Agreement reached to keep Hornets in New Orleans through 2024Posted by Inside Hoops
Governor Bobby Jindal and the New Orleans Hornets announced today an agreement in principle that will keep the team in New Orleans through 2024, subject to the conclusion of the NBA’s sale of the team to a new owner and legislative approval. Governor Jindal said the agreement will include funding for upgrades to the New Orleans Arena and eliminate all exit options, attendance benchmarks, and financial inducements. Compared to the current lease, the terms will save the state at least $72 million in operating subsidies over the life of the lease, and no new taxes will be required to fund any aspect of the proposed agreement. When completed, the agreement would also guarantee at least one NBA All-Star Game over the course of the lease.
Governor Jindal said, “We’re proud to announce that we have an agreement that keeps the Hornets in Louisiana, and is in the best interest of the state and Louisiana taxpayers. This proposed agreement shows that we’re changing the way we do business with our sports teams. We are investing in our capital assets to allow the Hornets the opportunity to earn more money, which reduces the risk for the state and our taxpayers.
“By upgrading the New Orleans Arena, we will help the Hornets earn more revenue and also make the site more competitive to attract entertainment and sporting events that generate economic development for the city and the state. The Hornets have been an incredible asset in the rebirth of the City of New Orleans and the team provides an enthusiasm and energy that enhances this great city’s spirit and unique culture.”
“We appreciate the strong support the Hornets enjoy in New Orleans and throughout the State of Louisiana,” said NBA Commissioner David Stern. “Today’s announcement is an important and necessary step toward reaching an agreement with a new owner.”
Hornets Chairman Jac Sperling said, “This agreement is an evolution of the great partnership between the Hornets, state and local leaders and all our fans. Governor Jindal deserves a tremendous amount of credit for demonstrating that the state wants this team to remain here so Hornets fans can continue to cheer for years to come.”
“We take pride in being a high-revenue producing business for Louisiana that provides over 2,000 jobs and opportunities and relish the chance to experience daily how New Orleans is emerging as a new force in business development and entrepreneurship,” said Hornets President Hugh Weber. “Knowing the Hornets will be here for our children and their children mean many more will grow up enjoying the excitement and memorable experiences at Hornets games.”
“I am thrilled at the prospect that the Hornets will continue to call New Orleans home through the next decade,” said New Orleans Mayor Mitch Landrieu. “On top of employing over 2,000 men and women in our city, the team has proven to be a great partner with local businesses and the Greater New Orleans community. This season, New Orleans proved it was “in” by achieving the ambitious goal of selling 10,000 season tickets for the 2012 season. This agreement in principle ensures the Hornets will continue to play a part in creating a New Orleans of our dreams.”
Subject to closing conditions, the lease will go into effect on July 1, 2012 and will significantly limit the financial exposure to The Louisiana Stadium and Exposition District. Under the current agreement, the LSED is responsible for paying up to $7.9 million annually, but under the new agreement, that obligation will be reduced to $2.8 million that will go towards revenue generating opportunities for the LSED. The Hornets will be required to produce 15 events per year in Champions Square with the revenues going to the LSED, and the LSED will also receive certain television, radio and electronic advertising benefits from the Hornets to promote live entertainment including concerts, family shows and other sporting events. These events and benefits will allow the LSED to recapture a portion of its payment.
The state will also be extending the Quality Jobs Tax Credit for the Hornets through the duration of the lease term. This extension is subject to legislative approval and based on the payroll and the jobs that the Hornets create in Louisiana.
Governor Jindal also said he is working with the Legislature to include $50 million in capital outlay funds to make improvements to the New Orleans Arena. These funds will be phased in over two NBA off-seasons. The improvements to the New Orleans Arena will provide the Hornets with additional opportunities to generate revenue, which allows the Hornets to assume greater financial risk as opposed to the state bearing that burden. Governor Jindal said these upgrades will also help the New Orleans Arena remain competitive with newer arenas around the country so the Arena can continue to attract major entertainment and sporting events.
The lease agreement also includes an option where the Hornets can receive up to $10 million in capital outlay funds in 2013 that can be used for either additional improvements to the New Orleans Arena or for the Hornets training facility.
A UNO study found that the Hornets generate over $300 million annually to the economy and over $10 million in annual tax dollars.
Louisiana State Senate President John Alario said, “It has always been our goal to keep the Hornets in New Orleans and today’s announcement is an important step forward for our city and the fans. This agreement makes good financial sense for Louisiana taxpayers and the Hornets.”
House Speaker Pro Tempore Walt Leger said, “This is exciting news for the city, region, and state. The agreement strikes a good balance by reducing the financial burden on the state, making investments in a state asset, and keeping the Hornets here at home for the foreseeable future.”
State Senator J.P. Morrell said, “It fantastic that the State of Louisiana has put together a competitive, but fiscally responsible package, that maximizes investment in the infrastructure to keep the Hornets in New Orleans without sacrificing general fund dollars that we need for K-12, higher education, and healthcare.”
State Senator David Heitmeier said, “It’s great that the Hornets are staying in New Orleans and this agreement is good for the taxpayers and good the sports fans of this state.”
State Representative Jared Brossett said, “The Hornets have been a great partner in helping to rebuild the City of New Orleans and I’m excited that the state and the team have put together an agreement that will keep the team in Louisiana and reduce the financial burden to our taxpayers.”
State Representative Cameron Henry said, “I am excited that we have the opportunity to keep the Hornets here through 2024. They are an important economic development asset to our state and additionally, reducing the financial incentives to the team is in the best interest of taxpayers.”
State Representative Neil Abramson said, “This agreement is a great step towards keeping the Hornets in Louisiana, reducing the financial burden on taxpayers and ensuring Louisiana sports fans have the ability to enjoy professional basketball in our state.
State Representative Jeff Arnold said, “I’m glad to see that the state and the Hornets put a deal together that will help keep the team here at home and is in the best interest of Louisiana taxpayers.”