Monday, March 30, 2009

Hey, Indianapolis Star! Ya Talkin' to Me?!?!?

There was an interesting tidbit in the Indianapolis Star's "Behind Closed Doors" this weekend, and since Ipopa (eye-pop-uh) was "agog" about this trip last week, I'm thinking the Star is calling me out along with Advance Indiana. Here's their missive:

Blogs don't get bogged down in facts

Local blogs were agog last week about a trip the financially strapped Indiana Pacers hosted for sponsors to Cancun, Mexico, recently.

The blogs reported the Pacers took 60 people on a five-day trip to an exclusive oceanside resort.

These bloggers, however, had it only half right.

They were outraged that the Pacers would pay for such largess while the team is asking the CIB to take over the $15 million cost of running Conseco Fieldhouse each year.

But as Greg Schenkel, vice president of corporate and public relations for the Pacers, pointed out, the annual trip is a part of the sponsorship contracts the team has with numerous companies, including The Indianapolis Star.

So the trip's costs are covered by the sponsorship dollars, he said.

Schenkel would not release a list of who went on the trip, but he did say no one from the CIB or the city or state government went.

Putting aside why Schenkel or the Star wouldn't list who attended the trip, can somebody make sense of this from a business perspective? Am I to understand that the Star actually PAID MORE on a contract so certain undisclosed individuals (management?!?) would get an all-expenses paid trip to Cancun (plus jewelry?) Since I'm assuming certain members of the Pacers organization attended, was THEIR attendance paid for by the sponsors, too? If so, I fear for the Star's management, which might be why they're mum on who went.

I'm sure there are many people reading this who work in corporate sponsorship/entertainment world. If this is done all the time, and I'm unfairly hitting these folks, let me know. Otherwise, I don't understand why a company would pay a premium on a promotional deal to have an organization whose product is professional sports play travel agent for them? (I have GOT to see one of these contracts).

But even if this happens all the time, isn't anybody worried about the potential effect on coverage? I've always wondered how an industry maintains journalistic objectivity when it has a business relationship with those whom it covers. At a minimum, shouldn't the Star disclose the nature of its business relationship and the amounts in play?

I ask because the Star editorial staff is calling for a CIB bailout (more on that in a second), and while Matt Tully wrote a strong column a few weeks ago telling the Pacers to put up (their financial spreadsheets) or shut up, his story today is an arguable softening of position.

You say, "WAIT! Tully said that if the Pacers left, it wouldn't destroy the city!" Yes, and he also said that the Pacers should stay, just "not at the cost of another sweetheart deal the city cannot afford."

Sometimes it pays to parse columnists' words like they're diplomats. You can then understand what they are REALLY signaling. Ask yourself these questions, "In Tully's mind, what makes the deal a "sweetheart" deal?" How does he define "the city," and how does "the city" decide what it "cannot afford?"

Later in the column, Tully basically tells you:

"If lawmakers decide a bailout is good public policy, the pain should be spread at least throughout Central Indiana. Remember: Carmel, Greenwood and the other suburbs benefit from a thriving Downtown Indy just as much as a homeowner living on the Far Westside."

See how subtle Tully and the Star are being? Next time you see Matt, call him "Smooth Operator" Tully. He takes the principal question - should we bail out the Pacers from their contract obligations - and fuses it into a completely separate (though clearly related) one -should we bail out the CIB for operating at a loss on everything else?

This subtle switch matters because the Star's editorial talks about the Superbowl and the Final Four and how those events help promote Indianapolis AND surrounding communities to other businesses that might seek to relocate here. Maybe so for national events that draw people from out of state who stay long enough to SEE the city. How often does that happen for a Pacer game? (Maybe a handful of people come from Columbus to see LeBron where there are seats still available).

And yet, here the Star (and Tully implicitly) stand, seemingly asking ten counties to accept regressive hotel and food and beverage tax increases so that corporations won't have to pay more for Conseco suites and Pacer fans, concert fans, and tractor pull fans won't have to pay more for their admissions. (I suppose in the interest of full disclosure, I'd be delighted to have Carmel, or even the rest of the state, pay something so I can still go out downtown without choking when I see my bill. Also, does anybody know if the CIB still has a suite at Conseco? If so, auctioning off that prime real estate could save the Pacers some money).

I admit that the Pacers haven't been the same in my eyes since the departure of Reggie Miller, but even in their glory days, I couldn't have seen giving more money to the Pacers in this type of economy. Let me say this as politely as possible. THEY PLAY A GAME!

Of course, will any of us be surprised when taxpayers take a hit when a deal gets done? This is capitalism, after all. While superior to any other system for generating prosperity, capitalism makes us cater to the financial elite by subsidizing their hobbies as the price for all the "trickle down" benefits the rest of us allegedly receive.

It's just funny how whatever "trickles down" onto average people always tends to smell funny.


Friday, March 27, 2009

CIB Bailout: Listen Closely, Legislators!

So our unelected Capital Improvement Board is in an operating hole that will get worse next year if the Pacers refuse to pay $15 million in operating expenses for Conseco. The Pacers tell us they lose money year after year. But then they pull a PR AIG.

Ruth Holloday reported last week that the Pacers took 60 people, including supportive corporate elite, on a five-day excursion to Cancun, Mexico. While one might argue the Pacers are prudent to ensure their advertising base is safe in a tough market, it bothers me that representatives from WISH-TV and the Indianapolis Star attended.

Holloday reports that the group was wined and dined at le Blanc Hotel and Spa, an all-inclusive oceanside resort with hot tubs in every room. The trip included side excursions for every one in attendance, and the Pacers gave the women expensive jewelry and the men fancy sport watches.

The question I would ask (were I a full-time reporter) is whether the Pacers have done THIS every year, or is there something special about THIS year and this TIME that makes it necessary? Oh, sure, there's a bad economy, but there was one last year, too. MIGHT the Pacers be trying to ensure a favorable corporate climate precisely when they seek to hoist the new costs onto the taxpayers?

Are we supposed to believe that there's NOT going to be any spillover from Star marketing to news/editorial? Really? Then why wasn't the story about this trip reported? Didn't every paper in the country report when the automotive executives who got bailed out fly to Congress in corporate jets? Remember when AIG execs paid for a $440,000 weekend retreat? EVERYBODY covered it. But the Star says nothing? (Look, we know the Simons are billionaires. But the rule of thumb is that if you're asking us to open the taxpayer wallet to bail you out, at least have the decency to ACT broke. Tighten your own belt first before asking us to go digging).

Also, the Indianapolis Star today runs a story about the CIB/Pacers fix under the heading of "Shared Pain." Guess where? BELOW "the internet fold." In other words, you WON'T see it unless you expand for today's top stories. What ran above it?

Homeless man held in blaze at complex
Officials say suspect set fire to intimidate his ex-girlfriend into coming back to him.
Indy says 'no' to Louisville's Downtown light show
Tourism promoters wanted to project messages onto buildings during NCAA regionals.
City, stadium get dress rehearsal for Final Four
Head-on crash kills Franklin man - 8:50 AM
United Way issues $1.4M in grants - 8:35 AM
Ban on smoking in car with kids advances - 8:26 AM
Finish Line 4Q losses narrow, beat estimates - 7:38 AM
12-year-old dies in industrial accident - 7:27 AM
Dozens seek Noblesville police chief job - 7:25 AM
Golf cart crash kills boy, 9, in Owen Co. - 7:25 AM
Read all of today's breaking news

I'm glad that the United Way still has money to give and that Finish Line did well (Hurray! They can keep their Pacer sponsorship!), but how do either of these stories have the impact that this one does on public policy? The meetings about the CIB are already being held "behind closed doors," and we can't even get the Star to front the options that are on the table so we can respond?

(As an aside Advance Indiana offers an interesting view of Jim Shella's coverage of a protest rally during which AI talked about the CIB bailout. Was any of the CIB portion covered by WISH-TV? Nope).

Anyway, here's what the Star says is on the table, along with my thoughts in response:

THE IDEA: Increase Marion County's 2 percent food and beverage tax to 3 percent. This would raise $18 million a year.

THE PROBLEMS: Every time you go out to eat, you get socked. If I owned a restaurant outside of downtown, I'd be hopping mad because my customers get popped, and I get close to NO benefit from the Pacer attendance. (MAYBE I get the guy who stops through after the game on his way back to Noblesville). You know who else would be hopping mad about this option? Me. I like to go out, but I will start eating at home more often, and every dollar they thought they would raise in new revenue goes off the table.

THE IDEA: Increase Marion County's motel/hotel tax from 9 to 10 percent to raise $4 million per year.

THE PROBLEMS: Let me understand this. We need the Pacers as the "bookend" for our convention business, but we're going to make it too costly for anybody to want to actually stay in Indianapolis? If somebody doesn't think a 1% increase matters, you're sadly mistaken when you're thinking about booking convention business. You're talking an additional $1,000 PER NIGHT for a small conference of 500 people with $200 per room PER PERCENT that the hotel tax is higher than competing cities. If I'm contemplating taking a conference that will book 2,000 rooms for three days to either Louisville, which has a 15% rate, or Indianapolis, with its 9%. Assuming only $100 per room, I can save $36,000. Why in the world would we give away that kind of competitive advantage if we're trying to make tourism our thing? Also, why apply the tax to EVERYBODY in Marion County? If I owned a hotel or motel near the county borders, I'd be hopping mad because people will just stay in the doughnut counties. In other words, my customers take a hit when I get NO advantage from downtown events.

THE IDEA: Raising the 6 percent admissions tax to 7 percent to bring in $1.5 million a year.

THE PROBLEMS: There aren't any with this idea. Having the "users" of the service pay for the service is the only equitable way this gets done. One percent increase? I'd make it five before I'd pursue any other options. The Pacers will say, "Yeah, but if we raise the cost, we'll lose some fans." And I'll say, "Then reduce your payroll! You were the ones who let the Pacers image get tarnished by not getting rid of the trouble spots earlier." I'm tired of rewarding bad management with bailouts. Aren't you? Also, as I understand this tax, it's for ALL Conseco events, not just the Pacers. People who go to concerts or rodeos at Conseco pay more.

Republicans may say, "Yes, Chris, but what about public libraries? You want us to make books available for free. Why not charge an admission fee for the central library?" Because, respectfully, some things should be public goods, such as educational information. So, no, I don't mind the "wealth transfer" that occurs when rich people have to pay so poor kids can get a place that encourages reading. Call me crazy! Are the Pacers a public good? Is a L'il Wayne concert a public good? There might be some camaraderie value, but certainly nothing that is close to a library. Sorry.

THE IDEA: The Indianapolis Colts are asked to give back a share of the revenue they now get from concessions, and we get $3.5 million.

THE PROBLEMS: None, in theory. The Colts should have never been offered concessions for events that had nothing to do with their product in the first place. But good luck getting that back from Jim Irsay! He's Christian and charitable, but he's not crazy.

THE IDEA: Expanding taxing districts: Adding new hotels and other stadium-related businesses to a sales tax increment financing district in Downtown would generate $10 million a year. Odds: Possible.

THE PROBLEMS: None. Next to having the fans absorb the entire operating cost of events they choose to attend, at least if you do this, you are putting the cost on those business ONLY that actually benefit from downtown events.

THE IDEA: Alcohol tax: Indiana's spirits, wine and beer taxes are on the low end, but lawmakers are more interested in solutions that affect Marion County alone, not the whole state. The taxes raise about $42 million a year, which is split between the state and local governments. Odds: Unlikely.

THE PROBLEMS: It's an easy fix to tax "sin," but thankfully this isn't really on the table. It's grossly unfair for every bar owner and grocery store in the state that does not benefit from downtown Indianapolis events.

In sum, legislators who try to make the pain TOO shared might be feeling their own come election time.


Sunday, March 8, 2009


I've been dormant, so I'm not sure who will read this, but I have to say it. Actually, YELL it. Have I lost my mind or soul or both...because I'm feeling so Republican lately. Or am I?

Over the past few years, I've grown my credit card limits and improved my credit score substantially. Two years ago, I opened an HSBC credit card with a $7,000 limit. Eighteen months ago, the balance was $6,200. Last week, it was at $780. I never paid late, I always paid 5-10 times the minimum, and my credit score now is better than when HSBC gave me the card.

Last week, HSBC reduced my limit to $2,730. I called to learn what I did wrong. The customer service rep actually said, "You've an ideal client. This doesn't have to do with you. This is something we've done across the board."


This man knew from staring for a millisecond at a screen that I was a good customer, but HSBC didn't care. It extended credit so recklessly, it had to take it all back, regardless of how it affected customers' credit scores. Can someone explain how a bank makes money when great customers pay their accounts off and close them (which is what I did)?

This is the "loose credit" the bailout was to generate? Banks taking credit lines BACK from the GOOD customers!?!

Where's the alleged Republican thought, you ask?

In my disgust and lack of sympathy.

We are rewarding a LOT of irresponsibility and ignorance. We are punishing the responsible by permitting banks to treat everybody the same, and we are rewarding people who bought more house than they could afford by letting them refinance at lower rates when their more responsible neighbors who sacrifice to pay their monthly payments get no benefit.

What's that? Predatory lenders??! Oh, sure, there are SOME citizens who aren't real sharp who didn't understand what they signed. But I promise you the larger problem was people who never believed they would have to face the music.

Everybody reading this who has either had or just contemplated an adjustable rate mortgage (ARM), ask yourself these questions:

(1) Did I KNOW that the rate could go up with an ARM?

(2) Did I know HOW MUCH the rate could go up with the ARM?

If you answered "yes" to the first two questions, you are a DUMBASS if you did not follow up with:

(3) IF the interest rate goes up, how much will my mortgage payment be?"

If we are honest with ourselves, it wasn't predatory lenders who caused this problem. It was foolish optimism.

When I bought my house in 1998, I had the following mental conversation as I weighed an ARM versus a fixed rate:

"If I get an ARM, I'll save crazy money right now. Interest rates will probably go down, and I'll save even MORE. If it doesn't work out, I'll sell, or if I want to stay, I'll just refi to a fixed rate. BUT the fixed rate is close to an all-time low, and I KNOW I can afford THAT. SO, I won't be greedy. I'll pay more now to get future security, and if rates keep going down appreciably, I'll refinance to a lower fixed rate.

I have no doubt that this same conversation has occurred in the minds of millions who, quite frankly, just guessed wrong about being able to refinance. It seems to me that Republicans are content saying, "We gave you the freedom to decide. Now live with your bad choice." It doesn't seem that Democrats do this as much.

OH, that's so terrible, Chris, you say. People will lose their homes! Yeah, and they'll move into cheaper ones they can actually afford, thereby taking OTHER foreclosed homes off the market and stabilizing the whole housing sector.

Quite frankly, I'm tired of people mythologizing homeownership as "the American dream." I've rented homes, and I've owned them. Aside from the fact I spent an entire summer powerwashing the owned house, the only difference was a minor psychological comfort of saying "it's mine." The rest of the benefits are artificially created.

You see, the U.S. Congress PAYS US to own homes, which is why I'm looking again. As a sop to the Home Builders Association, realtors, mortgage companies, and banks, Congress lets me deduct ALL of the interest I pay on my mortgage from my gross income before I calculate the taxes I owe the U.S. In addition, Congress let me deduct my property taxes. The combination of one and two are HUGE because, for most people, including myself, the mortgage interest is what gets us above the standard deduction on our taxes.

Think about the implications. If I am a single renter, and I pay $1,000 per month in rent and donate $5,000 to my church, I have to take the standard deduction, of $5,450. I get NO reward for my generosity. BUT if I pay $1,000 per month on a mortgage ($200 to principle, $800 to interest each month), I can deduct $9,600 in interest and, as a result, ALL $5,000 in charity expenses, PLUS the real estate taxes (plus a series of other deductions). In America, your charity almost ALWAYS matters more if you own a home.

Of course, any Republican-leaning I'm doing is moderated by the GOP "free market" hypocrisy.
On Friday, I heard a screed on Limbaugh by a guy who said, "Congress was forcing these banks to make loans to people who didn't deserve them. This made the demand for houses go up artificially, which inflated prices artificially. We should have let the market determine the rate." But what REALLY inflates prices is massive tax benefits for home ownership. Will Republicans take that away? Never. Their "free market" dogma only goes as far as the next election cycle.

So, yes, I'm looking to move again after renting this past year. Who wouldn't want an $8,000 CREDIT (yes, the government will cut you a check, even if you owe ZERO on your taxes already) so you can buy a house. Unfortunately, my credit score will go down as soon as my credit limit reduction is reported.

So, to recap:

(1) Congress will pay me $8,000 to buy a house (among other benefits);

(2) I need a loan to buy a house, and the rate I get will depend on my credit score;

(3) The worse my credit score, the higher the loan rate, the more interest I can deduct on my taxes, and the more I can keep out of the federal treasury;

(4) The higher the loan rate, the more banks will make; and

(5) Banks hurt my credit score by adjusting my credit limits without cause.

How am I not being hurt by the cascade of events that stemmed from people taking out loans irresponsibly?

How is it NOT unjust to let neighbor A refinance to a lower rate on his home because he either bought more house than he should have or he doesn't sacrifice as much as neighbor B who pays on time and gets NO CREDIT for doing so?

Just some thoughts....are they Republican, Democrat, or none of the above?