Without a corporate sponsor for the Superdome and a decreased tourism market after Sept. 11, 2001, the state is finding difficulty filling out contract promises to the New Orleans Saints.
The contract, signed in 2001 to secure the Saints’ future in Louisiana, is worth $186.5 million over 10 years. The Saints will receive annual payments ranging from $12.5 to $23.5 million.
The shortfall for the upcoming year is expected at $2.5 million dollars, said Republican Sen. Ken Hollis of Metairie.
Arnold Fielkow, New Orleans Saints executive vice president, said Gov. Mike Foster has assured the Saints that the contractual agreement will be met in a timely fashion.
Bill Curl, Louisiana Superdome director of public relations, said SMG, the managing company for the Superdome, has offered to give the state a $3 million unconditional grant for the next two years to cover the shortfall. However, to receive the grant the state must sign a contract extension with SMG that will keep the company managing the Superdome through 2012.
The current Superdome contract with SMG runs until June 30, 2006. Curl said he is optimistic the state will approve the extension in upcoming weeks.
Hollis said an increase in insurance on the Superdome, a lack of funds from the hotel-motel tax, and the still unsold naming rights to the Superdome contributed to the shortfall.
As part of the contract, the state would give the Saints a percentage of the money generated from the hotel-motel tax, a tax levied on hotel and motel rooms in the state, Hollis said.
With the tourism industry struggling, the hotel-motel tax revenue decreased 4.5 percent from last year, which adds up to a $2 million shortfall, Hollis said. In addition to the decrease from last year, the hotel-motel tax is down 17.5 percent from the proposed amount determined when the contract was signed, Curl said. The miscalculation led to a $5.3 million shortfall from the proposed amount determined in 2001, Curl said.
Also, insurance on the Superdome has doubled from $1.8 million to $3.6 million per year since Sept. 11, 2001, Hollis said.
In addition, the state has yet to find a corporate sponsor to purchase naming rights to the Superdome. The expected naming rights sale was estimated at $3 million when the state signed the contract in 2001. Of the 32 NFL teams, 17 play in corporate-sponsored stadiums.
Hollis said he does not foresee future shortfalls with the Saints. Hollis expects the naming rights to be sold before next year and thinks the tourism industry will rebound in the coming months.
The contract signed in 2001 will pay the Saints $12.5 million this year before jumping up to $15 million in the next three years. The price will reach $20 million during the next two then $23.5 million over the final three years.