May 24, 2004

Report for the State of Louisiana by the Louisiana Stadium And Exposition District

Analysis of Current Financial Obligations
Prepared by:
Barrett Sports Group, LLC
With support from:
SMG and the LSED

The following is the official report sent to the state by the LSED concerning the state's financial obligations to the New Orleans Saints and Hornets.


Analysis of Current Financial Obligations

May 18, 2004

A. LSED Background
B. LSED Funding
C. LSED Properties and Facilities

A. New Orleans Saints Lease
B. New Orleans Hornets Lease
C. Small Market Factors
D. Structure of State Support for Teams

A. LSED Financial Shortfall
B. Hotel Tax Decline
C. Capital Improvement Funds
D. LSED Obligations

A. Option I: Fund 2004 Payment Obligations
B. Option II: Fund Current and Ongoing Payment Obligations
C. Option III: Partial Payment of Financial Inducements
D. Option IV: Construct a New Stadium for the Saints
E. Option V: Upgrade the Superdome and Restructure Saints Lease

A. Lease Concerns
B. Major Objectives for LSED
C. Saints Lease Restructuring – Business Terms
D. Scope of Stadium Improvements
E. Benefits of Plan




A. LSED Background: The LSED is a state agency sub-division that was created by statute in 1975. The original purpose of the agency was to issue bonds for the construction of the Superdome and oversee the collections of the hotel motel tax that supports the bond indebtedness. Over the years, the agency’s administrative responsibilities have grown, due in part, to the refinancing of the original Superdome debt in 1994 that funded eight (8) separate facility related construction projects. The LSED continues to have oversight responsibility for some of those projects today. In addition, the LSED was designated by the legislature during the legislative session of 1999 to administer the “New Orleans Area Economic Development Grant Program” that was funded with surplus of hotel motel tax re-directed through agency’s annual budget. At the time the program was established by the Legislature, there were no statutory guidelines established for administration of the grant program. Consequently, the LSED had to create procedures for application and disbursement of the funds. Over the last 4 years, the LSED has overseen the disbursement of nearly $15 million in grants to local legislative members through the program.

B. LSED Funding: Funding for the consolidated LSED operating budget comes from two sources: 1) a portion of the local hotel motel sales tax, and 2) self generated revenues from the Superdome and New Orleans Arena. These funds are used to cover all of the obligations of the District including capital improvement expenses. Also, the District has responsibility for certain capital repairs, maintenance and legal expenses at facilities other than the Superdome and Arena. However, none of those facilities contribute any operating revenues to the District.

• Hotel Sales Tax Revenues: New Orleans area hotel motel tax revenues comprise approximately 60% of the LSED annual budget. These funds are relied upon to service the long-term bond indebtedness of the District, as well as offset operating and contractual obligations.

The LSED receives a $.04 hotel sales tax from both Jefferson Parish and Orleans Parish. The $.04 dedication was created by statute in 1975 to support the original Superdome indebtedness and the collections now generate approximately $30.5 million annually for the District.

In addition, the LSED receives a portion of a $.01 hotel sales tax collected in Orleans Parish only. The first $2.0 million of collections are dedicated to the Ernest N. Morial Convention Center, and the balance (approximately $5.0 million) is provided to the District through the “New Orleans Sports Development Franchise Fund”. These collections were dedicated to the District by statute during the 2002 legislative session to cover the financial incentives provided to the Saints and Hornets. The LSED also receives an annual appropriation of the non-resident player’s state income tax collected by the Department of Revenue. These funds amount to approximately $1.0 million annually and are passed through the LSED operating budget to the Saints, in accordance with the team’s lease agreement.

At the time the State was negotiating the Saints amendment, hotel sales tax revenues were at an all-time high. Over a ten-year period from 1992 to July 2001, the hotel tax had grown at an average rate of nearly 8% annually. At that time, the State based its financial assumptions (with regard to the Saints and Hornets leases) on the continuation of that growth at an assumed rate of 7% annually.

After 9/11, the growth did not occur. In fact, since July 2001 the local hotel tax has actually declined approximately 10% and it is expected to decline slightly again this fiscal period. The result is a financial gap of approximately $11.3 million between the State’s original forecast and the existing tax collections.

• Self-Generated Revenues: Self-generated revenues from the Superdome and New Orleans Arena comprise the remaining 40% of the LSED funding. Total combined self-generated revenues from both facilities are approximately $24 million annually, of which approximately $11.0 million is passed through to the Hornets and the Saints as lease related “entitlements” under their respective lease agreements. These lease entitlements include revenue sharing for such items as, concessions, parking, novelties, premium seating and advertising, consistent with many leases in the NFL and NBA. These entitlements are separate from the inducement payments made to each team under their respective leases.

Over the years, the Superdome and the New Orleans Arena have consistently met or exceeded operating projections. Facility utilization rates of both facilities have steadily increased over the last several years. While the LSED has oversight responsibilities for the Superdome and New Orleans Arena, the operations and management responsibilities rest with SMG, a private facility management company that has managed the Superdome since 1977. All day-to-day operations of the two facilities are handled by SMG, in accordance with its contract with the State. The current SMG management contract extends through 2012.

Total Operating Revenues of the Superdome and the New Orleans Arena have increased steadily since 1993. The chart below represents the overall operations of the Superdome and the New Orleans Arena, but does not include financial inducements for the teams, capital improvements or any non-operational related LSED expenses.

C. LSED Properties and Facilities: As previously stated, the LSED assumed additional oversight and responsibility for a number of facilities beyond the Superdome and New Orleans Arena when the State provided construction funding for eight (8) projects in the mid-1990s. The responsibilities assumed by the LSED included: 1) construction management, 2) financial administration of construction accounts, 3) certain maintenance and capital improvement obligations, 4) certain operational obligations and 5) legal expenses. While all of the construction projects have now been completed, some of the LSED operational, capital improvement and legal obligations are ongoing. The following is a summary of the facilities under the jurisdiction of the LSED and its ongoing obligations:

• Louisiana Superdome: Operated by SMG under private management agreement with the State. All day-to-day management, operational and maintenance obligations are performed by SMG under its contract with the State. While operating obligations are largely funded through self-generated revenues, the LSED, on behalf of the State, is financially responsible for capital debt service, all Saints contractual obligations and major capital improvements.

• New Orleans Arena: Operated by SMG under private management agreement with the State. All day-to-day management, operational and maintenance obligations are performed by SMG under its contract with the State. While operating obligations are largely funded through self-generated revenues, the LSED, on behalf of the State, is financially responsible for capital debt service, all Hornets contractual obligations and capital improvements.

• Zephyrs Field: Operated by the New Orleans Zephyrs under a Lease Agreement with the LSED. The Zephyrs are responsible for all operating obligations under the Lease. A separate Capital Reserve account established by the Zephyrs (which is required under the Lease) is used to provide capital improvements. However, the LSED and the State have the responsibility to fund any extraordinary or emergency repairs that cannot be covered by the Capital Reserve Account. In addition, the LSED is responsible for payment of all legal expenses as owner of the facility.

• Saints Training Facility: Operated by the New Orleans Saints, subject to the terms of a Lease Agreement with the LSED. The Saints are responsible for the day-to-day management of the facility, including any maintenance and repairs, except repair and replacement of the HVAC system and all property insurance expenses, which are funded by the LSED.

• Alario Events Center: Operated by Jefferson Parish under an Agreement with the LSED. Jefferson Parish assumes all day-to-day operating obligations. However, the LSED is responsible for corrective repairs relating to construction defects and any legal expenses as owner of the facility.


A. New Orleans Saints Lease: The New Orleans Saints football lease at the Superdome was amended in September 2001 by the State of Louisiana. It is our understanding that the amendment was the result of a six-month negotiation between the Saints and State of Louisiana, which started when the Saints filed an arbitration demand against the State for cancellation of the lease. Among other things, the arbitration demand claimed that the State had not properly maintained the Superdome to the standards of the NFL. The Saints also asserted that they lacked the financial resources in a small market to compete with other NFL franchises and that the Superdome lacked the amenities necessary to generate additional stadium revenues for the team. The Saints sought a new stadium, asserting that it would help them generate incremental stadium revenues. When that notion was rejected by the State, the Saints sought increased financial incentives to remain in the Superdome. The State eventually agreed to a financial inducement payment schedule for the team, in exchange for dismissal of the arbitration demand. The agreement was considered an “interim” arrangement for retaining the Saints until a long-term financial and stadium development plan could be developed. The general terms of the agreement are highlighted below:

Saints Lease Highlights:

The Saints are entitled to receive the following:

- Certain game day revenues such as, parking, concessions and novelties.
- 100% of premium seating income from the sale of luxury suites and club seats.
- 100% of the fixed panel and electronic advertising revenue, not subject to third party agreements.

The State, through its facility operator, SMG, is responsible for the following:

- 100% of the game day staffing costs.
- 100% of annual operating expenses of the Superdome.
- 100% of capital improvements of the Superdome.


- A $15.0 million payment is due the Saints on or before July 5, 2004 (less approximately $2.1 million which has already been be paid).
- The State can offset the inducement payments by amounts collected from a non-resident player tax, Saints annual facility rent of $800,000, revenues from 10 luxury suites remarketed by the State and proceeds received from the sale of naming rights.
- Saints have an option to “buy out” the lease after the 2005 season with a one-time payment of $81.0 million.
- The State has a one-time option to notify the team of its intent not to pay the inducements for years 2008, 2009 and 2010. The team would be required to continue play in the Superdome for these years, but the lease would terminate by its own terms after the 2010 season and the team would be free to relocate without penalty.
- Requires the gubernatorial appointed NFL Stadium Advisory Committee to issue a report on its findings by June 2004.
- Lease extends through 2010 football season.

B. New Orleans Hornets Lease: Just after the State and the New Orleans Saints signed the Memorandum of Understanding outlining the terms of the new lease amendment, the Charlotte Hornets were considering a move to New Orleans. City and State officials moved quickly to offer the team a favorable relocation package, and, in January 2002, the State signed a Memorandum of Understanding (MOU) with the Hornets. Like the Saints agreement, it was contemplated by the State at the time, that the financial and operating aspects of the lease agreement were to be funded solely by payments from the LSED hotel tax and self-generated revenues. By May 2002, the State had signed a formal lease agreement with the Hornets and the NBA had officially approved the relocation of the franchise. Listed below are the highlights of the Hornets lease:

Hornets Lease Highlights:

The Hornets are entitled to receive the following:

- Certain game day revenues such as, parking, concessions and novelties.
- 100% of premium seating revenues from the sale of luxury suites and club seats.
- 100% of fixed panel and electronic advertising revenue within the facility.

The State, through its facility operator, SMG, is responsible for the following:

- 100% of the game day staffing costs up to $1.1 million; teams pays 100% thereafter.
- 100% of annual operating expenses at the Arena.
- 100% of the capital improvements at the Arena.
- State has certain contingent financial liabilities if annual attendance and revenue benchmarks are not met by the team.


- Hornets are not required to pay any facility rental of the Arena.
- A $1.5 million naming rights payment is due to the Hornets on or before July 5, 2004
- Lease extends through 2011 NBA season, with 5-year option.
- Exit fee of $10 million if terminated after 10-year term without renewal.

C. Small Market Factors: Recent studies and statistics indicate that New Orleans is among the smallest markets in both the National Football League and the National Basketball Association. As a result, it is a constant challenge for the major New Orleans sports teams to compete with larger market sports franchises that have greater access to “non-shared” revenue streams. The non-shared revenue streams are important to franchises given the unprecedented development of new stadium and arena throughout the country. These new facilities have allowed teams to generate new and increased revenues that are not typically shared. Typical non-shared revenues include: 1) stadium related income from premium seating (portion), concessions, parking and novelties, 2) naming rights, 3) local sponsorship and advertising, 4) and local television and radio rights fees. Prior to the 2001 Saints Lease Amendment, it was estimated by the State’s consultant at that time, Convention Sports and Leisure (CSL), that the Saints ranked near the bottom of the NFL in terms of non-shared, net local revenues. After the first full year of operating under the Saints Lease Amendment, it was estimated by CSL that the Saints improved their ranking to 9th among NFL teams in the non-shared, net local revenue category. Based upon a recent market analysis, we concluded the following:

• The New Orleans market ranks near the bottom of the NFL markets in terms of overall population statistics.
• The New Orleans market is one of the poorest of the NFL markets, with income levels at or near the bottom of the NFL markets.
• The New Orleans market ranks near the bottom of the NFL markets in terms of television and radio market size.
• The New Orleans market ranks near the bottom of the NFL markets in terms of the number of medium and large companies.
• The New Orleans market ranks near the bottom of the NFL markets in terms of the ratio of population per seat, companies per suite, companies per club seat, and high income households per club seat.
• The New Orleans market median age is younger than most NFL markets, ranking in the top third.

These market factors were the driving force behind the Saints’ request to renegotiate their original lease in 2001. It was also the primary reason that the State elected to support the franchise with financial inducements. The New Orleans market is also considered one of the smallest markets in the NBA. The regional market is a key to the success for both the Saints and the Hornets.

D. Structure of Support for Sports Tenants: The economic model created by the State for support of the two major sports teams relies upon LSED revenues for fulfillment of contractual obligations. Hotel tax revenues are combined with self-generated funds from the Superdome and New Orleans Arena to create the revenue sources. In accordance with statutory requirements, facility debt service must be paid from first revenues collected. Subsequently operating expenses of the Superdome and New Orleans Arena are then deducted, along with other contractual obligations of the District. The major sports team financial inducements are treated as an operating obligation of the District, and to the extent revenues are not sufficient to meet these obligations, the State must look beyond the District for additional financial support.


A. LSED Shortfall: Largely due to the overall decline in hotel tax revenues, the LSED is faced with an economic shortfall of approximately $11.8 million for Fiscal Year ending 2004. As previously stated, hotel taxes are off approximately 30% from the State’s original 2001 LSED forecast, leaving a difference between projections and actual collections for the three-year period of approximately $11.3 million. Other factors contributing to the LSED include increased insurance expenses (post 9/11) and the State’s inability to sell a naming rights sponsorship as a result of market factors and uncertainty of the long-term future of the Superdome. The shortfall estimate includes the $15.0 million inducement payment owed to the Saints, the $1.5 million inducement payment owed the Hornets and the $4.7 million in other LSED general obligations. Some of these LSED financial obligations are deferred items from FY 2003. A significant deficit is projected through the remaining term of the Saints lease. The main reason for this is because the hotel tax collections are significantly lower than original projections. It is apparent that hotel tax revenues will not recover to the levels needed to fund current and expected deficits.

B. Hotel Tax Decline: The hospitality industry enjoyed tremendous growth during the mid 1990s. Dozens of new hotels were opened in downtown New Orleans. Occupancy rates hovered in the 70% range and the average daily rate was approximately $125. Since 9/11, there has been a steady drop in the tax revenues generated for the District. Although 9/11 greatly affected the tourism and convention industry, other factors have now contributed to the problem. There are over 35,000 rooms in the New Orleans market, so competition is fierce. Average daily rates have reportedly dropped in the last two years. More cities are competing for convention business now than ever before. Many cities are offering cash incentives to meeting planners and associations in exchange for their business. As stated previously, the ability for the State to make payments under the Hornets and Saints lease agreements was based upon a 7% growth rate in the hotel motel tax. At that time, collections had averaged nearly 8% for a ten-year period. It was assumed that similar growth would continue.

The following is a chart indicating the operating surplus amounts that would have been realized by the LSED had the forecast held correct. These figures reflect all LSED obligations, including payments designated for Saints and Hornets:

Estimated LSED Operating Surplus – Based Upon Original Hotel Tax Projections (2001)

Fiscal Year Surplus/(Deficit)
(in millions)

2004 ($1.1)
2005 $1.7
2006 $4.7
2007 $5.3
2008 $8.8
2009 $9.1
2010 $13.2
2011 $17.6

The following chart indicates the annual deficits that are expected to be incurred by the LSED through 2011. These figures reflect all LSED obligations, including payments designated for Saints and Hornets, and are based upon current hotel tax collections:

Estimated LSED Operating Deficit – Based Upon Actual Hotel Tax Collections (2004)

Fiscal Year Surplus/(Deficit)
(in millions)

2004 ($11.8)
2005 ($13.5)
2006 ($13.0)
2007 ($15.4)
2008 ($15.0)
2009 ($17.9)
2010 ($17.5)
2011 ($16.9)

C. Capital Improvement Funds: Due to the economic shortfall of the last two years, the LSED has elected not to encumber any funds for capital improvement except for emergency situations. Ordinarily, $2.3 million of the LSED’s self-generated revenues would be placed into the Superdome Renewal and Replacement Fund for capital improvements according to State statute. However, over the last two years the LSED has been required to utilize funds that would have otherwise been placed in the R&R account to meet the financial obligations of the Saints and Hornets.

D. LSED Obligations: With large financial commitments to both professional sports teams, it is important not to overlook the additional financial obligations of the District. As previously mentioned, the LSED has a number of outstanding financial obligations. Some of those obligations have been deferred for a number of years due to financial constraints.

Obligation/Description 2004 2005
Zephrys Field /ADA corrective measures $ 0 $ 250,000
Saints Training Facility /HVAC Repairs 100,000 0
Alario Center /Capital Repairs 0 750,000
Insurance Premiums /Deferred ORM payment 1,400,000 0
Legal Obligations (2003) /Taylor, Porter, Brooks 375,000 0
Superdome R&R Account /Capital Improvements 2,300,000 2,300,000
Sports Foundation /Statutory Payment 500,000 500,000
Total $4,675,000 $3,900,000

Since forecasted tax collections have not been realized, the State is faced with the possibility of not being able to meet its financial obligations to the Saints, Hornets and other LSED creditors.

The State has a variety of alternatives that it may consider in dealing with the LSED current and estimated shortfall. These alternatives are listed below.

Option I: Fund 2004 Payment Obligations:

- Requires one-time payment from general fund or alternative revenue source.
- $11.8 million needed to meet all LSED FY 2004 financial obligations, inclusive of Saints and Hornets.
- Seen as a “short term” fix. It does not resolve the long-term structural problems of the leases with regard to future payments.
- Does not address the long-term financial needs of the LSED.
- Does not provide for capital improvements to the Superdome to allow the stadium to remain competitive with other new facilities.
- Does not allow for extension of the Saints lease beyond 2010.
- Unlikely that the Superdome would be able to compete for a future Super Bowl without a Saints lease extension.

Option II: Fund Current and Ongoing Payment Obligations:

- Must identify new long term funding source (new tax or general fund).
- $11.8 to $18.0 million will be needed annually. The amount could vary depending on tax collections.
- Will allow the State to meet its obligations with both the Saints and Hornets.
- Does not provide for capital improvements to the Superdome to allow the stadium to remain competitive with other new facilities.
- Does not provide method of extending the Saints lease beyond 2010.
- Unlikely that the Superdome would be able to compete for a future Super Bowl in the near future without a Saints lease extension.

Option III: Partial Payment of Financial Inducements:

- Remit only that portion of the contractual inducement payment, which can be funded by the LSED in FY 2004.
- If the State does not remit full payment to the Saints and Hornets on or before July 5, 2004, the State will be considered in default under the current lease agreements.
- The State will have a 75-day period in which to “cure” the default.
- The Saints and Hornets could potentially terminate the leases and relocate after the 2004 season without penalty.
- This option does not address the long-term capital improvement needs of the Superdome if the Saints depart.
- Possible damage to the State’s public image.

Option IV: Construct a New Stadium for the Saints:

- Retractable roof stadium costs estimated at $450 million (excluding land and infrastructure)
- Must identify new funding source of $25 - $30 million annually just for stadium debt service (excluding land and infrastructure).
- Additional funding would be required to meet other LSED obligations, including potential Hornets payments.
- Must continue to pay capital debt on Superdome and the LSED properties of approximately $187 million ($14.0 million annually).
- Future of the Superdome would be uncertain - market analysis suggests that two major competing sports facilities cannot be supported.
- Must address Saints financial inducement shortfall for 2 years or more.
- Incremental revenues generated by a new stadium, compared to incremental revenues generated by a renovation do not appear to justify the capital expenditure.
- While a new stadium may result in a long-term Saints commitment, it is unclear whether the Saints will agree to a new lease without further inducements.

Option V: Upgrades to the Superdome and Restructure Saints Lease:

- Total capital improvement costs are estimated to be $150 million.
- Will require identification of a new annual revenue of approximately $12 - $15 million.
- New revenue source of that amount will be sufficient to cover debt service and ongoing obligations of the District.
- Improvements would allow the team to generate incremental stadium revenues to offset financial guarantees.
- Will provide a method for an extension of the Saints lease (require 15 years).
- Allows the State to modernize the Superdome and remain competitive with other facilities.
- Attempt to shift a portion of the risk of revenue generation back to the team.
- Eliminates concern of two competing facilities in a small market.


A. Lease Concerns: The State cannot afford to meet the terms of the current Saints and Hornets agreements without a significant new revenue source. The financial cornerstone of the Saints and Hornets lease agreements – the hotel tax revenues – will not be sufficient to meet the current or expected obligations over the term of the lease. Given the magnitude of the Saints inducements it is clear that there are inherent structural concerns that necessitate a re-evaluation:

- The State bears a disproportionate share of the financial risk.
- Escalating inducement payment schedule over the remaining term of the lease.
- State obligation to fund inducements is guaranteed.
- Saints have little incentive to participate in the sale of facility naming rights.
- There is no funding for capital improvements to the Superdome, which is needed to keep the facility competitive with other major stadiums.
- The lease term expires in 2010, at which time the Saints could gain significant leverage.

B. Major Objectives for LSED: All of the available options listed above (with the exception of the potential default option) require the State to identify a new revenue source. Consideration should be given to a major renovation of the Superdome. The major goals and objectives would be as follows:

- Modernize the Superdome:
- Superdome remains viable and competitive with other new facilities.
- Provides the team with opportunity to generate incremental stadium revenues.
- Allows the Superdome to host major events that generate significant economic
- Restructure the Current Saints Lease:
- Attempt to reduce or eliminate fixed financial guarantees.
- More equitable sharing of the financial risk between the State and Saints.
- Extend the Saints Lease:
- 15-year extension
- Extension needed for future NFL Super Bowls and stability.
- Improve LSED Financial Condition:
- Cover non-operational expenses and obligations.
- Continue to fund renewal and replacement fund account.
- Capture surplus balances for future contingent liabilities.

C. Saints Lease Restructuring - Business Terms: In order to achieve the key objectives outlined above, the State should request a restructuring of the current Saints lease. Listed below are the general business terms that could be considered:
- $150 million modernization of the Superdome (plus cost of bond issuance).
- Saints should participate in a portion of renovation expense - amount will vary depending on funding options.
- $15.0 million from a new revenue source will be needed in order for the LSED to:
- Fund renovation debt coverage ($8 - $10.5 million).
- Balance of surplus used to cover contractual obligations.
- Saints will retain 100% of the incremental stadium revenues generated from renovation (estimated to be approximately $8 - $12 million annually).
- Fixed financial guarantees to the team will be eliminated or reduced.
- Surplus LSED revenues used to support contingent financial liabilities associated with the Saints and Hornets leases.
- Extend the term of the Saints lease through 2020.
- State continues to assume operating and capital improvement costs of the Superdome and the Arena.

D. Scope of Stadium Improvements: Based upon the feasibility study prepared by the Architectural Consultants Ellerbe Becket, the renovation can be completed during two successive off-seasons to minimize impact to Dome events. Assuming design and engineering work is commenced by October 2004, and construction begins in January 2006, Phase I of the improvements could be completed prior to the 2006 Saints season. This would allow the team to realize some incremental revenue during that football season. The renovation will provide needed infrastructure improvements to the facility, as well as add a number of revenue producing assets for the team. The scope of the renovation is as follows:

- Relocate the existing press box to the terrace level and add box suites.
- Renovation and Upgrade all 137 existing luxury box suites.
- Construct two “French Corner” suite towers in the NE and NW corner of the Superdome.
- Reconfigure the lower bowl seating area to add approximately 1,500 new seats.
- Add “bunker” suites on event level concourse below the plaza stands.
- Widen plaza level concourse by 50’ to allow for more concession and restroom areas.
- Replace all existing electronic message and video boards for greater advertising value.
- Create four club lounges on the loge level with exterior views and upgraded amenities.
- Improve vertical circulation by adding escalators for premium seating.
- Renovate and upgrade all plaza restrooms.
- Repair, renovate and upgrade all mechanical, electrical and plumbing systems.

E. Benefits of Superdome Upgrade: Upgrading the Superdome appears to be the best available option to allow the State to affordably modernize its landmark stadium and provide increased revenue for the team. Some of the general benefits are as follows:

- State preserves the use and competitiveness of its largest asset - the Superdome.
- The upgrades could provide the team with an opportunity to generate an additional $8 - $12 million annually, thereby minimizing the need for fixed guarantees.
- The arrangement would more appropriately balance the sharing of financial risks between the State and the Saints.
- Extends the life of the Superdome for approximately 15 - 20 years at about 30% of the total costs of a new stadium.
- Provides the State with time to plan for a new stadium in the future.
- Upgrades benefit other Superdome clients and events.


In order to accomplish the improvements to the Superdome and the restructuring of the Saints lease, a new annual revenue source of approximately $15.0 million must be identified. Our preliminary research indicates the revenue could be generated from a variety of different sources. Listed below are a few possible sources that could be considered:

Tax Source Increase Total Value
- Hotel Motel Tax (Orleans and Jefferson): 1% $7.6 million
- Car Rental Tax (Orleans and Jefferson): 5% $5.0 million
- Cigarette Tax (Statewide): $0.05 $15.0 million
- Sales Tax (Orleans): 1.00% $61.0 million
0.25% $15.0 million
- Ticket Tax: 5.0% $3.0 million
- Beer Tax: $1.00/barrel $3.7 million

These and other similar revenue streams have been used to finance stadium improvements in other NFL cities.


The LSED is currently facing a financial crisis. As summarized in Appendix I, the LSED is currently facing a deficit of nearly $12.0 million. This deficit is expected to increase to nearly $18.0 million. The LSED has limited options and resources to address this problem. Consideration has been given to a number of alternatives to address the anticipated deficits. It is apparent that hotel revenues will not recover to the levels needed to fund current and expected deficits. Debt service payments are fixed and refinancing options are limited. Insurance and facility operating expenses are not expected to change in a material way. New revenue sources must be identified to meet current and expected financial obligations of the LSED or a potential default may take place. A new stadium or renovation to the Superdome could potentially generate new revenues. Given the limited size of the market and the landmark nature of the Superdome, it would appear that the renovation scenario would be the preferred alternative.

The LSED and the State have clearly indicated that it is important to retain the Saints and Hornets in Louisiana. However, given the financial condition of the State, in general, it is important that any decisions be done in a fiscally responsible way. The renovation of the Superdome, combined with a restructuring of the Saints lease to share the risk more equitably could address the current problem and provide the Saints the opportunity to remain competitive in the NFL.

The information contained herein has been developed based, in part, on information obtained from sources believed to be reliable. Figures have not been audited or otherwise independently further verified.

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