NEW ORLEANS -- The New Orleans Saints offered to pay up to $17.5 million toward Louisiana Superdome renovations and also sought cash subsidies that would have required $16 million in new taxes, leaving the team and the state tens of millions of dollars apart when negotiations over a new and longer stadium lease broke off this week, Superdome Commission chairman Tim Coulon said.
"I would say the Saints have not accepted our last offer, which we considered to be our final and best offer," Coulon said Friday. "Where we go from here is, we live under our existing agreement."
Saints owner Tom Benson has cut off negotiations until after the 2005 season, at which time he could opt out of the current lease by paying the $81 million and then sell or move the team. The NFL has repeatedly said that bringing a team back to Los Angeles, either through relocation or expansion, is a priority.
"It's about leverage. It's about creating an opportunity for fear -- fear factor among those who support the Saints," Coulon said, recalling what happened when the current deal was renegotiated from a previous, then-active lease in 2001. "In 2001, the state had a deal with the Saints, and the Saints said it wasn't good enough because the climate had changed in the NFL. The state stepped up and changed the deal. Now the climate is different for the state.
"We're optimistic their intent is consistent with what Mr. Benson has said, and that's to stay in the city," Coulon added.
Coulon acknowledged that the Saints had agreed to eliminate the 2006 escape clause from the current lease if the state would eliminate its own, which takes effect in 2007. Coulon said the state refused because the state's ability to end cash subsidies early gives it more leverage in renegotiating a longer lease that is more favorable to taxpayers. The New Orleans-area hotel and motel taxes dedicated to the current lease are expected to come up about $9 million short this year alone.
Most details of the negotiations, aimed at ensuring the Saints remain in New Orleans at least another 20 years, had been kept confidential until Coulon and Superdome official Doug Thornton decided to meet with reporters on Friday afternoon.
The pair said they had, under Gov. Kathleen Blanco's direction, offered the Saints a generous deal that would have given the team an opportunity to be in the top half of the NFL in revenue.
In their "final" offer, state negotiators, led by Coulon, asked the Saints to pay $40 million -- or a little less than 25 percent -- of a Superdome renovation now estimated to cost around $174 million. The state also offered to continue to pay the current annual cash subsidy -- totaling $50 million -- until completion of the first phase of renovations for the 2007 season. After that, under the state's proposal, the cash payment would have dropped to $14 million and then to 9.5 million when the renovation was complete
for the 2008 season but rising 2 percent annually from there.
That plan would have required the state to raise $12 million in new taxes. The Saints wanted the new schedule of cash payments to begin at $13.5 million in 2008, Coulon said.
"It's beyond the threshold of pain," Thornton said of the Saints' latest offer, which would require $4 million more in new taxes over what the state offered even if the Saints also agreed to pay $40 million toward renovations. "What we were trying to do is
reach a framework of an agreement, and to get any tax passed would be a Herculean effort."
Coulon also pointed out that the Saints never allowed state negotiators to see hard financial data from the team or the NFL.
"We asked the Saints to substantiate the need as opposed to a want. That was never forthcoming," Coulon said.
Benson could still change his mind and accept the state's latest offer until March 2006, after which the terms would change because of a projected 3 percent annual increase in construction costs, Thornton said.
Saints officials declined to comment Friday on their view of the negotiations.
Blanco had sought to call Benson to ask him whether he'd change his mind and resume negotiations sooner than 2006, but Coulon said those efforts were unsuccessful as far as he knew.
"If there's an opportunity, we'll move forward, but there has to be two of us to share information. Right now the Saints have chosen not to," he said.
According to figures supplied by Coulon and Thornton, the Saints' last proposal would have cost state taxpayers $100 million more over the 20-year length of the agreement.
They also pointed out that around the NFL, owners have contributed an average of 35 percent of the cost of stadium renovations or new construction. The state asked the Saints to contribute 25 percent and the team only offered to pay 10 percent, even though the NFL has a loan program to help teams pay for portions of renovations or new construction.
A recent example held out by Thornton was Atlanta Falcons owner Arthur Blank's offer to invest $150 million to improve the Georgia Dome in hopes of hosting the 2009 Super Bowl.
The state negotiating team also estimated the Saints could potentially earn more money under their proposal than if the current deal was extended over the same amount of time, depending on team performance.
The idea behind the renovation is -- while improving the state's property -- to give the Saints more amenities with which to generate money, such as more private suites, concession stands, club lounges and more bathrooms to reduce waiting times for fans and allow them more time to watch the game and spend money.
The state estimated those new amenities could allow the team to immediately earn an additional $12 million to $15 million per year. Combined with the lower cash payment, the total would still exceed the value of the current deal, Thornton said.
The problem for the Saints, however, is that the team would likely have to win on the field to lure the type of crowds necessary to realize the state's most optimistic financial projections.
"Obviously that means they'd have to bear ... a percentage of risk," Coulon said. "They'd have to bear some of the burden to fill the stadium, to fill the suites."
Currently, in addition to the cash payments by the state, the Saints' lease calls for the state to pay for game day expenses as well as debt service on and maintenance of the Superdome. That would remain the same under the state's latest offer.
The Saints would also keep all parking, premium seating and advertising revenues as well as 42 percent of concession revenues.