Tuesday, December 21, 2004

Less Blue

OK, I was a tad harsh on the Mayor with yesterday's post on the agreement with the Colts on a new stadium. Since the plan is clearly not going to be tax-funded, I will today give him credit for that. Good show!

On the other hand, I still think that the quest for funding could be done better than by using gambling revenue. The possibility of using gambling revenues as the source of funding is as troubling to some as using taxes is to others. Fortunately, three good options are available that are enormous civic pride opportunities.

1. Join a consortium of investors
2. Purchase shares of stock in the project
3. Purchase bonds in support of the project, a la WW2-era War Bonds

By using these three methods, the funding is achieve solely by the choice of the participants, and directly so, as opposed to the gambling funded method. People will choose to get involved because they believe in the project. They will have a stakeholder interest far beyond the guy who drops ten bucks on pull tabs and loses.

Civic projects can and should be a source of pride to as many people as possible. Using funding that people will be eager to provide is an excellent way for everybody to come out a winner.

Good so far. Make it better.


Is the sale of stock in a stadium a good way to raise money? In 1998, the Cleveland Indians sold shares of stock in an IPO at the initial offering price of $15/share. This raised $60 million, selling out the stock in rapid fashion. That's not a huge percentage of the $800 million or so needed to be raised. No problem. Set the amount to be raised by this device to $150, with a higher initial offering price tag, and this can be achieved easily.

Will the stock be worth anything to the investor? Possibly not. There is always the risk of a crash when investing in the stock market. Many subscribers will be glad to simply buy the stock certificate as a piece of history and something to frame and hang in the den. The 1998 Indians stock certificate goes for $150 on collector sites. Others will treat it as a business and look for a dividend, or to sell if the price rises with the success of the complex. The story of the Indians stock had a happy ending.

War Bonds sold phenomenally well because the public believed in the cause. I think that enough people in Central Indiana would buy Stadium Bonds because they believe in it. Pie in the sky guess? I think $150 million could be raised from investors on this.

Monday, December 20, 2004

Wearing Colts Blue

So, Mr. Irsay got the City of Indianapolis to shell out some money to build him a new palace, so that he can make some more money, thus preventing (for the next 5-10 years) Colts from taking the moving van night express down the interstate, just as the Baltimore Colts did back in the early 80s.

I can't say I blame him for having asked. So many cities give the moon. City officials always cite jobs, but are also always certain to insist that the prestige of the city would dive if a major sports team left.

I'm a big sports fan, but I'm also a big fan of classic and exotic automobiles. I drive a 1997 Saturn, which is neither of these things, but it sure gets me from-A-to-B. It's a reliable car, and gets very good fuel economy.

Just the same, I'm thinking that I'd like to have a Rolls-Royce... and a Ferrari... and a Maserati. These would look really good in my driveway, and I would look and feel much better about driving them than I do about my Saturn.

I'm thinking that I'd like everyone on my block to pay for these luxury automobiles. Heck- it will improve the prestige of my neighborhood if out-of-towners were to drive down my street and see the Rolls. My neighbors will enjoy the benefit of this enhanced prestige, and it will only cost them each a little bit. They'll hardly notice how much it is.

I'm even thinking that about 10 to 12 times a year, I will allow my neighbors to take a spin with me in the Rolls or the Maserati. They can pay me admission to ride in my car, getting the direct benefit of having purchased the cars for me. Sometimes they can even ride shotgun. Of course, you don't always get to sit on the 50-yard line, so sometimes, my neighbors will have to ride in the trunk. Heck, though- the tickets are almost half price!

Maybe they can't afford the price of tickets for the whole family to ride. Well, they can stand on the sidewalk and watch as I drive by with those who can afford the price of admission. Still- they're getting the enormous benefit of having created a sense of civic pride and prestige for our neighborhood, thanks to my cars. Of course, I'll only let them stand on the sidewalk if I've sold out the admissions to all of the seats, including the trunk. I'm not kind of idiot who is going to let people watch for free from the sidewalk when I have empty seats!

So, hats off to Jim Irsay. He sold his bill of goods lock, stock, and barrel. I'm impressed with his moxie.

I'm less impressed with Mayor Peterson. He gave away the store and gets very little in return. He'll claim it was great leadership to keep the Colts here. Great leadership would have included a stadium that was fully privately funded.

This is not impossible. Look at the Brickyards or Nationwide Arena in Columbus, Ohio for good examples of privately built arenas that were built with private funds and are thriving.

While the Mayor or Mr. Peterson may not have been able to locate a single source of funding, think of the extraordinary opportunity to build civic pride that was lost. They could have built a consortium of local business who would have invested in the project, thus taking a real stake in the success of the project. They could have sold shares of stock to Colts fans and raised a huge sum, rather like the Cleveland Indians did a few years back.

Nope. Easier to tax or to create a government monopoly casino to pay for it.

Maybe it's time to ask for that Rolls Royce.