April 30, 2009

Saints, State Agree to New Lease

courtesy neworleanssaints.com

The New Orleans Saints and the state of Louisiana have reached an accord on a tentative agreement that will keep the Saints playing in Louisiana through the 2025 NFL season, dissolve the need for a new stadium after the finalization of the next phase of major upgrades, and energize a currently blighted section of the Central Business District with a refurbished office tower and a state-of-the-art sports and entertainment district.

In a morning press conference at the Superdome, both the Saints and the state are expected to announce the agreement as well as enter into the agreement by signing a memorandum.

“This is a win-win if there ever was one for both the state and the Saints,” said Saints Senior VP/CFO Dennis Lauscha.

As part of the deal, which officials said could save the state $281 million when compared with the current agreement that pays the Saints $23 million in subsidies, the state would make $85 million in improvements to the Dome, and Saints owner Tom Benson and his family would buy the vacant Dominion Tower and New Orleans Centre and lease office space back to the state.

The deal also would create a new sports district, increase the potential for stadium revenue and shift more of the financial burden on the Saints by eliminating fixed payments and reducing subsidies based on the team's financial performance.

The investment in the community is simply the latest in Tom Benson’s quest to help continue the growth of New Orleans following post-Hurricane Katrina, when many businesses have been slow to react in making major investments in the Gulf South Region. The deal still needs approval from the state Legislature, which will have to approve the finalized $85 for Superdome improvements. State officials hinted that the money will likely come from the state's surplus.

The new business plan will see the state inducement package that has been in place since 2001 evaporate and the new agreement kick into effect following the 2010 season. “”It’s a 15-year agreement with a five year option,” said Lauscha. “The assumption of risk shifts squarely from the state to the Saints. At the end of the day what the state will have is a modernized Superdome that will rival the best buildings in the NFL and viable for the top events each season such as Super Bowls, Final Fours and political conventions, plus much, much more.

“Meanwhile the Superdome will improve by substantially widening plaza level concourses, adding concession stands, reconfiguring lower bowl seating to add 3,100 seats, and adding 300-level luxury boxes, a new retail store, a club lounge and upgraded restaurants,” Lauscha continued.

"The thing that we really tried to do with these negotiations was to come up with some creative ways to accomplish what we were trying to do, " Lauscha said. "There were a ton of things that we threw out back and forth.

"It has been as tough as any negotiation. But at the end of the day, we want to be here, the state wants us here. They know the gap. We had to come up with a way to close the gap. And that's what we did.

The new revenue streams would reduce the state's financial obligation to the Saints based on a sliding scale, with the most the team could receive in a year capped at $6 million if the team generates less than $7 million in new game-day revenue. The state's payment drops to zero if the Saints generate at least $12.5 million in new revenue.

A direct component of the agreement also factors in the Saints purchasing the currently vacant and blighted Dominion Towers, while committing over $10 million worth of upgrades to the facility, while also partnering in operating with the LSED for the mall and 2,100 parking garage that will be turned into a state-of-the-art sports-centric area similar to Patriots Place, Fremont Street in Las Vegas or the Staples Center in Los Angeles.

Many state agencies are expected to be working out of the Dominion Tower as part of the agreement, something New Orleans Sports and Exposition authority chairman Doug Thornton said the agreement was a good deal for the state, which would have paid $24 to $26 per square foot plus operating expenses to put up a new building, as it initially planned to do. The Dominion Tower would also represent a step up for the state agencies, which are mostly housed in Class B and C buildings today. Thornton expected that about 30 state agencies now housed in scattered offices around the city would be moved into the tower.

The synergy between the state and the Saints extends beyond the tower and to the new sports complex currently envisioned for the New Orleans Centre mall, also currently a vacated piece of property and blighted. The Benson family also will buy the mall and the parking garage and then lease those back to the Superdome Commission, a state agency, which will operate them on game days. The commission and the Bensons will share profit from the property, which will be recast into what they called a "festival plaza."

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