New Orleans Saints owner Tom Benson has "all the negotiating power" in ongoing talks with Gov. Kathleen Blanco over how to keep the team in the city. That's the opinion of Robert Baade, a sports economist and professor of business and economics at Lake Forest College in Chicago, who last week addressed a forum hosted by the Bureau of Governmental Research (BGR). Baade says because the owners of professional sports leagues control the "supply and demand" of teams, cities like New Orleans are at a major disadvantage when private owners demand public funding for a new stadium or other amenities.
"It's simple economics," Baade told reporters. "If you create a situation where there is excess demand for teams, then every single host city is at risk for losing their teams if they don't accede to league and team demands. ... [The threat of relocation] is not just a problem for New Orleans. I think it's a problem for the country."
We agree with some of Baade's analysis, but we disagree with any conclusion that the state is powerless. True, Blanco is governor of one of the poorest states in the nation. But Blanco has plenty of political capital to spend in negotiations with the Saints, and she's indicated that she's willing to play tough.
Benson last month suggested he was ready to leave if the state declines to renovate the Louisiana Superdome and give the team millions of dollars in annual state subsidies. The NFL has made no secret of its desire to put a team in Los Angeles, the nation's No. 2 media market. Benson has threatened to "boogie" out of town in the past: In June 2001, when negotiations stalled between the Saints and then-Gov. Mike Foster's administration, Benson said he might move the team to Mississippi or sell it. Instead, on Sept. 25, 2001, Foster and Benson agreed to a 10-year, $187.2 million deal to keep the Saints in New Orleans. Under the deal, the state started paying the Saints escalating annual subsidies, starting with $12.5 million in 2002 and growing to $23.5 million in 2008.
Steve Perry, then Foster's chief of staff, called the deal "a historical partnership between a sports franchise and a governmental entity." Payments are funded by a number of sources, including reimbursements of $800,000 a year in rental payments to the Superdome and 100 percent of all concessions. But funding tied to taxes on hotel bookings took a big hit after 9/11. This summer, during Blanco's first year as governor, the state had to borrow from an economic development fund to make the $15 million payment due in July 2004. Another $15 million is due in July 2005.
A new stadium could cost a prohibitive $600 million or more. A $168 million renovation of the Dome could provide seating and amenities that might entice the Saints to stay, consultants to the state Superdome Commission said last week. But the makeover would require a new tax to generate $8.4 million to $12.7 million a year, depending on what the Saints kick in -- if anything.
As part of her tough stance, Blanco called for the Saints to open the team's financial books to state auditors. The Saints had not responded by press time, but Blanco's move does have a precedent. A Foster-Benson memo from prior negotiations notes that the Saints' revenue dropped sharply from 1995 to 2001, and states, "These revenue numbers have been reviewed and corroborated by the state's own independent experts." Blanco thus has good reason to seek state review of the Saints' books.
Let us be clear: We love the Saints and we want them to stay in New Orleans. We don't suggest state review of the team's books as a bargaining ploy, but rather as a means of maintaining public confidence in the notion of extended subsidies for the franchise. We also don't agree with Baade's conclusions that professional sports teams have marginal economic impacts on their communities. Local economist Tim Ryan, in a report paid for by the state, concluded several years ago that the Saints have an enormous economic impact on the city and the state. The Saints are big business, and their presence makes New Orleans a big-league city. The issue is whether our city and state can afford to stay in that league -- and at what cost? Blanco should consider taking a page from the playbook of Tulane University President Scott Cowen, who challenged the BCS bowl selection system as unfair to smaller colleges. In that vein, she should work to stop pro sports teams from extorting massive public funds from poor cities with a proven record of fan devotion. She could raise that issue when she meets with a league of her own next month -- the National Governors Association convention in Washington, D.C. Networking with the governors of NFL states might build support for the types of reforms that are needed to level the playing field between cash-strapped cities and states, and the big-money world of professional football.