Pacers owner seeks court finding on team ownership

Pacers owner Herb Simon is asking a court to declare that neither his late brother’s estate nor his brother’s widow has any financial stake in the team.

The Indianapolis Star learned about the request in an unusual way. It came to light because a court document filed by Bren Simon, widow of Melvin Simon, contained visible words that were meant to have been redacted.

Herb Simon is asking the court to keep the documents, filed last month in Hamilton Superior Court, under seal. He argues that public viewing would create “significant risk of substantial harm” to people who signed a confidential settlement in 2012 pertaining to Melvin Simon’s estate.

The brothers, who became billionaires from owning shopping malls, bought the Pacers in 1983. Melvin Simon died in 2009.

It’s unclear what prompted the timing of the request. A lawyer for Simon declined comment, and court documents available to the public are heavily redacted. A Pacers spokesman also declined comment.

Parts of court documents not redacted included Herb Simon noting that since 2009 Bren Simon has been in litigation with Melvin Simon’s children regarding his estate. The filing said Herb Simon has “consistently and earnestly” tried to help them resolve the dispute.

“Herb has done so in an effort to uphold the Simon name, to preserve some measure of family harmony, and to facilitate the charitable giving that his brother Melvin intended under his estate plans,” the court document says.

The court has scheduled an Oct. 16 hearing to decide whether the redacted information should remain hidden from public view. Notice of the hearing was sent to The Star and local television stations.

The visible words where redactions were intended showed up in Bren Simon’s request to move the case to federal court in Indianapolis.

It says that Herb Simon wants a legal finding that “Melvin Simon Family Enterprises Trust, Bren Simon, nor any of their successors, assigns, owns or has any right, title, interest, or expectancy in or to Pacers Basketball, LLC.”

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Ownership of the Pacers is of significant public interest, for those who have concerns about the team’s long-term commitment to staying in Indianapolis, and for those who oppose the taxpayer support the team receives.

Alan Brown, an attorney for Bren Simon, said he has never seen an initial complaint filed with most of the allegations and facts redacted, as in this case. He declined to discuss the case in more detail.

“If they (the court) say it’s confidential, we can’t walk through that stop sign,” he said. “I just can’t get into the merits of the complaint in any way. I really can’t.”

The value of NBA teams will increase with a nine-year, $24 billion television deal starting in 2016-17. The average of $2.66 billion per year that the league will receive from the deal is an increase from the average of $930 million for the last two years of the current deal.

The deal also will increase NBA teams’ expenses, most notably for player salaries.

Before that TV deal was announced, the local Capital Improvement Board agreed to use $160 million in tax money to cover operating costs and upgrades at Bankers Life Fieldhouse. The team keeps revenue from fieldhouse events, basketball and non-basketball alike.

Simon widow's lawsuit against IRS sheds light on Pacers' ownership

Bren Simon also is involved in litigation with the Internal Revenue Service that’s related to the Pacers.

She is trying to recover more than $21 million in taxes that she paid in protest. She contends that the IRS improperly interpreted as a gift money that Melvin Simon received from an ownership reorganization of the Pacers in 2009.

That reorganization, according to court documents, came after Herb Simon wanted to retain ownership of the Pacers but his brother had grown tired of funding losses for a team “hemorrhaging cash.”

That lawsuit said the Pacers’ infamous brawl in 2004 at Detroit, where players entered the stands to confront fans, started the franchise on a tailspin of financial trouble.

In 2009, after two years of wrangling, the brothers agreed that Melvin Simon would not have to fund losses and would be “released from personal guarantees.” Melvin Simon died later that year.

Not long after that, the Pacers’ fortunes on the court rebounded, with a stretch of winning seasons, including consecutive appearances in the Eastern Conference finals.

Bren Simon, however, suffered a blow — from the IRS.

In December 2013, the IRS notified her that she owed taxes on half of the $83 million that Melvin Simon received in the 2009 reorganization.

Star reporter Jeff Swiatek contributed to this story.

Call Star reporter Mark Alesia at (317) 444-6311. Follow him on Twitter: @markalesia.