JLambert

Lost in an AP report regarding the $15 million that the State of Louisiana will save by cutting subsidy payments to the NFL's New Orleans Saints and the NBA's New Orleans Hornets is that the reduction of the Saints' annual chunk of charity change from $15 million to $2.5 million constitutes a potential breach of the ten-year agreement signed in 2001 to keep owner Tom Benson from moving his football team.

The real story here is that, once the State of Louisiana puts the Saints officially on notice of the $12.5 million haircut, all hell could break loose.

But there's no mention of that possibility in the AP account, which reads, frankly, like an adroitly-crafted effort to win public support for the notion that Louisiana is doing nothing wrong by shorting the Saints and that, if the Saints balk, they'll look like insensitive a-holes.

Jeff Duncan of the New Orleans Times-Picayune reports that the team has declined comment on whether it will accept the reduced payment.

Though the folks who run the Superdome seem to think that the Saints can get the lost money from their business interruption insurance policy, our experience with insurance carriers is that they don't like to give money away unless they absolutely have to. (Even then, they still are inclined at times to try to find ways to avoid paying up.) In this case, if the insurance carrier concludes that the State of Louisiana owes the money to the team and that the reduced payment isn't justified by any fine print in the contract, there's no way that the insurance company will cough up a dime.

So then the question becomes whether the Saints will eat the $12.5 million loss, sue the State of Louisiana for the money, or declare a breach and move the team out of town.

That's the news item that the AP should be pimping. Even though the NFL has successfully managed to keep a muzzle (and perhaps a straitjacket) on Benson for most of calendar year 2006, getting stiffed on his money might be all that it takes to get him to affix a "For Sale" sign on the fleur-de-lis -- raking in a cool billion or so from an L.A. ownership group that would bring not only pro football back to L.A. but also, more importantly, Reggie Bush.

PFT

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Cowher was driving very conservatively, and it was easy to predict how he was planning on getting to the stadium.
It seemed as if he was driving not to crash and relying on his tires to pound their way down the asphalt about 3 yards at a time.

JLambert

State could save $14 million on payments to teams
Associated Press

NEW ORLEANS -- Hurricane Katrina, which forced the New Orleans Saints and the New Orleans Hornets out of town, could wind up saving the state more than $14 million this year on payments owed the two teams.

As a result, the state plans to pay the Saints $2.5 million instead of the $15 million it was originally obligated to pay for the 2005 fiscal year, according to the terms of a 10-year, $186.5 million contract the state signed with the club in 2001.

Payments to the Hornets for the 2005-06 and 2006-07 seasons were waived as part of an agreement reached between the state and club in January. Those subsidies typically would range between $1.5 million and $2.5 million per season.

State representatives with the Louisiana Stadium and Exposition District and SMG, the company that manages the Superdome and New Orleans Arena, said the Saints have been made aware of the reduced payment for months.

Team officials declined comment on whether they will agree to the reduced payments.

LSED attorney Larry Rodel said he has not had contact with Saints officials or their attorneys in several months.

"It is my understanding that the Saints may make a claim against their business interruption insurer for losses stemming from Hurricane Katrina, including the loss of inducement revenues due to games not being played in the Superdome during the 2005 season," Rodel said.

NFL spokesman Greg Aiello declined comment, saying the matter is an issue between the team and state.

The Hornets' situation is clearer. On Jan. 30, the state and the NBA reached an agreement that will keep the Hornets based in Oklahoma City for next season with the understanding that the club will return to New Orleans for the 2007-08 season.

At the team's request, the Hornets' lease was amended to allow the team to play 35 games at Oklahoma City's Ford Center and six at New Orleans Arena next season.

In return, the Hornets agreed to waive all financial inducements owed the team for this past season and the 2006-07 season, an amount that could have reached $10 million.

"We're right where we're supposed to be," Hornets owner George Shinn said. "I told the governor that we would work very closely with them.ESPN

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Cowher was driving very conservatively, and it was easy to predict how he was planning on getting to the stadium.
It seemed as if he was driving not to crash and relying on his tires to pound their way down the asphalt about 3 yards at a time.

JLambert

Saints, Hornets get less from La.
Teams' displacement lowers state obligations
Friday, June 30, 2006
By Jeff Duncan

Hurricane Katrina has saved the state more than $14 million this year on the payments it owes the Saints and Hornets.

The state's contractual obligations were reduced because the storm displaced both professional sports teams for the 2005-06 seasons and forced them to play almost all of their "home" games outside the city.

As a result, the state will pay the Saints $2,525,753 next week instead of the $15 million it was originally obligated to pay for the 2005 fiscal year, according to the terms of a 10-year, $186.5 million contract it signed with the club in 2001.

The financial obligations to the Hornets for the 2005-06 and 2006-07 seasons were waived as part of an agreement reached between the state and club in January. Those subsidies typically would range between $1.5 million and $2.5 million per season.

State representatives with the Louisiana Stadium and Exposition District and SMG, the company that manages the Superdome and New Orleans Arena, said the Saints have been made aware of the reduced payment for months.

LSED officials drafted a letter to Saints officials this week outlining the calculated reduction and planned to send it to them Monday, said Doug Thornton, the regional vice president of SMG. The payment is due on or before Wednesday.

"It has not been 'officially' presented to the Saints, but will be provided to them on or before Monday," Thornton said in an e-mail. "We have had conversations with them regarding the payment amount, and there doesn't seem to be any disagreement."

Whether the Saints will agree to the reduced payment is unknown. Team officials declined comment on the issue this week.

In a statement, Saints chief operating officer Rita Benson LeBlanc said, "The Saints are continuing in positive discussions and negotiations with the state, and we are both eagerly anticipating a successful 2006 Saints season. Our focus, and primary goal, has been to ensure in every possible way the progress of the Superdome for play for our first home game."

In a Feb. 19 story about the possibility of a reduced payment, Benson LeBlanc told Gannett News Service, "That's still up for debate and discussion actually. I wouldn't speculate on a number at this point based upon the fact that we're still in talks."

State officials, though, insist the payment of slightly more than $2.5 million adheres to the terms of the contract, which includes annual inducements to offset revenue shortfalls incurred by the Saints by playing in one of the league's smallest and poorest markets. As a compromise to the Saints' demands for a new stadium, the state agreed to pay the club escalating annual payments of $12.5 million to $23.5 million through 2011. The state's obligation can be reduced by various credits.

However, according to the "future inducements" clause in the contract, "If the club plays fewer than nine home games in the Superdome in any NFL season, the additional inducement amount for the season shall be the product found by multiplying the additional inducement amount by a fraction with a numerator equal to the number of home games played in the Superdome in the NFL season with a denominator of nine."

Because the Saints played only two home games at the Superdome last season -- preseason exhibitions against Seattle (Aug. 12) and Baltimore (Aug. 26) -- the state says it is bound contractually to pay only the prorated portion of the regular subsidy. The state arrived at a figure of $3.33 million by multiplying the total inducement ($15 million) by two-ninths. That figure was further reduced by $800,000 from credits the state receives from a visiting player tax and revenue from the suites the LSED resold during the first two preseason games, Thornton said.
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Larry Roedel, the attorney for the LSED, said he has not had contact with the Saints or their attorneys in several months.

"SMG will do the math calculation, and the check will be delivered on time," Roedel said. "It is my understanding that the Saints may make a claim against their business interruption insurer for losses stemming from Hurricane Katrina, including the loss of inducement revenues due to games not being played in the Superdome during the 2005 season."

The league has an umbrella insurance policy for all of its 32 teams that includes business interruption coverage. The NFL drew on that coverage in 2001 when Commissioner Paul Tagliabue postponed the second week of the season in the wake of the Sept. 11 terrorist attacks in New York and Washington, D.C., and moved Super Bowl XXXVI back a week in New Orleans.

NFL spokesman Greg Aiello declined comment, saying the matter is an issue between the team and state.

The Hornets' situation is clearer. On Jan. 30, the state and the NBA reached an agreement that will keep the Hornets based in Oklahoma City for next season with the understanding that the club will return to New Orleans for the 2007-08 season. At the team's request, the Hornets' lease was amended to allow the team to play 35 games at Oklahoma City's Ford Center and six at New Orleans Arena next season. In return, the Hornets agreed to waive all financial inducements owed the team for this past season and the 2006-07 season, an amount that could have reached $10 million.

"We're right where we're supposed to be," owner George Shinn said this week. "I told the governor (Kathleen Blanco) that we would work very closely with them. There's no dispute."

When the Hornets signed their lease agreement with Oklahoma City in October, they had an option to return for the 2006-07 season if the league determined that New Orleans had not fully recovered economically from Katrina or repopulated to a sufficient level to support an NBA team. The team's lease deal in Oklahoma is generous, and fan support has been very strong at the Ford Center.

In fact, the two sides are now involved in a dispute on how to distribute the profits the team made this past season. Based on Oklahoma City officials' calculations, they estimate $4.2 million should be the amount split between the city and the team after their $2.4 million in expenses for the housing costs for Hornets employees and office space supplied to the team are paid. Based on the Hornets' calculations, $1.6 million is the amount of the profit share that should be split.

The savings were critical for the state because revenues from hotel-motel taxes that support the Superdome and help pay the annual inducements to the Saints and Hornets were significantly reduced by Katrina.

LSED officials project the Orleans-Jefferson Parish tax to generate about $22.9 million for the past fiscal year, about a third less than pre-storm projections. The dip, which is down from the $36.1 million generated in the previous year, is due to the extended closure of many hotels in the two parishes after hurricanes Katrina and Rita. As a result, SMG slashed its operating budget and laid off all but 32 of the 186 employees at the Dome and Arena, Thornton said. They have since refilled 19 positions.


LA Times-Picayune

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Cowher was driving very conservatively, and it was easy to predict how he was planning on getting to the stadium.
It seemed as if he was driving not to crash and relying on his tires to pound their way down the asphalt about 3 yards at a time.

Panther24

i hope they stay in LA, a better city mioght mean a better team.

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Megatron for the sig.
I am the Way, the Truth, and the Life. No man cometh to the Father, but by Me. John 14:6

imported_BaltimoreRavens

NO*

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"The Steelers are still the best team in the AFCN by a landslide" - Steelerfan1

imported_The Bitter Truth

IMHO the writting is on the wall here. There is this, and then there is Reggie Bush which makes the team an easy sale. Especially to a California location.

imported_TeaLeafReaderII

<div class='quotetop'>QUOTE(The Bitter Truth @ Jul 10th ) [snapback]1618462[/snapback]</div>If the saints moved to LA would they rearrange the divisions? Maybe put them in the west and put the rams in the south?

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sig by da_bears86
Congrats on 500 Big Hurt .

imported_The Bitter Truth

I don't think you can do that. Not everytime a team moves. Maybe if they take a look at the divisions 10 years down the line or something ...