State still scrambling to fund subsidies to franchise

Updated: October 14, 2005, 3:08 PM ET
By Len Pasquarelli | ESPN.com

In the latest chapter of what could become a long and acrimonious legal battle over the future of the displaced New Orleans Saints, Louisiana and Superdome officials might seek to reduce, perhaps by more than 75 percent, the $15 million state payment that is due the team next July.

Under terms of a 10-year agreement with the Saints, negotiated by former Gov. Mike Foster in 2001, the franchise is due $186.5 million in state subsidies through 2010. The amount due in 2006, on a sliding scale that escalates to subsidies of $23.5 million for 2009 and 2010, is $15 million.

But because the Hurricane Katrina-ravaged Superdome cannot be used -- the Saints have been forced to split their home games between the Alamodome in San Antonio and LSU's Tiger Stadium in Baton Rouge -- state officials suggested earlier this week that payments could be reduced to as little as $3.3 million.That it based on a formula that would prorate the $15 million due the Saints over two of the nine games the team is contractually bound to play in the Superdome every year.

The state has scrambled to fund the $15 million subsidies paid to the Saints in each of the last two years. To avoid defaulting on the agreement, which would have opened the door for the Saints to relocate, current Gov. Kathleen Blanco and the legislature have either had to issue notes or borrow money from the Department of Economic Development to cover the shortfall.

Blanco sought to have the agreement forged by her predecessor -- Foster believed the team could not remain competitive in the NFL without it -- reworked last year, but Saints owner Tom Benson rejected her proposal.

The stance taken by the Louisiana Stadium & Exposition District, which operates the Superdome and feels the reduced payments are appropriate since the Saints played just two preseason games at the facility, come at an awkward time. It remains unknown when, or if, the Saints will be able to return to the Superdome, whose structural integrity is still being assessed after the damages wrought by Katrina.

The two sides have essentially agreed that a disaster clause in the Superdome lease might allow the Saints to terminate the lease by Nov. 29, or 90 days after Katrina struck New Orleans and the Gulf Coast. Saints attorney Phil Wittman said he has not discussed with Benson the possibility of terminating the lease, but will address the matter in the near future.

Given the rumors that Benson might consider permanently relocating the franchise to San Antonio, where he has strong personal and professional ties, any decision by the state of Louisiana and the Superdome to reduce the $15 million subsidy could further strain some already tenuous relationships.

Benson would need NFL approval, of course, to move his team and commissioner Paul Tagliabue has already suggested the San Antonio market might not be large enough to accommodate a football franchise. Still, the matter of subsidies to the Saints, always a controversial one in Louisiana and especially outside of New Orleans, could ultimately force Benson to relocate the team.

Wittman said that Benson has "not made any decisions about next year at all, nor do we know whether the Superdome can be renovated."

The Saints have arranged for an independent study on the damage to the Superdome and the state has contracted for the Ellerbee Beckett design form to analyze the structure. It is not known when those studies will be completed, but the early estimates on renovating the Superdome have been in the $400 million-$500 million range.

There is also some question as to whether Louisiana, a cash-strapped state long before Katrina hit, should be prepared to make even the reduced subsidy payments to the Saints at a time when there are more pressing priorities. But Tim Coulon, chairman of the Louisiana Stadium & Exposition District commission, said the state has never defaulted on such an agreement, and doesn't intend to in the case of the Saints.

"It's a contractual obligation," Coulon said. "We are honoring contractual obligations to shipbuilders. The fact the Saints are a sports franchise does not negate our contractual obligations and our desire to keep them. The Saints have been a part of our history and they need to be a part of our future. And I've been led to believe they feel the same way, although we haven't really crossed the issue of the future very deeply yet.

Len Pasquarelli is a senior NFL writer for ESPN.com. To check out Len's chat archive, click here Insider.