Our Panelists:
Ken Hollis,
T. Taylor Townsend,
Janet Howard,
and Dave Dixon

Preview the show thanks to Louisiana: The State We're In...

BACKGROUND

Professional Sports in Louisiana

Sports are a big part of modern American life. The “big four” professional sports leagues - basketball, football, baseball, and hockey – generate around $15 billion in revenue each year. Louisiana has two major league teams, both located in New Orleans. The National Basketball Association [NBA] Hornets play their home games in the New Orleans Arena. The National Football League [NFL] Saints suit up in the Louisiana Superdome. Both of these sports facilities are owned by the state. Both were built with the intention of attracting a professional sports team to Louisiana.

The state and the Saints, owned by New Orleans businessman Tom Benson, are currently trying to work out the terms of a deal that will keep the team here. Benson has threatened to move the Saints to another city if renovations are not made to the Superdome, and if other inducements are not forthcoming from the state. Governor Blanco, already facing a large budget deficit, is also trying to re-negotiate the terms a deal made by former Governor Mike Foster, which guaranteed cash payments to the Saints.

Over the years, the Saints have received, or been promised, $376 million in state subsidies, extending out to the year 2011. These inducements were made to keep the team in Louisiana.

In 2002, Benson was able to secure subsidies which were much larger than any previous ones. Included in the deal were guaranteed cash payments from the state. The money was supposed to come from local taxes in the New Orleans area, but a tax shortfall forced the state to pull over $6 million from general funds to make up the difference. The gap increased last season to about $8 million. The annual guaranteed cash payments that the state committed to in 2002 will increase to $23.5 million a year in 2008.

Though Benson is willing to discuss renovating the Superdome, estimated to cost around $169 million, it’s not clear how much of that cost would be borne by the team. Benson has also stated that he expects, at the very least, the state to honor its current 10-year, $186 million commitment to the Saints.

Background

Louisiana’s relationship with sports goes back a long way. The state’s first significant professional sports franchise, a minor league baseball team called the New Orleans Pelicans, set up shop in 1887. They folded in 1959, but seven years later, in 1967, the first NBA team - the Bucaneers - arrived in the Crescent City [followed, in succession, by the Jazz and the Hornets]. The Bucs eventually joined a long parade of pro and semi-pro teams that have come and gone, but another franchise opened for business in New Orleans in 1967, and it is with us still.

The “Father of the New Orleans Saints”, local businessman Dave Dixon, is credited with convincing then-Governor John McKeithen and key Louisiana state legislators to back his Big Idea: construction of a domed stadium that would be the catalyst for attracting a NFL team to New Orleans. It took a constitutional amendment and a budget that wound up being about four times larger than the original $35 million estimate, but the go-ahead to build the Louisiana Superdome led to New Orleans becoming hometown to a coveted NFL franchise.

Massive public support for sports began with the Saints, but it extends beyond that one team. State and local funds have been allocated for the construction of Zephyr Field for the Zephyrs minor league baseball team in Jefferson Parish, and to build the New Orleans Arena, home of the NBA Hornets basketball team. Subsidies, in the form of tax abatements, cash and guarantees, have also been used to attract and/or retain teams. These past expenditures, and future commitments, total $1.4 billion in public funds.

Revenue guarantees are rare in the NFL: only the Saints and the Indianapolis Colts currently receive them. But half of the NFL teams play in stadiums built since 1990, and all but two of these facilities were paid for with public money. Average cost: $200 million.

With costs so high, why do communities invest so heavily in sports? Proponents point to intangibles that can’t be measured, such as “civic pride” and the cachet of being a “major league” city, which could positively affect recruitment of new businesses to an area. They also say teams increase tourism and act as an economic engine. The number of tourists coming to a community can be counted and the number of dollars spent for goods and services can be tallied, but tying these to the real costs and benefits of professional sports turns out to be tricky business.

In a report commissioned by the state two years ago, University of New Orleans economist Dr. Tim Ryan estimated that the Saints generated $181 million in direct spending, and had an economic impact on the local economy of $402 million in 2002. The report claimed that having the Saints in New Orleans resulted in the creation and support of 4,686 jobs. An earlier study by different researchers estimated an even higher amount of direct spending [$310.8 million] and an annual impact 50% larger than the 2002 study [$677 million]. While many observers feel that, on balance, professional sports are an economic plus for communities, not all academic researchers have come to that conclusion.

According to Andrew Zimbalist, professor of Economics at Smith College and editor of The Economics of Sport , “The independent economic research that's been done on the question of whether sports teams and sports facilities have an economic impact on an area has uniformly found that there is no positive impact. By having a sports team or a new stadium or arena, you don't increase the level of per capita income, and you don't increase the level of employment. There's no direct economic development benefit.” [The American Prospect magazine, no. 40, Sept.-Oct. 1998]

Supporters of professional sports in Louisiana contest such findings, pointing to the economic impact studies by Dr. Ryan and others. They also cite fiscal benefits, such as those reported in “Funds and Games: Paying for the Saints”, a recent report published by the non-profit Bureau of Governmental Research. That study indicated that for the years 2001 through 2004, the state’s tax revenues related to the Saints exceeded the state’s subsidies to the team in each of those years. The difference was $14.4 million in 2001. The $15.7 million net gain reported for 2004 may be reduced by up to $8 million – the amount the state owes the Saints in unfunded cash guarantees.

Proponents of subsidies contend that not all decisions relating to the spending of public funds can be judged purely on economic terms. State and local governments invest in many facilities – concert halls, green spaces, bicycle lanes - that do not yield economic returns. These things bring social and cultural value to a community, and so does investing in sports, according to backers of subsidies.

Are subsidies to multimillion dollar businesses a form of corporate welfare, or are they sound economic investments that stimulate local economies and provide needed additional tax revenue? The question for public policy makers remains: in a time of soaring deficits, threatened federal cutbacks and longstanding social and economic needs, how should the state allocate scarce resources to maximum effect?

Louisiana Professional Sports Teams, Past & Present

Football
• National Football League
   o New Orleans Saints
• Arena Football League
   o New Orleans VooDoo
• Other Football leagues
   o New Orleans Spice - NWFL
   o Shreveport Bombers - IPFL
   o Louisiana Bayou Beast - IPFL
   o Bossier City Battle Wings - AF2
• Semi-Pro Football Teams
   o Baton Rouge Riverboat Bandits - SAFL
   o Lake Charles RiverKats - SAFL
   o Minden RoughRiders - SAFL
   o Lafayette Bayou Bulls - SAFL
   o Ruston Rage - SAFL
   o Shreveport Steamers - SAFL
   o Greater New Orleans Gladiators - SAFL
   o Hammond Headhunters - SAFL
   o Louisiana (Houma) Blazing Bulldogs - SAFL
   o Central Louisiana Warriors - SAFL
   o Slidell Steelsharks - SAFL
Baseball
• Minor League baseball teams
   o New Orleans Zephyrs
   o Shreveport Sports
   o Alexandria Aces
   o Baton Rouge River Bats
   o Houma Hawks
   o New Orleans Pelicans (1887-1959)
   o New Orleans Creoles (Negro League) (dates?)
   Basketball
• National Basketball Association:
   o New Orleans Jazz (1974) team moved to Salt    Lake City and became the Utah Jazz in 1979
   o The Charlotte Hornets moved to New Orleans    in 2002 - Now known as The New Orleans    Hornets.
Hockey
• Minor League Hockey
   o Louisiana IceGators - ECHL
   o Bossier-Shreveport Mudbugs - CHL

BIOGRAPHIES

Ken Hollis,
Louisiana State Senate

Ken Hollis was born and raised in Alexandria and attended Louisiana Tech University where he received a degree in Business Administration. Upon completing his studies he entered the insurance field and served as MassMutual's Regional Group Manager until 1981. Hollis then served as MassMutual's General Agent for the State of Louisiana until retiring from that position in January 1998. He is now President and Chief Executive Officer of Hollis Companies which specializes in employee benefits consulting. He is a member of the National Association of Insurance and Financial Advisors and Past President of the Employee Benefit Planning Association of Louisiana.

Hollis began his career in public service as a Jefferson Parish Councilman in 1980. He served in that position until 1982 when he was elected to the State Senate to fill an unexpired term. He was unopposed in his bids for re-election in 1983, 1987, 1991 and 1999. He won re-election in 1995 with 80% of the vote and again in 2003 by a substantial margin. Hollis has received numerous public service awards including the Alliance for Good Government's Senator of the Year Award for Jefferson Parish in 1985, 1987, 1993, and 1996 and also the 2000 Legislator of the Year Award from the New Orleans Regional Chamber of Commerce.

In the Senate, Hollis serves as Chairman of the Commerce and Consumer Protection Committee and is a member of the Judiciary "C" and Retirement Committees. He also serves as Chairman of the Senate Select Committee for Oversight of the Greater New Orleans Expressway Commission.

T. Taylor Townsend,
Louisiana State House of Representatives

Representative T. Taylor Townsend is a graduate of Northwestern State University and Southern University Law Center. This Democrat serves District 23 in the Louisiana State House of Representatives. He is married with two children, active in Ducks, Unlimited, on the Board of Directors for Friends for Red River Refuge, and a member of the Natchitoches Area Chamber of Commerce.

Janet Howard,
President & CEO, Bureau of Governmental Research, New Orleans

Janet Howard is the president and chief executive officer of the Bureau of Governmental Research, a non-profit, nonpartisan research group dedicated to informed public policy making in the New Orleans area. Prior to joining BGR, Ms. Howard practiced commercial and banking law in New Orleans, New York City and London. She is a graduate of Princeton University and the University of Cincinnati College of Law.

Dave Dixon,
Father of the Louisiana Superdome

Known as the “Father of the Superdome,” Dave Dixon, Tulane University alumnus and civic activist, first envisioned an enclosed multipurpose mega-arena in New Orleans.  A local businessman, philanthropist and visionary, Dixon persevered against seemingly insurmountable odds, overcoming political and legal obstacles to see the fulfillment of his dream. 

Dixon traveled the state in the early 60’s, seeking any forum and speaking to all who would listen, drumming up public support for the Superdome.  Among his converts: Gov. John McKeithen and key members of the Louisiana legilature. 

To prove the city was ready for an NFL expansion team, Dixon promoted two NFL exhibition games at Tulane Stadium.  On Nov. 1, 1966 (All Saints Day), the NFL announced an expansion franchise for New Orleans, contingent on a new stadium. 

Construction began in 1971 and was completed in 1975.  The Superdome has hosted many major events -not all of them sports-related: six Super Bowls, four Final Fours, a presidential nomination (George Bush, 1988 Republican National Convention), a Papal visit (Pope John Paul II in 1987), and a world-record concert crowd (87,500 for the Rolling Stones in 1981).

Dixon was the founder of the United States Football League and World Team Tennis.  Now one of the nation’s largest antique and art dealers, he has received numerous awards for his contributions to the community, including the Times-Picayune Loving Cup in 1990 and the national Freedom Foundation Award in 1991.  He was inducted into the Louisiana Sports Hall of Fame in 1999.