BATON ROUGE, La. (AP) — It’s a near annual problem for the governor and lawmakers: scramble to find millions of dollars to pay the state’s contract obligation to the New Orleans Saints.
State officials have been creative through the years. They’ve used surplus cash, refinanced Louisiana Superdome debt and borrowed from an economic development fund.
But they’ve never found a permanent source of cash for the payments.
So, new year, same problem — only this time, the shortfall comes amid a massive state budget crisis. And state officials aren’t necessarily as keen to pay a professional sports team with dollars from the state treasury if they’re also going to have to cut spending on colleges and health care programs.
Thanks goes to former Gov. Mike Foster, who made the $186.5 million deal that leaves Louisiana scrounging for cash to hand over to the NFL team each year.
Team owner Tom Benson says the subsidy is needed to make operating in the relatively small New Orleans market worthwhile. Next year’s payment is $23.5 million.
The money is supposed to come from the budget of the Louisiana Stadium and Exposition District, or LSED, which operates the Superdome where the Saints play. Doug Thornton, senior vice president of SMG, the company that manages the stadium, said the LSED won’t bring in enough for the fiscal year starting July 1 to cover the payment.
The problem has recurred since Foster negotiated the 10-year deal with the Saints in 2001.
The deal assumed the LSED would get money from several sources that never materialized, including annual growth in the New Orleans area hotel/motel tax and the sale of naming rights to the Superdome and New Orleans arena. The 9/11 attacks, Hurricane Katrina and the national recession have kept growth slowed in the hotel tax, and naming rights have never sold.
Nearly every year Thornton must deliver the news to a legislative panel that the LSED will come up short of what is needed to pay the Saints.
The deal with the team runs through 2010 and promises direct cash payments. The money comes atop the team’s earnings from ticket sales, concessions, parking and other items.
If the state doesn’t make the payments to the team, the Saints could leave New Orleans without penalty. Thornton said the troubled economy would make that difficult, and the Saints have expressed a commitment to New Orleans.
“We hope that an eventual solution will address both the short- and long-term challenges that face the Saints and the state,” said Greg Bensel, a Saints spokesman.
The LSED also is short of what it will need to make its annual payment to the New Orleans Hornets, but the contract for the professional basketball team is much smaller than the Saints’ deal. The total shortfall in funding needed for the two teams could be as much as $27.5 million, Thornton told lawmakers last week.
Now Thornton, Gov. Bobby Jindal and state lawmakers are trying to figure out what the solution for next year’s payment will be, even as the state is expected to bring in $1.2 billion less in state general fund income.
And all of this comes while the Jindal administration is in negotiations with the Saints, seeking a new contract to keep the team in Louisiana past 2010.
Thornton said the state hopes to renegotiate with the Saints before April 1, the deadline for NFL teams to apply for the 2013 Super Bowl. A long-term deal between both is needed to be in the running for future Super Bowls.
In a new deal, Thornton said, the state hopes to “rebalance the risk,” moving away from direct cash subsidies. In exchange, he said the state could make improvements to the Superdome, like adding more suites, seats and concession areas to help the Saints earn more from ticket, food and drink sales.
Rep. Jim Morris, R-Oil City, summed up a common sentiment around the state Capitol when he told Thornton, “I think my constituents would certainly say, ‘I hope to God the same people’s not negotiating this go around as they did the last time.'”
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