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Super Bowl Football, Steve Weatherford

New York Giants punter Steve Weatherford, who was born in Crown Point, warms up on the field before Super Bowl XLVI in 2012 in Indianapolis. Indianapolis officials worry a new law could damage Indianapolis' hard work in making the city a center for major convention and sporting events.

Most main roads leading into Indianapolis have fading signs at the city limit saying it was the proud host of Super Bowl XLVI in 2012, the culmination of decades of positioning a city once known as Indiana No Place into a host of major conventions and sporting events.

Boosters seized the spotlight to tout Indianapolis as a world-class city, and it has continued to welcome visitors for events such as the upcoming Final Four.

But the state's "religious freedom" law is threatening to undermine decades of work by Indianapolis's civic leaders, who also sought to diversify the city's economy by fostering the life-science sector, tech companies and other emerging industries.

Leading tech firms that include Salesforce, PayPal, Yelp and Apple quickly lashed out at a law that's widely believed to sanction discrimination against gay people since it was passed in the session after gay marriage was legalized in Indiana and the state does not have a law protecting GBLT people from discrimination. The controversial law lets people, churches and for-profit businesses ignore government rules they disagree with on religious grounds, and gives them a defense against lawsuits.

Since the law was signed, Indiana's reputation as a welcoming place has been tarnished after mockery from comedians and scorn from celebrities.

"It's a touchy issue, but from a business perspective you don't want to appear to treat any customers unfairly," said Micah Pollak, assistant professor of economics at Indiana University Northwest. "The customer always comes first. It doesn't matter if the law results in any actual discrimination, just the perception from the public."

People from outside the state might think twice about visiting, attending college in Indiana or opening a business in the Hoosier state, Pollak said. Chicago residents might be less likely to venture into Northwest Indiana to visit a beach or craft brewery.

"Northwest Indiana has had a fairly negative image in Chicago for a long time, and the recent "Stillinoyed" ad campaign reinforced that by trying to draw a line between Northwest Indiana and Chicago," he said. "We've been working hard to improve that image to show we have amenities and new spaces on Lake Michigan and microbreweries. But this just reinforces negative stereotypes in greater Chicago."

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Indianapolis can't afford the stigma of being perceived as an intolerant place, because its convention business has competition all over the country, Pollak said. An organization might rule out Indy because of a fear members might not feel welcome there. That would have a spillover effect on downtown restaurants and bars, and would hurt hotels throughout the city.

A government labor union just canceled its convention, and Gen Con and Disciples of Christ are threatening to as well. But the full impact won't be known immediately. Conventions are planned years in advance and would be more likely to steer away from Indianapolis than break contracts, Pollak said.

The loss of a single major convention like Gen Con could cost $50 million, Indiana Business Research Center Director Jerry Conover said. If a few pulled out, the economic loss could skyrocket into the hundreds of millions of dollars.

"It would be felt in cash registers throughout the city," he said.

Damage to the state's reputation could be long-lasting, said Conover, who noted he didn't buy gas at an Exxon station until 20 years after the Exxon Valdez oil spill. 

"The more quickly the state gets its act together after this PR fiasco, the less likely those impressions will last that Indiana isn't a nice state for visitors," he said.

Perhaps most critically, a stigma that Indiana is retrograde will thwart efforts to diversify the economy and create better-paying jobs to raise income levels, Indiana Business Research Center Director of Economic Analysis Timothy Slaper. 

"We can add as many manufacturing jobs as we want, but it's not going to move the needle on per capita personal income," he said. "To move the average wage of the state, we need brainpower as opposed to brawn. Jobs in the creative class – marketers, statisticians, life sciences, aerospace, scientists – pay an average of $80,000 to $90,000 a year. Those will make the state more prosperous."

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Business Reporter

Joseph S. Pete is a Lisagor Award-winning business reporter who covers steel, industry, unions, the ports, retail, banking and more. The Indiana University grad has been with The Times since 2013 and blogs about craft beer, culture and the military.