LOUISVILLE, KY. (WDRB) -- Here's how this works. Every time I read a study commissioned by , well, anybody, I dock myself 10 IQ points. It is mind-numbing stuff. With any luck, you won't have to dock yourself any points after reading this column. But I make no guarantees.
On Wednesday, some outfit called "Cambridge Economic Research" out of Cambridge, Mass., came out with a feasibility study that cast great doubt on how much Louisville would benefit economically from an NBA team coming to town.
Its conclusion, frankly, might be right, in the same way that if I throw a dart, I might hit a bullseye. But it wouldn't be because I know what I'm doing in darts. It's my belief that this city and state could support an NBA team, the right team, under the right conditions. So far, no such team appears to have expressed an interest, and no such conditions seem to have been arranged. So basically, all of this is one big exercise in grandstanding. That's my opinion. I haven't commissioned a study.
In general, I'm of the opinion that if you want to put a team in downtown Louisville, you go get a team. Otherwise, you're just riling everybody up. This is an issue that has the potential to waste a great amount of time and money, if no team is looking to relocate here.
At any rate, faced with a downtown arena whose revenue is coming in below projections and leaving the city on the hook for higher payments, Louisville mayor Greg Fischer, some NBA proponents and some city business leaders have met to talk about how an NBA team at the KFC Yum! Center might help the situation. Over time, the beginnings of an NBA drumbeat have commenced.
This study, in effect, is an answer to that drumbeat. It asserts that Louisville has little to gain from the NBA.
Who commissioned it? That's unclear even a day after it was released. But some crew called Boxcar PR was the one blowing the horn on it, and given my role in the punditry, I'm going to say that it was backed by someone sympathetic to the University of Louisville, which has a great deal to lose from an NBA team coming to the city, and also, conveniently, happens to have a signed contract to play in the very arena that NBA backers want an NBA team to take over.
How do I assume all this? I go to the footnotes first. The footnotes are where they put all the good stuff in these things, anyway. In a White Paper from the study, there are some interesting footnotes.
There's a Louisville TV story about Fischer brainstorming an idea about bringing the Indiana Pacers down here to play 10 games. Let's hope that storm was a quick one. The Pacers are in the third year of a $30 million aid deal because they couldn't afford to operate Bankers Life Fieldhouse. So I'm not thinking they want to forfeit any Indiana revenue to come down and help pay the bills on this arena in Louisville.
More footnotes. Two of them, in fact, that cite the study they're sending the release out on. That seems like a neat trick. It's like a study citing itself. If you can do that, I need to get back with my high school English teachers.
Another source cited is, "U of L Today," an in-house publication of U of L, and yet another is an email exchange between Kevin Miller, Harold Workman and Debbie Burda. Workman is the former fair board chairman and Miller is an executive associate athletic director at U of L. Burda is a sales and marketing director for the fair board.
Moving to the actual study itself, it's interesting enough. It raises questions of how much it costs to get an NBA team, how much money the team itself demands, and takes a look at NCAA attendance trends and Louisville demographics compared with existing NBA markets.
It paints a pessimistic picture. That doesn't necessarily mean it won't be an accurate picture in the end. But it's not a complete picture. Studies like this often gloss over things -- on purpose.
You cant necessarily compare Louisville to some of these other markets, because Louisville is a basketball city, and Kentucky is a basketball state. It's like those who predicted the competition of Indiana casino gaming would affect Churchill Downs as catastrophically as it did some tracks in other states. They failed to consider one thing. Churchill Downs is not those other tracks. Horse racing in Kentucky is, or at least was, a different proposition. Basketball in this city and state is, too.
The most interesting section of this study, for me, was a look at how much income tax revenue would be gained by bringing an NBA team here. This is a main argument for NBA proponents. College athletes and coaches don't bring the kind of income tax benefit that pros do. So I was intrigued to see an estimate of how much an NBA operation might bring in new income tax. Unfortunately, this study shot an airball on some of these estimates. It figured in salaries for 15 players, front-office staff and coaching staff, then applied a 2.2 percent city tax (or 1.45 percent for non-city residents).
It came up with the finding that $81.5 million in team salaries would generate $1.27 million in city tax revenue.
What it never took into account were visiting teams and coaches. NBA players and coaches typically file taxes in 16 to 20 different jurisdictions. When LeBron James comes to town to play, he makes a salary in that night's game, and he has to pay tax on that in whatever city and state he plays. Those taxes are never mentioned in this study. Nor are possible taxes on player income from endorsements, personal appearances or dividends and investment income -- though those generally go to the player's state of residence, which, let's face it, probably isn't going to be Louisville, Ky., in most cases. Regardless, at the very least, this study's projection in this one area is too low based on some projected tax revenue from visiting teams and coaches.
Moreover, the study contains other little errors of the kind that make things just look hastily done. Like the sentence that says, "$70 million of the Memphis Grizzly's (sic) $98 million annual operating budget goes to salaries of player (sic), high paid (sic) executives, and team owners."
But let's face it. The only reason to have a study is so that leaders who oppose the NBA can have a study to cite when they stand up to talk about it. And now we'll get another, more expensive study, down the road to say that Louisville CAN benefit from an NBA team, so those folks can have a study they can cite.
Other than the realization that I need to get into the business of writing these studies, where apparently the real money is, the situation still stands in the same place:
-- Proponents see an NBA team as the quickest, most logical cure for the new arena's revenue ills. And they have resorted to open criticism of U of L, and calls upon U of L to amend its deal with the arena, as a gesture of good citizenship.
-- U of L athletic director Tom Jurich points out that the arena deal was negotiated in public, with appointments to the arena authority made by the governor, and its agreements subject to open records laws. There was an early warning on this. John Schnatter and David Jones both said that the waterfront site was too expensive. U of L, however, was opposed to an alternate downtown site, and the deal was struck to build on the waterfront to get a downtown arena. Jurich says U of L negotiated the contract in good faith and will protect it.
-- We are entering an adversarial process, and that is going to make matters worse. To scapegoat U of L at this point is a losing proposition. Without U of L, there is no arena. And while U of L negotiated an advantageous deal downtown, it also made the original proposal on a new arena, and the site for that would have been the Fairgrounds right next to Freedom Hall. U of L was serious about that, and in fact said at one point it would not play downtown at all. The school is one of the city's largest employers. It's going to have to be dealt with respectfully on this.
-- We still don't know if there is a flesh-and-blood team that is willing to come to Louisville.
-- Other options for addressing the arena revenue shortfall, such as further development in the special tax district, seem to have been swallowed up by NBA talk. U of L is delivering more than 600,000 fans through the turnstiles for men's and women's games combined. (More than about one-third of NBA teams). What those fans choose to do before and after the game is a factor when it comes to the special tax district. Options for dining and entertainment around the arena are key with or without an NBA team.
It's a tough call. The sports columnist in me sees the NBA and says, "Bring it on." But you can't just keep firing bricks at U of L. That's not going to make anything better. And now with this study, someone sympathetic to U of L's take on things has fired back.
In the absence of an NBA team that wants to come to this city, substantive and realistic help for this situation could be left on the sidelines if too much is wrapped up in this NBA issue.
A couple of weeks ago, The Courier-Journal asked the question of whether the city's investments in Fourth Street Live have turned a profit. More than $20 million in taxpayer subsidies are in question, and many of Cordish's dealings are not subject to public review.
The following paragraph from reporter Chris Otts' story is referring to Cordish, but is just as applicable to the KFC Yum! Center: "Mayor Greg Fischer said the city's deal with Cordish was 'negotiated many years before my administration began, and the city is obligated to uphold its agreements.'"
If that's the case with Fourth Street Live, then it has to be the case with Main Street's arena.
I don't know who is going to referee this thing, but I don't need a study to see that somebody is going to need to.
Copyright 2012 WDRB News. All Rights Reserved.
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