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Pacers Financial Issues Continue To Raise Questions

Yesterday, Anthony Schoettle laid out the financial issues facing Pacers Sports & Entertainment and he didn't paint a pretty picture.

With the Capital Improvement Board (CIB) apparently set to pitch in $15 million, which puts the CIB further in the red, Jim Morris and other Pacers executives are starting to explain their side of the story and why they need help.

I'll be honest, the business side of the game makes my frontal lobe throb, let alone taking it to the level of PS&E which includes the Pacers. I have my own financial issues to deal with, I just want to watch the Pacers play. Besides, business finances can be nuanced to make whatever case is necessary and simply leaves me asking questions. This particular item certainly raised a few questions.

The Indiana Pacers have lost money in 25 of the last 27 years, including nine of the last 10 seasons in Conseco Fieldhouse, said Pacers Sports & Entertainment President Jim Morris. The losses, he added, are much higher than recently published estimates of more than $6 million annually.

The Pacers have lost money in each of the 25 individual years? What revenue is include in that calculation? There were some very successful years in there with full houses and long playoff runs. If the team loses money after a year when they made it to the NBA Finals with sellouts all year, then the business is a mess.

One messy issue with the Pacers current arrangement involves the annual loss of a few million dollars thanks to an old ABA agreement.

The Pacers’ local TV revenue is about $5 million below the league average, Morris said. On top of that, the Pacers must pay the former owners of the defunct ABA team in St. Louis part of their TV revenue.

That deal was brokered as a condition of four ABA teams—including the Pacers—merging into the NBA in 1976. The NBA didn’t want St. Louis, so the four merging ABA teams agreed to pay the St. Louis team owners one-seventh of their annual TV revenue, in exchange for the owners’ folding their team. That deal costs the Pacers $4 million to $5 million annually, suggesting the team pulls in $28 million to $35 million a year from television. The arrangement has no expiration, although the Pacers and NBA have tried to negotiate a settlement.

Am I crazy or is this absolutely insane? The NBA didn't want St. Louis to joing the league, so they made (and continue to make) the Pacers pay the freight? Obviously, the Pacers willingness to pay was likely a reason they made the transition to the NBA and St. Louis didn't, but can we get a settlement here please? Who exactly is pocketing the case in St. Louis? I'm sure they have no interest in letting this bonus money dry up.

Since I'm happy to let the business people figure out the business side of things, my only concern is that the franchise runs out on the Fieldhouse court 41 times a year. Fortunately, I don't read any of this information as an opening salvo in an attempt to move. In fact, Jim Morris tried to make that point clear.

“No one,” said Morris, shifting forward in his chair and raising his voice for emphasis, “has ever suggested that we would move the Pacers out of Indianapolis. The Simons have not asked the city for anything. The question is, how do we keep this franchise here for this community for the next 50 years?”

For now, that's good enough for me. The Pacers are lucky to have solid local leaders rolling up their sleeves and looking for solutions. Unfortunately, in the current economy they have their work cut out for them to try and find a solution that doesn't dig into taxpayers pockets.