Saints agree to new Superdome lease

Updated: April 30, 2009, 11:09 AM ET
Associated Press

NEW ORLEANS -- The New Orleans Saints have agreed to a lease extension that will keep the NFL team playing home games in an improved Louisiana Superdome through the 2025 season.

An announcement by Saints owner Tom Benson and Louisiana Gov. Bobby Jindal has been scheduled for 10 a.m. Thursday at the Superdome.

[+] EnlargeNew Orleans Superdome
Paul Spinelli/Getty ImagesAs a part of the Saints' new lease at the Superdome, the state of Louisiana agreed to upgrade concourses, seating areas and suites at the stadium.

"With this new deal with the state, we're going to be here for a long, long time," Benson said in a video presentation to lawmakers ahead of the announcement. The video was seen by the Associated Press.

"I've got a lot of confidence in our city," said Benson, a New Orleans native.

Benson and Jindal wanted a long-term extension in place by this spring to improve New Orleans' bid to host the 2013 Super Bowl.

It would be the city's 10th Super Bowl and the seventh in the Superdome, an iconic, 34-year-old structure that has hosted some of the nation's most memorable sporting events, world famous musical acts and even the late Pope John Paul II.

On Wednesday, a video presentation of the proposed deal was shown in Baton Rouge to state legislators, who will have to approve the new lease. Afterward, state Sen. John Alario said the complex deal would cap direct state cash payments to the NFL team at about $6 million a year.

Alario, D-Westwego, a powerful New Orleans area lawmaker, said the state could pay even less than $6 million each year, depending on how much money the Saints get from other income sources.

The arrangement would be far less than the $23.5 million the state is slated pay the Saints annually in a direct cash subsidy over next three years.

The deal would save the state $281 million between 2010 and 2025 compared to what the state would have paid if the current deal had been extended, a person close to the negotiations said.

The state will be giving money to Benson in other ways, however.

The state has agreed to spend $85 million in improvements to the Superdome and to lease office space for local state agencies at a downtown property Benson has an agreement to buy.

The property, next to the stadium, has been abandoned since Hurricane Katrina struck in 2005 and was known as the Dominion Tower and the New Orleans Centre mall.

Improvements to the dome -- such as expanded field-level seating, new exclusive lounges, additional suites and more concession stands -- are expected to create more moneymaking opportunities for the team.

The state will pay more than $6 million a year to rent the office space, a parking garage and the mall, where plans call for a plaza that could host outdoor concerts and also house bars, restaurants and shops.

The Saints have agreed to give back a combined $10.5 million out of the three remaining $23.5 million state payments so the Louisiana Stadium and Exposition District can use that money for redevelopment projects in the abandoned mall. Once the projects are finished, the LSED will keep the revenues generated by events using that space.

Cash subsidies totaling $186.5 million over 10 years were part of the current lease that took effect in 2001. That lease ran through 2018, but once the subsidies ended following the 2010 season, the Saints would have had the right to leave by paying a $15 million penalty.

While it remains up to Benson and Jindal to sign off on the new deal, chief negotiators included Saints vice president and chief financial officer Dennis Lauscha, LSED chairman Ron Forman and SMG senior vice president Doug Thornton.

Thornton, whose company manages the Superdome and neighboring New Orleans Arena for the state, was the force behind the unprecedented nine-month rebuilding of the dome after Hurricane Katrina, which allowed the Saints to return for the 2006 season.

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The initial rebuilding of the Superdome included replacement of the roof, cleaning and gutting of much of the building, and the rebuilding of suites and club lounges. This year, floor-to-ceiling windows were installed in the stadium's four club lounges. Ongoing improvements include the addition of escalators that will bring club ticket holders directly from a public plaza into the lounges, and new siding. The costs for all the repairs and improvements so far total about $220 million.

The new extension calls for replacing field level seating so it hugs the rectangular contours of the football field, as opposed to its current, semi-oval layout. The change will add about 3,000 seats. New lounges will be added under lower sideline seats.

The lower concourse will be widened by more than double so concession stands may be added and bathrooms expanded. The press box would be moved from the suite level to the upper deck, allowing for more suites or premium seating.

The changes would benefit not just the Saints, but also the Sugar Bowl, Tulane football, the Bayou Classic featuring Grambling State and Southern, and other major events slated for the building, including the college basketball men's Final Four in 2012.

The Saints contend additional revenues are necessary in small-market New Orleans, which lacks the big business headquarters on which many major professional teams rely for sponsorships and suite sales. The state never debated that, but looked to wean the team off of the large direct cash subsidies agreed upon in the 2001 lease.

During the administration of then-Gov. Mike Foster, the state hoped it would have the cash to pay the Saints' annual subsidies based on projected hotel tax revenues in the New Orleans area. Those projections, made before the 9/11 terrorist attacks hurt tourism, wound up being far too optimistic. Since then, Katrina and now the current economic recession have provided further blows, and the state repeatedly has been forced to dig into general funds to meet its financial obligations to the Saints.

In the current economic climate, state officials saw a chance to compromise by improving the state-owned Superdome. That way, the Saints -- who do not pay rent and unlike many pro clubs are not burdened by stadium debt service -- could have an opportunity to greatly increase net revenue. Saints games at the dome have sold out all three seasons since the team's return.

At the same time, the city would get a downtown high-rise back in business and the state would have the benefit of an improved stadium that serves as an engine for its tourism industry. Finally, the deal will not require any new taxes.


Copyright 2009 by The Associated Press