Can Indianapolis afford an NFL franchise?

Since at least 1997 only 14 years after the 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 the 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 the revenues provided from the RCA Dome, and that a new stadium is needed sooner or later.

Its tough making big money on an NFL franchise in a market this size without taxpayers subsidizing much of the costs. Taxpayers coughed up $20 million in 1998 to enlarge the RCA Domes suites and enhance the value of its expensive box seats. This actually cut the domes capacity to 57,900 seats, making it the smallest stadium in the league. In 2003 the team ranked 27th out of 32 NFL teams in terms of revenue and 29th in value.

"We're significantly, significantly below the average (in revenue), and that disparity is growing, Irsay told Indianapolis television viewers. Yet the average determines what our expenses are with the salary cap. That's what makes things so difficult."

However, as the Cincinnati Bengals have proven, a new stadium does not ensure a better profit. Even with a new stadium, the Bengals were 24th in revenue in 2002, with only $4 million more in revenues than the Colts.

The Colts lease at the RCA Dome runs until 2013, but the team can break the deal after the 2006 season if its revenues arent greater than or equal to the median in the NFL in two out of the next three seasons. Indianapolis could require the Colts to stay by paying the difference between the teams revenues and the leagues median.

In 2002 the Colts fell short by about $13 million. Under this arrangement, Indianapolis taxpayers presently pay the 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 the teams future in Indianapolis depends on the ability to market yourself and sell seats, particularly the expensive suites and club seats. Agreed.

The RCA Dome has 104 suites. The leagues top franchise, the Washington Redskins, offers 280. The difference in revenue between the Colts and Redskins luxury suites likely exceeds $15 million annually. Total team revenues were $137 million and $227 million, respectively, in 2002.

Certainly it behooves Irsay to shop his team to the city that gives him the best deal. During the past decade, 21 of the leagues 32 teams have received new or renovated stadiums. An average sweetheart deal is a $323-million stadium, paid 65 percent by taxpayers , that holds 69,200 spectators.

But here are the $66,000 questions for Mr. Irsay: Even with an average $323-million stadium funded two-thirds by taxpayers, can the Colts sell more suites at greater prices to bring team revenues above the NFL median? Likewise, can the central Indiana football market sustain more suites, box seats and higher prices to keep the Colts in town?

Ive been thinking of recommending that the Libertarian Party buy the naming rights to the next Indianapolis Colts stadium, but now Im having second thoughts.

At a recent sold-out home game, I was unable to sell the two extra $45-seats that I had at any price. There was no one besides ticket scalpers to give the tickets. I swallowed the $90 in losses, not to mention two grossly expensive $6 beers during the game. (Hey, I was thirsty and now have my third plastic commemorative Colts cup!)

Before a new stadium becomes economically realistic in Indianapolis, demand for Colts tickets, box seats and luxury suites must exceed their supply. This burden of truth falls on Jim Irsay, and he must meet this before taxpayers make more concessions.

Funding a new stadium with $400-plus million of taxpayer debt (excluding interest) is to gamble on the teams ability to sell itself to more fans and at a higher premium.

This will be a much harder task than giving away my extra tickets.

(Originally published on November 16, 2004)

Attorney, screenwriter, Libertarian Party activist in Indianapolis

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To Open or Not to Open a Major Franchise Business

If you are tired of working for someone else and exploring opening and running your own small business, you are probably confused about the multitudes of available business possibilities. To make matters worse, authoritative voices differ in their opinions of whether opening a major franchise business is preferable to starting an independent business.

As an owner of nine franchise businesses, I have personally experienced the benefits as well as the limitations of opening and running franchise businesses. The following is a list of pros and cons of owning a major franchise business.

1.(Pro) Pre-existing building layouts and dcor requirements lesson start-up confusion and facilitate quicker and easier start-ups.

Many pre-existing franchisors The Franchise Giver Big Daddy usually equip their new franchisees You The Little Fish with possible layout and decor drawings and requirement spec sheets, thus taking the guesswork and hassle out of trying to figure out how you are going to build-out and equip your new business.

2.(Con) Loss of creative control over business layout and dcor appearance.

The benefit of being told where and how to build and place everything comes with loss of freedom you may want to express your creative decorative expression in your business. If you want to decorate your business with freedom, research the franchise dcor rules and regulations before you purchase a franchise.

3.(Pro) Franchise agreements and structures set up to save you money on business, service or food products.

Because of the greater number of franchises, Big Daddy usually has arranged cheaper national contracts wherein you can get certain services, business or food products at a significantly reduced price. You get to save money.

4.(Con) The products and/or services you provide are regulated and controlled by Big Daddy.

These cheaper prices are usually accompanied with regulation and control by the franchisor as to what type of products and services you can or cannot purchase. In other words, Big Daddy tells you what you can or cannot buy and from whom.

5.(Pro) National Advertising included.

Well known, established franchises typically have a National Advertising campaign in place that provides TV, radio, and printed material advertising. This way, you dont have to spend a lot of your own money locally advertising your business.

6.(Con) Loss of promotion/advertising freedom.

Great national advertising promotions are typically accompanied by blanket: You will promote this product or service during this campaign ruling. Hopefully, their advertising campaigns will make sense, wont cost you too much money, and bring in more business. Sometimes it works and sometimes it doesnt.

7.(Pro) Name recognition.

Who has not heard of Baskin Robbins, Subway or GNC? If you havent, youve been living in a cave. Franchises typically have wonderful name recognition benefits to them. In other words, people will actively seek out a particular franchise wherever they go.

8.(Con) Customer holds other franchise experiences against YOU.

If a customer has had a bad experience at one franchise location, he tends to hold all of the other franchise owners responsible for that one bad experience somewhere else. In other words, Ill never go to another Subway because I didnt like the meatball sub I got at Joe Blows location.

9.(Pro) Potential for higher sales.

With the national advertising campaigns and name recognition, your franchise business has a better potential for much higher sales than a similar business with a no-name, no experience rating history.

10.(Con) Handing over a percentage of your sales to Big Daddy.

Yeah, higher sales! But ouch, you have to hand a large bulk of your sales over to Big Daddy. For every dollar you earn, your franchise fee rips away anywhere from .04 to .25. Pull your wallet out and hand it over to Big Daddy.

As with any situation in life, there are resulting pros and cons. Simply study the nature of the franchises completely and talk to other franchise owners to get a feel of whether you will want to purchase that particular franchise. If its a good fit, go for it!

Good luck and good business!

As an owner of nine franchise businesses, I have personally experienced the benefits as well as the limitations of opening and running franchise businesses. The following is a list of pros and cons of owning a major franchise business.

1.(Pro) Pre-existing building layouts and dcor requirements lesson start-up confusion and facilitate quicker and easier start-ups.

Many pre-existing franchisors The Franchise Giver Big Daddy usually equip their new franchisees You The Little Fish with possible layout and decor drawings and requirement spec sheets, thus taking the guesswork and hassle out of trying to figure out how you are going to build-out and equip your new business.

2.(Con) Loss of creative control over business layout and dcor appearance.

The benefit of being told where and how to build and place everything comes with loss of freedom you may want to express your creative decorative expression in your business. If you want to decorate your business with freedom, research the franchise dcor rules and regulations before you purchase a franchise.

3.(Pro) Franchise agreements and structures set up to save you money on business, service or food products.

Because of the greater number of franchises, Big Daddy usually has arranged cheaper national contracts wherein you can get certain services, business or food products at a significantly reduced price. You get to save money.

4.(Con) The products and/or services you provide are regulated and controlled by Big Daddy.

These cheaper prices are usually accompanied with regulation and control by the franchisor as to what type of products and services you can or cannot purchase. In other words, Big Daddy tells you what you can or cannot buy and from whom.

5.(Pro) National Advertising included.

Well known, established franchises typically have a National Advertising campaign in place that provides TV, radio, and printed material advertising. This way, you dont have to spend a lot of your own money locally advertising your business.

6.(Con) Loss of promotion/advertising freedom.

Great national advertising promotions are typically accompanied by blanket: You will promote this product or service during this campaign ruling. Hopefully, their advertising campaigns will make sense, wont cost you too much money, and bring in more business. Sometimes it works and sometimes it doesnt.

7.(Pro) Name recognition.

Who has not heard of Baskin Robbins, Subway or GNC? If you havent, youve been living in a cave. Franchises typically have wonderful name recognition benefits to them. In other words, people will actively seek out a particular franchise wherever they go.

8.(Con) Customer holds other franchise experiences against YOU.

If a customer has had a bad experience at one franchise location, he tends to hold all of the other franchise owners responsible for that one bad experience somewhere else. In other words, Ill never go to another Subway because I didnt like the meatball sub I got at Joe Blows location.

9.(Pro) Potential for higher sales.

With the national advertising campaigns and name recognition, your franchise business has a better potential for much higher sales than a similar business with a no-name, no experience rating history.

10.(Con) Handing over a percentage of your sales to Big Daddy.

Yeah, higher sales! But ouch, you have to hand a large bulk of your sales over to Big Daddy. For every dollar you earn, your franchise fee rips away anywhere from .04 to .25. Pull your wallet out and hand it over to Big Daddy.

As with any situation in life, there are resulting pros and cons. Simply study the nature of the franchises completely and talk to other franchise owners to get a feel of whether you will want to purchase that particular franchise. If its a good fit, go for it!

Good luck and good business!

As a Mind Power Leadership coach, trainer, and speaker, Ronya Banks has helped others become leaders and business owners since 1992. Frequently featured in radio, magazine and newspaper articles and interviews, Ronya helps you find the great leader within by accessing the natural power of your minds. Discover more of Ronyas proven leadership success secrets by subscribing to her Mind Power Leadership ezine newsletter at: http://www.livinginaction.com/newsletter.cfm.

Franchise Models For Less

I read an article from the Seattle Times this week about a Quiznos franchise that struggled for several weeks just to stay afloat after the owners disappeared. The manager and three employees stayed on with no pay in an attempt to salvage this sinking ship. Things got really bad when food vendors would no longer deliver on credit so the loyal employees were forced to pick up supplies, such as deli meat, from the local grocery store.

Stories like this are not typical of franchise models, but, of course, nothing is completely flawless. Franchises are the hottest business model today because they provide a proven system and product that tend to produce very high rates of success. The downside typically comes from the high start-up fees. A typical brick and mortar franchise can run between $430,000 and $750,000 with the majority going to pay for the building, equipment, and supplies. Forty percent of this cost has to come from your own (non-borrowed) funds.

Not all franchises today are brick and mortar businesses, however. In fact, there are many service franchises that can be run from your home. Entrepreneur Magazine has released its spring title of Be Your Own Boss: 231 Low-Cost Businesses You Can Start Today! Its packed with several franchises options that range from $2,200 to $50,000 in startup costs and require small ongoing royalty fees that average under 10%. A great web site for additional information on franchise options is www.franchise.com

If these start-up costs are still a little high, consider starting your own service business. There are several great ideas Dan gives in his audio Turning Your Passions into Profits. Also, stay tuned for Business Ideas You Can Bootstrap For Under $500! an e-book that will be available to all of our subscribers for FREE in a couple of weeks.

Jonathan R Taylor is the author of The Coach's Career Tips and Resources. He helps his clients Love Their Work! You can subscribe at www.careercalling.com/subscribe.htm.