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March 20, 2012
Louisiana to pay $50m to keep Hornets, get out of old subsidy deal
The New Orleans Hornets have been a rumored relocation target ever since owner George Shinn bailed out in 2010 and left the team league-owned, but it looks like that's off the table now that the NBA and state of Louisiana have agreed to a ten-year lease extension that will keep the team in town at least through 2024. The details, such as can be determined from the truly execrable reporting turned in by local Louisiana news outlets:
- The state will supply $50 million for renovations of the 13-year-old New Orleans Arena, funded mostly by capital bonds (repaid out of general state revenue, I believe), which should supply the Hornets with additional revenue from new ad boards and the like.
- The Hornets will keep on getting $3.6 million a year in tax breaks that they received under the old deal.
- The state will no longer have to kick in subsidies if Hornets ticket sales fall short of the team's desires, as was the case under the old lease. That could be as much as $6.8 million a year in savings over ten years, or it could be nothing, if the Hornets draw well enough that the subsidies wouldn't have kicked in.
- The Hornets no longer get an out clause to break the lease if attendance doesn't reach certain benchmarks.
All in all, it looks like a relatively small price to pay to lock up the team for another ten years, though this is more in the "no worse than the old crappy lease" category than actually qualifying as a good lease. The deal is still tentative pending the Hornets' sale to local owners and approval of the tax breaks by the state legislature, but both of those are expected to occur soon. All of which likely means: No Hornets for you, Seattle.