National Collegiate Athletic Association

The NCAA News - News and Features

June 16, 1997

Finances favored Indianapolis in headquarters location decision

Although the decision to move the NCAA's national office from the Kansas City area to Indianapolis was based on a number of factors, one key difference in the proposals offered by the two cities had to do with the timing of financial incentives.

The NCAA announced May 31 its decision to move to Indianapolis, either in the last half of 1999 or the first half of 2000. On June 9, NCAA staff members met with representatives from the Kansas City area and provided them with additional information to explain the financial reasons for the decision.

The Kansas City delegation was advised that the Indianapolis proposal was "front-end loaded," with incentives provided during the early stages of the project. By contrast, all of the proposals from Kansas City/Overland Park featured incentives that came at the end of a specified time.

Further, while the Indianapolis proposal did not include any construction financing, each of the Kansas City area proposals included multi-million dollar, long-term financing for the NCAA to cover the construction costs of both the headquarters facility and the Hall of Champions, resulting in annual-debt service costs.

The Kansas City area proposals also required a 20-year commitment from the NCAA to remain in the area, with a stipulation that virtually all of the incentive package would be forfeited if the Association did not stay for the length of the agreement. The Indianapolis proposal did not require any such commitment.

Because of Kansas City's requirement for a 20-year agreement, figures for operating expenses for both cities were based over 22 years (the 20-year agreement, plus 1998 and 1999).

The most expensive option was to continue leasing the current space. Using that figure as a baseline, the Indianapolis proposal would save between about $49 million and $54 million.

The Kansas City proposal that was most appealing financially was to purchase the current facility (a savings of about $23 million over leasing). However, the other viable Kansas City proposal -- one that featured space in the Crown Center area south of downtown Kansas City, Missouri -- was more appealing in terms of establishing a quality headquarters site. It would provide a new facility, better access to the airport, proximity to large hotels and much greater traffic for the Hall of Champions.

But that proposal required construction financing, which meant that the Association would realize savings of only $5 million to $6 million over the 22-year period, compared to the cost of leasing the current facility.

Another proposal from the Kansas City area involving the Corporate Woods office complex would have cost more than leasing the current facility and was eliminated from consideration by the NCAA 2000 working group.

Other factors that were involved in the decision included the following:

  • The two most cost-effective Kansas City/ Overland Park proposals included land-lease costs with market-driven rents, one with a 10-year lease and the other with an open-ended lease. The Indianapolis proposal included an open-ended lease with an annual rent of $1.

  • With the exception of the current facility, each of the other Kansas City/Overland Park proposals had included in their construction cost estimates an amount for construction-period interest costs. The Indianapolis proposal did not include such costs.

  • The projected net total construction costs in the Kansas City area (that is, projected construction costs, less incentives) for the headquarters facility and the Hall of Champions represented the amount to be financed by the NCAA through tax-exempt bonds. The Indianapolis proposal included incentives that exceed the net total construction costs for the headquarters facility and the Hall of Champions.

    "The primary, but not exclusive, factors contributing to the differences in these proposals included long-term debt service costs, long-term land lease costs and annual parking space costs," concluded the report that was provided to the Kansas City-area representatives. "The Indianapolis proposal did not include such costs."

    Kansas City representatives have expressed concerns that Indianapolis altered its proposal after a May 15 information deadline. However, NCAA and Indianapolis officials say that is not true and NCAA officials say that, in fact, both cities submitted updated information between May 15 and May 31.

    The Indianapolis proposal featured a $10 million contribution from the Eli Lilly Foundation that was contingent on the raising of $15 million in private money.

    As time wound down, Indianapolis officials acknowledged that they had not raised the $15 million in private funding. However, on May 27, Indiana Gov. Frank O'Bannon provided the following assurance to the NCAA:

    "Because of my familiarity with the bid and the individuals and corporations who are leading Indiana's effort, I have every confidence that the development of a new headquarters for the NCAA in White River Park will be done in a timely manner and to the satisfaction of the NCAA.

    "Reflecting that confidence, I want you to know that I stand prepared to step in and pursue all available financing alternatives should any unexpected shortfalls result in fund-raising yet to be accomplished during the remainder of the year."

    Site-by-site savings

    Estimates for the savings for various NCAA headquarters sites over a 22-year period, compared to the cost of leasing the current facility:

    Indianapolis (best case) -- $53.9 million

    Indianapolis (worst case) -- $48.7 million

    Present location -- $23.1 million

    Present location

    (Hall of Champions in Union Station in Kansas City) -- $12.4 million

    Present location

    (Hall of Champions in Crown Center in Kansas City) -- $12.1 million

    Crown Center -- $5.3 million

    Crown Center

    (Hall of Champions in Union Station) -- $5.6 million