)

Before a new stadium becomes economically realistic in Indianapolis, demand for Colts tickets, box seats and luxury suites must exceed their supply. This burden of truth falls on Jim Irsay, and he must meet this before taxpayers make more concessions.

Funding a new stadium with $400-plus million of taxpayer debt (excluding interest) is to gamble on the team’s ability to sell itself to more fans and at a higher premium.

This will be a much harder task than giving away my extra tickets.

(Originally published on November 16, 2004)

About the Author

Attorney, screenwriter, Libertarian Party activist in Indianapolis


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