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By Jeff Duncan, Staff Writer The recipe to pay for the New Orleans Saints' proposed new stadium is as familiar to NFL teams as red beans and rice is to New Orleans. Team owner Tom Benson said he and the NFL would invest $100 million in the project, which they estimate would cost $450 million. The Saints believe the rest would come from taxes that are chiefly paid by tourists, such as the Orleans-Jefferson Parish hotel-motel tax and a car-rental tax. A sales tax also is being considered, but Sen. Ken Hollis, R-Metairie, said that's a remote possibility. "One of the advantages to coming in at the end of the stadium cycle is we have the luxury of learning all the creative ways teams have found to finance new stadiums," Saints director of administration Arnold Fielkow said last week. A familiar road The Saints hope to follow the road taken by most of their NFL brethren during a stadium-building frenzy that has seen more than $15 billion in construction in the past decade, with the majority of it paid for with public dollars. But it's a road that local political leaders have not readily embraced. Benson and Gov. Foster will meet Monday to talk about the Saints' stadium proposal and ways the state can help make the franchise more profitable. Foster and other state officials continue to focus on the idea of renovating the Superdome and increasing revenue to the team, with any plans for a new stadium coming years down the line. It is also a road with one huge potential pothole for the Saints: the proposed $454 million Phase 4 expansion of the Ernest N. Morial Convention Center. That project likely would need to tap into the same revenue streams that the Saints want. The Saints' idea to improve their bottom line by building a stadium isn't a revolutionary one in the NFL. Since 1992, 12 stadiums have been built. Seven more are under construction and scheduled to open within the next three seasons. With the exception of FedEx Field in Washington, D.C., public subsidies have paid for most of the cost of the stadiums. In fact, since World War II only 14 of the 140 new or refurbished sports facilities were financed without taxpayer dollars, according to a report by economist Adam Zaretsky. And most of the facilities relied heavily on public support. On average, public dollars have paid for 74 percent of the new NFL stadiums, according to a report by Conventions Sports & Leisure International. Financing trend The trend for public financing has increased in recent years, especially in small markets, where private-sector money is often more limited. "Typically, the smaller the market the higher the public sector's contribution is to the stadium," said Marc Ganis, of SportsCorp Inc., a sports marketing firm based in Chicago. Cincinnati voters approved a sales-tax increase in 1996 that would pay for about 90 percent of the $450 million Paul Brown Field. PSINet Stadium, home of the Super Bowl champion Baltimore Ravens, was built almost entirely with public money. Revenue bonds and sports lottery money accounted for $200 million of the $223 million price tag. The Jacksonville Jaguars invested only $10.5 million in the $135 million reconstruction of Alltel Stadium in 1995. The rest of the money was financed through a state sports refund program that will pay $2 million every year for 30 years, a hotel-motel tax and ticket surcharges. The NFL approved a loan program in 1999 that would support its franchises in stadium construction. Under the G-3 loan program, the NFL contributes 34 percent to 50 percent of the private contribution from team owners. In effect, it's almost a free loan because clubs use the visiting team's share of club-seat premiums to pay back the money. Tight-fisted voters Even with an assist from the NFL, public dollars are becoming increasingly difficult to find in today's tightening economy. And the votes are getting more difficult to win. Voters in Maricopa County, Ariz., approved financing for a new stadium for the Arizona Cardinals last year by a narrow margin of 2 percentage points, but only after the club added $18.5 million to its previous $85 million investment. Amid protests from some critics, Pittsburgh lawmakers used public dollars to pay for new stadiums for the team's pro baseball and football teams. The public paid almost 85 percent of the $261 million cost of PNC Park, home of major league baseball's Pirates, and 70 percent of the Steelers' new football stadium. "The easy deals have all been done," said Ganis, the sports marketer. "Louisiana has a real budgetary problem right now, and unfortunately, it doesn't look like it's limited to the short term. It looks like a long-term issue." Indeed, although Benson's vision for a stadium is an intoxicating idea for many fans, the reality of financing the project will quickly sober them up. Even if Benson contributes $100 million toward stadium construction, with $34 million of that in a loan from the NFL, the money needed to subsidize the remaining $350 million would be difficult to find, despite Benson's optimism. Looking for money Senate President John Hainkel, R-New Orleans, said his staff is crunching numbers to see how much money would be needed to finance a new football stadium and an expansion of the Convention Center. Hainkel said his staff tells him that the remaining $350 million would have to be borrowed, and that it would cost $35 million per year to pay off the loan. Convention Center officials said they can commit about $100 million to construction of the expansion, leaving about $350 million to be financed, probably through bonds backed up by existing or new revenue sources, also totaling about $35 million per year to pay off. He said there is not enough money now to do both. "If you can find it, call me back," Hainkel said. He said he has so far identified about $12 million to $13 million that could be used from existing hotel-motel tax revenues to finance the $70 million needed annually for a bond issue. Discussions about raising the 9 percent sales tax were vehemently opposed during Wednesday's meeting with state legislators and business leaders. "This decision is really going to come down to a political judgment," Ganis said. "A prioritization has to be made. Does it benefit the community more to fund the civic center and keep the Saints in the Superdome? Or does it benefit the community more to build the Saints a new stadium and take some of the money away from the convention center? Or would it be best to increase the local sales tax and fund both projects? "These are hard choices.
But they are clear ones." |
