03/05 - Professional Sports in Louisiana

What role do professional sports play in Louisiana?

Should the state subsidize pro teams in the hope of future economic benefits? For the players deciding these issues, this is no game: its a contest of will, ego and philosophy of government that have large economic and political consequences for years to come. " Louisiana Public Square : Professional Sports in Louisiana." Premiered Live, March 23!

LPB President Beth Courtney and former CNN anchor and reporter Charles Zewe were the hosts for the program.

Backgrounder

Professional Sports in Louisiana

Sports are a big part of modern American life. The “big four” professional sports leagues - basketball, football, baseball, and hockey – generate around $15 billion in revenue each year. Louisiana has two major league teams, both located in New Orleans. The National Basketball Association [NBA] Hornets play their home games in the New Orleans Arena. The National Football League [NFL] Saints suit up in the Louisiana Superdome. Both of these sports facilities are owned by the state. Both were built with the intention of attracting a professional sports team to Louisiana.

The state and the Saints, owned by New Orleans businessman Tom Benson, are currently trying to work out the terms of a deal that will keep the team here. Benson has threatened to move the Saints to another city if renovations are not made to the Superdome, and if other inducements are not forthcoming from the state. Governor Blanco, already facing a large budget deficit, is also trying to re-negotiate the terms a deal made by former Governor Mike Foster, which guaranteed cash payments to the Saints.

Over the years, the Saints have received, or been promised, $376 million in state subsidies, extending out to the year 2011. These inducements were made to keep the team in Louisiana.

In 2002, Benson was able to secure subsidies which were much larger than any previous ones. Included in the deal were guaranteed cash payments from the state. The money was supposed to come from local taxes in the New Orleans area, but a tax shortfall forced the state to pull over $6 million from general funds to make up the difference. The gap increased last season to about $8 million. The annual guaranteed cash payments that the state committed to in 2002 will increase to $23.5 million a year in 2008.

Though Benson is willing to discuss renovating the Superdome, estimated to cost around $169 million, it’s not clear how much of that cost would be borne by the team. Benson has also stated that he expects, at the very least, the state to honor its current 10-year, $186 million commitment to the Saints.

Background

Louisiana’s relationship with sports goes back a long way. The state’s first significant professional sports franchise, a minor league baseball team called the New Orleans Pelicans, set up shop in 1887. They folded in 1959, but seven years later, in 1967, the first NBA team - the Bucaneers - arrived in the Crescent City [followed, in succession, by the Jazz and the Hornets]. The Bucs eventually joined a long parade of pro and semi-pro teams that have come and gone, but another franchise opened for business in New Orleans in 1967, and it is with us still.

The “Father of the New Orleans Saints”, local businessman Dave Dixon, is credited with convincing then-Governor John McKeithen and key Louisiana state legislators to back his Big Idea: construction of a domed stadium that would be the catalyst for attracting a NFL team to New Orleans. It took a constitutional amendment and a budget that wound up being about four times larger than the original $35 million estimate, but the go-ahead to build the Louisiana Superdome led to New Orleans becoming hometown to a coveted NFL franchise.

Massive public support for sports began with the Saints, but it extends beyond that one team. State and local funds have been allocated for the construction of Zephyr Field for the Zephyrs minor league baseball team in Jefferson Parish, and to build the New Orleans Arena, home of the NBA Hornets basketball team. Subsidies, in the form of tax abatements, cash and guarantees, have also been used to attract and/or retain teams. These past expenditures, and future commitments, total $1.4 billion in public funds.

Revenue guarantees are rare in the NFL: only the Saints and the Indianapolis Colts currently receive them. But half of the NFL teams play in stadiums built since 1990, and all but two of these facilities were paid for with public money. Average cost: $200 million.

With costs so high, why do communities invest so heavily in sports? Proponents point to intangibles that can’t be measured, such as “civic pride” and the cachet of being a “major league” city, which could positively affect recruitment of new businesses to an area. They also say teams increase tourism and act as an economic engine. The number of tourists coming to a community can be counted and the number of dollars spent for goods and services can be tallied, but tying these to the real costs and benefits of professional sports turns out to be tricky business.

In a report commissioned by the state two years ago, University of New Orleans economist Dr. Tim Ryan estimated that the Saints generated $181 million in direct spending, and had an economic impact on the local economy of $402 million in 2002. The report claimed that having the Saints in New Orleans resulted in the creation and support of 4,686 jobs. An earlier study by different researchers estimated an even higher amount of direct spending [$310.8 million] and an annual impact 50% larger than the 2002 study [$677 million]. While many observers feel that, on balance, professional sports are an economic plus for communities, not all academic researchers have come to that conclusion.

According to Andrew Zimbalist, professor of Economics at Smith College and editor of The Economics of Sport , “The independent economic research that's been done on the question of whether sports teams and sports facilities have an economic impact on an area has uniformly found that there is no positive impact. By having a sports team or a new stadium or arena, you don't increase the level of per capita income, and you don't increase the level of employment. There's no direct economic development benefit.” [The American Prospect magazine, no. 40, Sept.-Oct. 1998]

Supporters of professional sports in Louisiana contest such findings, pointing to the economic impact studies by Dr. Ryan and others. They also cite fiscal benefits, such as those reported in “Funds and Games: Paying for the Saints”, a recent report published by the non-profit Bureau of Governmental Research. That study indicated that for the years 2001 through 2004, the state’s tax revenues related to the Saints exceeded the state’s subsidies to the team in each of those years. The difference was $14.4 million in 2001. The $15.7 million net gain reported for 2004 may be reduced by up to $8 million – the amount the state owes the Saints in unfunded cash guarantees.

Proponents of subsidies contend that not all decisions relating to the spending of public funds can be judged purely on economic terms. State and local governments invest in many facilities – concert halls, green spaces, bicycle lanes - that do not yield economic returns. These things bring social and cultural value to a community, and so does investing in sports, according to backers of subsidies.

Are subsidies to multimillion dollar businesses a form of corporate welfare, or are they sound economic investments that stimulate local economies and provide needed additional tax revenue? The question for public policy makers remains: in a time of soaring deficits, threatened federal cutbacks and longstanding social and economic needs, how should the state allocate scarce resources to maximum effect?

Louisiana Professional Sports Teams, Past & Present

Football
• National Football League
o New Orleans Saints
• Arena Football League
o New Orleans VooDoo
• Other Football leagues
o New Orleans Spice - NWFL
o Shreveport Bombers - IPFL
o Louisiana Bayou Beast - IPFL
o Bossier City Battle Wings - AF2
• Semi-Pro Football Teams
o Baton Rouge Riverboat Bandits - SAFL
o Lake Charles RiverKats - SAFL
o Minden RoughRiders - SAFL
o Lafayette Bayou Bulls - SAFL
o Ruston Rage - SAFL
o Shreveport Steamers - SAFL
o Greater New Orleans Gladiators - SAFL
o Hammond Headhunters - SAFL
o Louisiana (Houma) Blazing Bulldogs - SAFL
o Central Louisiana Warriors - SAFL
o Slidell Steelsharks - SAFL
Baseball
• Minor League baseball teams
o New Orleans Zephyrs
o Shreveport Sports
o Alexandria Aces
o Baton Rouge River Bats
o Houma Hawks
o New Orleans Pelicans (1887-1959)
o New Orleans Creoles (Negro League) (dates?)
Basketball
• National Basketball Association:
o New Orleans Jazz (1974) team moved to Salt Lake City and became the Utah Jazz in 1979
o The Charlotte Hornets moved to New Orleans in 2002 - Now known as The New Orleans Hornets.
Hockey
• Minor League Hockey
o Louisiana IceGators - ECHL
o Bossier-Shreveport Mudbugs - CHL

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