State takes out another loan to pay Saints; What's next?

According to numerous reports, Louisiana has taken out a loan for a second consecutive year to pay its annual obligation to Tom Benson and the New Orleans Saints. Last year, Louisiana took out a $7.5 million loan, which has yet to be repaid. This year's loan will be for $10.5 million and will be conducted through the sale of a "revenue anticipation note," a financial method the state hasn't used in over a decade.

By all accounts, state officials have no idea where the revenues will come from to pay off the new loan, which will come due and owing with interest on Jan. 1, 2007.

State Treasurer John Kennedy was quoted in the Monroe News Star as saying, "What we did today wasn't pretty. If you look strictly at the numbers, you probably wouldn't do this, but there's a story beyond the numbers." Kennedy also was quoted in the Baton Rouge Advocate ("It's not pretty but you do what you have to do.") and the Shreveport Times ("It's either default on the contract or pay the Saints.")

Also, the New Orleans Times-Picayune quoted a member of the state Bond Commission, which approved the loan, as saying, "[s]hould nothing change, the (LSED) would be in...worse financial position next year." LSED is the Louisiana Stadium and Exposition District, and it oversees operation of the Superdome. Through it, the state loses money each year by selling concessions it purchases and sells with its own staff at Saints games, and then giving all the profit and then some to the Saints under the current agreement, according to an Alexandria Town Talk article from December 2004, "Saints have heavenly deal with state, look for even more."

The Alexandria Town Talk article also notes that the Saints use the Superdome rent-free, receive all gameday parking fees, all profit from anything sold at Saints games, and all advertising in the Dome. And that's not including luxury suite sales.

In other words, things don't look overly optimistic going forward for either LSED or the state.

All of which begs the question: How will the state pay off the aforementioned loans and still come up with the $20 million due next July to Benson and the Saints under the present agreement? Through another loan?

As it stands now, the only silver lining in continuing to line Benson's pockets with taxpayer gold is this: Since the state has somehow propped up its end of the deal, it means that if Benson opts out of his agreement with the state after the 2005 Saints season, the state will receive $81 million back from Benson.

Like it or not, that seems to be the most revenue anticipation there is for the state at this moment.

A Benson history lesson

Having seen and heard so many "a deal's a deal" arguments out there, I looked into some more specific information on the history of Tom Benson's dealings with the state of Louisiana. I also found some interesting information on the nature of the Saints' present arrangement with the state, in context with the remaining 31 NFL teams.

According to a May 1, 2005, Shreveport Times article by Glenn Guilbeau entitled "Saints play Louisiana Fear Factor," Benson has at various times during his ownership sought to alter agreements with Louisiana. Three years after Benson bought the Saints in 1985, with a stadium deal through 2006, Benson attempted to renegotiate the deal with then-governor Buddy Roemer, and was rejected. Then, in 1992, when the Saints led the NFL in net revenue, Benson threatened to move the team unless he got an improved stadium deal and practice facility. Two years later, a new lease was granted, dramatically improving Benson's game-day earnings. Then, in 1999, Benson again attempted a lease renegotiation, and was unsuccessful. But after a tremendous increase in complaining just weeks after the Saints' lone playoff win in 2000, the present agreement was entered into with then-governor Mike Foster in 2001 (which is detailed in part below).

Another story has chronicled the Benson dealings history. Jeff Duncan of the New Orleans Times-Picayune, in a June 3, 2004, story entitled "Gamesmanship," reported that lease concessions from the state were made when Benson bought the team in 1985, and provided details on the 1994 renegotiation:

"The 1994 renegotiation helped the Saints' profit margin by capping the team's rent at $800,000 a year until the lease expires in 2018, increasing his take of game-day concession sales to 42 percent, up from 35 percent, and eliminating his in-stadium game-day expenses. The deal kept in place revenue streams flowing to the team, such as 100 percent of game-day parking, 100 percent of Superdome tours year-round, 100 percent of annual box suite revenue, and 100 percent of game-day Superdome advertising."

As for the present deal that has caused such a headache in Louisiana, the aforementioned Shreveport Times article reports that the arrangement is one-of-a-kind.

According to the article, Dan Barrett of the Barrett Sports Group that helps finance NFL and MLB stadiums is quoted as saying that "no other team gets direct payments" like the Saints do, especially in addition to the fact that Louisiana pays "all dome operating expenses," totaling over $15 million a year.

The Shreveport Times story also mentioned that its parent company, Gannett, polled all 32 NFL teams, and found that each one (except for the Saints) has financial relationships with their city or county, not their state. And though some NFL franchises have received public funds, those were incentive-based and usually one-time payments or loans, unlike the Saints' annual non-incentive-based payments.

And the Shreveport Times noted the state of the current agreement, as follows:

"Louisiana has already paid $42.5 million and owes roughly $140 million in all through 2010 with the next installment of $15 million due in July. Blanco had to borrow more than $7 million from a state economic development fund to make last summer's payment and estimates the state is $9 million short at the moment for the next payment."

The deal also included a $15.2 million indoor practice facility that opened in 2003, which was fully-funded by the state. And according to the same article, experts have called the unprecedented deal the best in the NFL.

So what's the point of all this? When Benson has wanted more profits for his team, the state has overlooked contracts with the Saints, renegotiated, and bailed him out. Now that the shoe is on the other foot, however, and in spite of all his talk about wanting to keep the team in New Orleans, Benson is more than happy to continue to rake Louisiana and its citizens over the coals with a uniquely bum deal that tremendously favors him.

The Times-Picayune article noted above quotes the state's lead negotiator with the Saints, Tim Coulon, as follows:

"We've heard over and over again, a deal's a deal a deal. But in 2001, apparently the state had a deal with the Saints, but the Saints said it wasn't good enough because the climate had changed in the NFL. The state stepped up, changed the deal. Now, the climate's different for the state. What we asked them do was restructure. We didn't want to take away all their cash inducements. We wanted them to bear what I call the word they don't like to use -- the big 'R' word -- and that is a percentage of RISK on the part of the Saints. They have to bear some of the burden. So I would hope that cooler heads would prevail and we'd go forward if there was an opportunity for continued discussions. Apparently, the Saints have chosen not to."

And that, my friends, is my biggest gripe with Benson. It's not just that he's utterly incompetent when it comes to public relations, or that he has ripped his own team's fans for low 2005 season ticket sales after they have given him years of sellouts to support subpar teams he himself has labeled "high school" quality. (Well, those go along with this.) It's that he seems to possess an uncanny ability to overlook everything that has been done for him, by past state officials and fans alike, and remain completely oblivious to anything but his own pocketbook.

One person left a comment to this site that says that the Saints situation is all about business, and fan loyalty means absolutely nothing. But you can't have one without the other, even though it is clear that professional sports is a business. Darn profitable one at that. And I don't dispute that fact at all.

But maybe there's something to that. Maybe Benson knows now that he will opt out of the current agreement after 2005, sell the team, bank a billion bucks, and move to San Antonio permanently. Maybe he's got a buyer in place already. Maybe he just has to toe the line for a few more months, then get out forever, a billionaire off of an initial $70-something million investment.

Just business. And an amazing deal for Benson, Saints fans be damned.

So far, he's done nothing whatsoever to dissuade me from believing otherwise.

(And, contrary to some beliefs, I do wish he would give me reason to think differently.)

State's chief Saints negotiator debating whether to accept 2006 salary

The front page of today's Lake Charles American Press features an AP story on how Louisiana is again seeking to borrow funds to make the annual $15 million payment to the New Orleans Saints, due July 5. According to the article, "State still grappling with Saints payment," the chairman of the Superdome commission and the state's top negotiator with the Saints, Tim Coulon, is undecided on whether he will accept the position's $50,000 salary for 2006, which is presently authorized in the 2006 state budget.

Whether Coulon is confident that the Saints will still be in New Orleans after the 2005 season was not mentioned, though if the team does leave, a chief negotiator obviously won't be a necessary expense.

As for the annual payment shortfall, the state is currently seeking $9 million to make the July 5 payment of $15 million. State Treasurer John Kennedy is quoted in the article as calling Louisiana's options "a last resort when you're down to virtually no alternative." The state is seeking a "revenue anticipation" loan, dedicating hopeful future tax revenue to make the payment in two weeks.

The blatant problem with such a plan was noted by Kennedy: "The obvious question is, if you use future revenues to pay back the revenue anticipation notes, what if your revenues don't increase? You're in the hole again."

It seems that such a hole will be a problem every July, if the Saints stay in Louisiana under the present arrangement.

As Matt Drudge would say: "Developing..."

Saints in the Red?

This blurb comes from a recent edition of the St. Paul (MN) Pioneer Press:

"Some people remain convinced that Red McCombs will use some of the $600 million he received from the sale of the Vikings to Zygi Wilf to become a major investor in the New Orleans Saints and try to move them to San Antonio, where he resides."

As I have stated before, I don't believe the NFL would approve such a move, given the strongly stated goal of having a franchise in Los Angeles. But who knows? I guess we just need to have a little faith ;o).

losing FAITH

The New Orleans Times-Picayune reported earlier this week that the 2005 New Orleans Saints' advertising slogan has been unveiled, and it is unbelievably ironic given the potential move to Los Angeles.

Curious to know what it is?

Here goes...

"FAITH."

Great job, Tommy Boy.

Let's analyze, shall we? FAITH...in season ticket sales...in the team winning the Super Bowl...in a miraculous new deal with Louisiana...in a new stadium...in Benson himself. I'm sure Benson will also drill the new slogan into the head of Governor Kathleen Blanco: "Come on, Kathleen, I've never lied to you...Have a little FAITH in me!"

(Just a reminder: "FAITH" is defined as a belief in things unseen.)

TV ads promoting the new slogan will run through the Saints' history, attempting to stoke the flames of nostalgia and distract Saints fans from the very real possibility that their support over the years could well be rewarded by the team leaving them for a greener pasture.

That's "green" as in dollar bills. And "pasture" as in Los Angeles.

The Times-Picayune story, "First in Faith," starts by noting how strong Saints fan support has been, but if you read far enough, it also discusses the original Cleveland Browns' stunning move to Baltimore...in spite of amazing fan support. Then the story quotes disillusioned ex-Saints season ticket holders who have lost their, well, faith. And the last paragraph quotes an economics professor as saying the following: "It's all so disheartening. The NFL is going to go where the money is."

And the money ain't in New Orleans. Given the news that season ticket sales have increased to an underwhelming 27,500, Benson had this to say: "That's pretty hard to swallow. I mean, I understand that people don't have money, and I realize that, but I can't carry the burden personally."

(At least not until he makes his billion by selling the team.)

O me of little FAITH. I guess I'm a Saints aetheist. I just wish I had something else to believe.

Saints possible 'temporary tenants' in L.A. Coliseum starting in 2006

NFL owners should decide on a future stadium site for a Los Angeles franchise by this fall, according to a recent Washington Post article.

This coincides with today's Orange County Register story, "Saints, Chargers still best bets to relocate," which reports that of the likely remaining available stadiums (possibly just the Coliseum after today), "temporary tenant" status would be granted in the event a team needed to move to L.A. before the NFL's target timeline of 2008 or 2009.

Like, say, in 2006.

To quote the O.C. Register:

"If the Saints were to relocate to Los Angeles, their arrival date of 2006 would be 2-3 years earlier than the NFL's current projection. Under that scenario, the league could consider a temporary stadium arrangement until the new L.A. stadium is completed. Presumably, the Saints would play in the Coliseum or Rose Bowl - whichever loses in the stadium derby. Anaheim is the third site competing for the stadium project.

"The general managers of the Coliseum and Rose Bowl said they would be open to having an NFL team as a temporary tenant, as unsatisfying a consolation prize as that would be.

"Coliseum GM Pat Lynch said the potential revenue would be akin to 'having 10 major concerts per year.' Rose Bowl GM Darryl Dunn said: 'We're always looking for opportunities to generate revenue and looking for big events. But obviously, our focus remains on our long-term situation.'"

Perhaps Lynch is the perfect source here, given that the Coliseum could very well be the only stadium available to fill such a request.

Today's Los Angeles Times reports that Pasadena's city council is set to vote today on whether the city will renovate its landmark Rose Bowl into an NFL stadium. The Pasadena mayor is among those vehemently opposed to the measure, as are local neighborhood activists. The odds on whether the measure will pass are about 50-50. (UPDATE - Pasadena has passed on the NFL, voting down the measure. That leaves the Coliseum as the only stadium available to possibly take the Saints in 2006.)

If Pasadena bows out today, the only other site remaining that could house an NFL franchise in the immediate future is the Coliseum. The NFL's other consideration for a stadium in L.A. is a new construction in Anaheim. The other potential location, Carson City, removed itself from contention recently.

So what does this all mean for the Saints? Clearing up the L.A. stadium situation definitely opens a necessary door for the team to relocate to Los Angeles after next season.

As for obtaining the requisite 24 of 32 NFL owner votes to get the Saints to L.A., Denver Broncos owner Pat Bowlen was quoted in the above-cited Washington Post article as follows:

"L.A. is a huge market. We've had success there before. I think we have to be in Los Angeles...[But] first of all, I want to see a stadium. Once you see a stadium, then you can start worrying about whether it's an expansion team or a relocated team [that will play in Los Angeles]...I'm not a strong proponent of expanding the National Football League. But I'm not going to worry about that until I see a stadium. We've been trying to do that as long as I can remember."

Obviously, clearing the stadium hurdle is crucial to getting league approval.

If you're wondering, here's what Benson (again, from the Washington Post) had to say about the matter:

"I think it's moving forward pretty good. If we can keep doing what we're doing, the interest in L.A. is great. With that in mind, something will get done. It can be any of the...sites they mentioned. We're trying to determine how to work a club into L.A."

Interesting.

The Post also notes regarding the Saints' situation, "things could get ugly, as the Saints prepare for what could be a lame-duck season in New Orleans with only about 25,000 season tickets sold." (This marks the first actual acknowledgement to my knowledge that 2005 could be a lame duck season in New Orleans.)

Benson is quoted on this topic in the O.C. Register as saying, "That part of the country is having problems. It's very difficult. But it's been difficult for the 20 years I've owned the club, and we've managed it."

(I guess that fan support for 20 years is not enough to qualify a city as "NFL-caliber," eh, Tom?)

Bottom line: For Benson to stay in "good faith" in his contract with Louisiana, and keep his upcoming $81 million lease buyout option available, he must continue to toe the line and try to sell tickets (hence, his talking up the Saints as Super Bowl contenders). Then, he can become an instant billionaire off an initial $70 million purchase, simply by selling the Saints after 2005. Solidifying the L.A. stadium situation makes the odds of Benson selling the team all the stronger.

Benson: 'I didn't say' I wouldn't sell Saints

Tom Benson has proved once again that he is a hypocrite.

In the same week Benson was quoted in the New Orleans Times-Picayune as saying, "I'm not going to sell the club. My granddaughter is working hard, and she's going to be involved in this club for a long time. I'm not interested in selling the club," Benson reneged on those same comments.

In a Yahoo! Sports article entitled "Saints on the march?", when Benson was asked if he had guaranteed that he wouldn't sell the Saints, he replied, "I didn't say that."

So which is it, Tom? Keep the team or sell it? Renovated Superdome or new stadium? San Antonio, Albuquerque, or Los Angeles?

This makes comments like "I wouldn't take $5 billion for the team" all the more ridiculous.

New Orleans area officials getting worried, with good reason

Today's New Orleans Times-Picayune reports that government officials from Orleans and Jefferson Parish are at odds with Governor Kathleen Blanco over funding for the New Orleans Saints, and that they are very concerned with what will happen if the team leaves the city after the upcoming 2005 season.

The story, entitled "Saints tax plan stalls in House," provides interesting insight into New Orleans area politicians' growing discontent with Blanco over the governor's proposed tax plan. (The taxes, projected to pull in $15 million annually, would come from the tourism industry in New Orleans through car rental and hotel tax increases, as well as ticket and concession surcharges to Superdome events including Saints games. Officials from New Orleans would rather the funds come from the rest of the state, in spite of a majority of Louisianians not wanting any more statewide tax money spent on keeping Tom Benson's pockets lined.)

The most intriguing part of the article notes one reason New Orleans politicians are against a $15 million tax increase in their local area:

"Generally, the Orleans and Jefferson lawmakers support the idea of raising additional local revenue to support a new, long-term deal with the Saints, participants on both sides of the talks said. But since that has not materialized, the lawmakers have been asking what exactly Blanco wants to do with the new tax revenue. They fear Blanco might be raising a permanent tax to support a team that won't be here next year...Local lawmakers also are wondering how much, if any, the local area will get of the $81 million owed the state if the Saints pull out next year."

An amendment to the proposed tax bill is also garnering consideration by state representative Rick Farrar of Pineville. The amendment would limit the taxes to just one year in the event the Saints do decide to leave after the 2005 season.

The fact that so many officials are voicing their concern about a tax bill put in place to support a team that won't be there next year, and asking what will be done with the money owed by Benson if he does opt out of his contract with Louisiana after the upcoming season, is evidence that they understand the Saints leaving after 2005 is a very realistic possibility.

Let's remember what Benson really wants, and why he cut off negotiations with the state. Looking back to a Houston Chronicle article from November 20, 2004, entitled "Owner says Saints could be headed to Los Angeles," Benson gave a February 1, 2005 deadline for Louisiana to either (a) agree to build a new stadium, (b) extend or enhance the current agreement, or (c) tell the team to leave. In the event a new stadium is not built, the following applied:

"Benson will agree to stay in New Orleans through 2020 if he gets:

1. A $168 million Superdome renovation
2. A continuation of the annual state-funded cash inducement that was $15 million this year and will increase to $23.5 million in 2008
3. A 25-acre tailgate park that is estimated to cost between $5 million and $10 million
4. A state-operated multi-sport facility
5. Development of eight acres of land next to the team’s practice facility so he can build a hotel and relocate the team’s Hall of Fame
6. A sports-oriented redevelopment of the New Orleans Centre shopping mall that’s connected to the Superdome that will be modeled after the new atrium at the renovated Lambeau Field in Green Bay.

"And, get this, Benson wants the income but doesn’t intend to pay a penny out of his pocket for any of it. Some close to the Saints believe he’s making such preposterous demands because he wants Louisiana to turn him down so he can move his team to Los Angeles."

The demands Benson expressed in November for stadium renovations were outlandish. So what's changed since then? Well, Louisiana wants to renovate the Superdome and cut back on the escalating annual payments. Benson now says that's out, and he demands a new stadium. If you'll recall, he said recently that there had "better be a new stadium in place by 2010."

Given the current state of things, that is highly unlikely.

New Orleans area officials, and Saints fans everywhere, have good reason to be concerned.

USA Today: Benson laying groundwork to leave Louisiana

The top line from today's USA Today Sports' "The Inside Scoop," by John Czarnecki:

"By complaining about low season-ticket renewals and empty luxury suites, Saints owner Tom Benson is laying the groundwork for leaving Louisiana."

The story says nothing further, but identifies the obvious pending truth, barring a serious change in the present situation.