Can Indianapolis afford an NFL franchise? by Kurt St. Angelo @ 2005 Libertarian Writers' Bureau
Since at least 1997 – only 14 years after 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 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 revenues provided from 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 costs. Taxpayers coughed up $20 million in 1998 to enlarge RCA Dome’s suites and enhance value of its expensive box seats. This actually cut dome’s capacity to 57,900 seats, making it smallest stadium in league. In 2003 team ranked 27th out of 32 NFL teams in terms of revenue and 29th in value.
"We're significantly, significantly below average (in revenue), and that disparity is growing,” Irsay told Indianapolis television viewers. “Yet average determines what our expenses are with salary cap. That's what makes things so difficult."
However, as Cincinnati Bengals have proven, a new stadium does not ensure a better profit. Even with a new stadium, Bengals were 24th in revenue in 2002, with only $4 million more in revenues than Colts.
The Colts’ lease at RCA Dome runs until 2013, but team can break deal after 2006 season if its revenues aren’t greater than or equal to median in NFL in two out of next three seasons. Indianapolis could require Colts to stay by paying difference between team’s revenues and league’s median.
In 2002 Colts fell short by about $13 million. Under this arrangement, Indianapolis taxpayers presently pay 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 team’s future in Indianapolis depends on “the ability … to market yourself and sell seats, particularly expensive suites and club seats.” Agreed.