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June 7th, 2018

Baton Rouge, Louisiana


The Times Picayune reported last week that the New Orleans Saints may ask the state to pay for a $350 million upgrade to the Superdome before the 2024 Super bowl. That’s a huge taxpayer commitment for a state that can’t even fund education at all levels and basic healthcare for hundreds of thousands of its citizens. So how should any upgrade be paid for?

The Green Bay Packers are one of the best examples of how a sports franchise should operate. They don’t go to the state capitol hat in hand, looking for a handout. The team is owned by citizen stockholders all over Wisconsin, and the Packers’ management doesn’t regularly try to blackmail public officials under threat of moving.

Recently, when it came time for Green Bay to revamp and refurnish legendary Lambeau Field, the state of Wisconsin didn’t put up one penny.  All proceeds came from the private sector. Season ticket holders were charged a one-time user fee of $1,400, which fans can pay over several years.  In addition, the Packers did a stock offering, just like many corporations do for capital improvements.  And finally, the packers took out a team loan to be repaid out of yearly revenues.  No sweetheart deals from the state, no special considerations, no coming to the public trough for taxpayer money.

What happens in my home state of Louisiana is that team owners have cried wolf saying they will have no choice but to move elsewhere if, the tax incentives and outright dollars are not bountifully offered.  But under the NFL financial structure, owners can’t loose money.

Unlike other professional sports operations, individual teams do not sell television revenues.  In baseball, the New York Yankees get broadcasting revenues significantly greater that what a smaller market receives.  In pro football, every team shares in one gigantic pie.  Little Green Bay receives the same television revenues as does a team in New York or Los Angeles.

The Packers have also bought up 28 acres spending more than $27 million to develop an entertainment district.  This would give the team revenues that it would not have to share with other clubs.  It is a business strategy that a number of NFL franchises are undertaking. The Saints have the same strategy but Louisiana taxpayers pay all the costs.

The Saints receive $6 million in direct funding, from the state of Louisiana each year.  But there is much more they will receive that is every bit as valuable as direct payments, including millions in upgrades for luxury boxes that mean more profit.  The state pays the cost, and the Saints get the income.

Then there is the agreement for the state to lease office space in a downtown office building adjacent to the Dome being purchased by the Saints owners.  The state is to lease more than 320,000 feet at $24 dollars square foot, which is one of the highest rental rates in the state today. So the Louisiana taxpayers are basically paying the cost of the building the Saints’ ownership is buying.

But what about all these projections of how much the economy in New Orleans will be positively impacted, with millions more in tax revenue. Figures are being wildly thrown around, indicating an $500 million economic impact. A University of New Orleans study, quoted in a New Orleans Times Picayuneeditorial, estimated that the Saints produce $22 million in state revenue.  Here’s the fallacy.  Any such analysis assumes that all of the dollars spent at Saints games are dollars that are new to the region’s economy.  Most dollars spent going to the Superdome are dollars that would have been spent on other leisure activities in the area.  There are numerous choices as to how to spend leisure dollars.  Going to a football game is just one.

The Brookings Institution’s recent 500 page study titled, Sports, Jobs and Taxes, concluded that professional sports teams “realign economic activity within a city’s leisure industry rather than adding to it.  “Professional sports,” they write, “are not a major catalyst for economic development. Consultants, often hired by team owners who say otherwise, according to the Brookings study, “are peddling snake oil.”

But more important, the Packers represent the best of the American free enterprise system. They built a championship team by paying their own way without trolling for taxpayer dollars. It’s a lesson that should be adhered to by both the Saints and the State of Louisiana.

Peace and Justice

Jim Brown

Jim Brown’s syndicated column appears each week in numerous newspapers throughout the nation and on websites worldwide.  You can read all his past columns and see continuing updates at http://www.jimbrownla.com.  You can also hear Jim’s nationally syndicated radio show each Sunday morning from 9:00 am till 11:00 am Central Time on the Genesis Radio Network, with a live stream at http://www.jimbrownla.com.

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