Mathematics Does Not Lie, Â So Why Do Our Leaders Keep Lying to Themselves
Four years ago the City County Observer published an editorial that exposed the fact that the valuation of the downtown convention hotel that was proposed at the time would not exceed $20 Million. We were scoffed at for that opinion, yet proven right by three deals in a row all of which came unraveled when the financing fell apart over VALUATION. Â We followed that up with perhaps as many as 100 articles that called out the City of Evansville and particularly the Evansville Redevelopment Commission for failing to have a competent vetting process in place. We hoped that our elected leaders would actually elevate their financial skills to at least a sophomore business student level and learn something about valuation and vetting. Â Alas, that has not happened and another valuation based debacle has been exposed with yesterday’s confession that the funding for the convention hotel is once again on the verge of collapse.
A year ago, elected officials by the score were congratulating themselves on striking a deal with Old National Bank to buy the naming rights to the Centre for $14 Million with all of the proceeds going to subsidize the convention hotel. When questioned about such a stratospheric value in these pages and the fact that Old National is a public company that has shareholders to answer to by the CCO, we were dismissed again by the golden shovel team. Well folks the valuation chickens just came home to roost, EXACTLY AS THE CCO PREDICTED.
Yesterday’s news was filled with the typical finger pointing associated with delays with HCW blaming the City of Evansville and ONB for not delivering the cash, and the Mayor’s Chief of Staff blaming HCW for not having their finances in order. Â Who is telling the truth? Probably none of them, they never have when it comes to this project. Â This is typical for a project that has been mired by inaccuracy, fluff pieces by local media, and down right delusion from lots of people who should know better.
The reality of the financial valuation of a 250 room hotel with 60% occupancy and a $100 per day rate has not changed one iota since 2010 when the CCO first called out the City for visions of grandeur without basis. Â The price paid for the naming rights for the Ford Center was $400,000 per year. Â The Ford Center has 4 times as many seats and double the number of events that the Centre has so it seems very generous to assume with that as a comp, how the Centre’s naming rights could exceed half of what was paid to name the arena. Â That would calculate to $4 Million for 20 years. Â County Commissioners past and present have acknowledged that the naming rights have been on the block for over 10 years with no interested party. Â One even stated that the naming rights were worthless.
Bob Jones, the CEO of Old National knows the valuation and has sent the expert opinion to HCW. Â Soon, this truth will come out and the ERC and the City Council will be faced with a demand for more than the $20 Million they have already committed to the project. We doubt that they will do any vetting because they simply refuse to learn how. Â We also doubt that there will be 5 votes to move forward with a subsidy that is higher than $20 Million in an election year. Â The potential for this hotel, that our former mayor said would come free if we only built an arena, to go away for good has never been higher. Without 5 people on the City Council with the will to vet projects and who understand the mathematics of valuation, Evansville will keep making these same mistakes over and over and over and over, etc.
In closing, we would like to ask why a valuation for the naming rights to the Centre was not done before the self congratulatory golden shovels were brought out and a press release was distributed? It could have been done and it should have been done, but that would have required a willingness to face reality instead of a camera.