If there’s one thing I’ve learned in all my years of covering sports subsidy shenanigans, it’s that no team owner — and, really, no owner of any American business — will pass up a chance at free public money. Which isn’t especially surprising, as which of us would, if we had the connections and the lobbyists to request large checks from the government? Not like, if we were in that position, we would really need another yacht, but then, another yacht would be nice, wouldn’t it, especially if some nice legislators were offering to pay for it?
Anyway, all this is to say that even if this story in the Louisiana Illuminator about the New Orleans Pelicans isn’t entirely surprising, it’s pretty depressing:
The New Orleans Pelicans receive a $3.65 million cash rebate every year from Louisiana — more than any other company — by counting its professional basketball players’ positions as newly-created direct jobs under the state’s Quality Jobs program, an economic incentive that’s supposed to encourage companies to create well-paid, full-time jobs for residents.
In 2020, the Pelicans reported creating a total of 183 jobs with salaries averaging $608 per hour, according to documents from the Louisiana Economic Development agency received through a public records request. The wage rate is so high because it includes NBA players’ salaries in the Pelicans’ average wage.
Yep, that’s right: In order to encourage local companies to hire people at decent wages, the state of Louisiana offers to cover up to 6% of their payroll costs for up to 10 years. The program has been in place since 1995, and according to a recent audit has generated about $5 billion a year in household income in the state — though the same audit says that “the majority of that amount would have been generated even if the Quality Jobs program had not been available,” which must be a new meaning of the word “generated.” (The audit also reported that the state only gets back between 1 and 10 cents in new tax revenue for every dollar it spends on the program, which is a pretty awful ratio.)
I know what you’re wondering at this point, or at least I know what I’m wondering: How do NBA roster spots count as “new jobs,” since there are only 15 of them, same as there have been since 2005, when the roster limit went up from 12? The answer appears to be that the state legislature passed a law in 2002 saying that they would, in order to lure the team to New Orleans from Charlotte:
The state offered up the Quality Jobs incentive during its negotiations to bring the team to Louisiana in 2002. Pelicans spokesman Greg Bensel said the state included the 5% payroll rebate from the Quality Jobs program as a provision in its lease agreement with the team.
The Louisiana Legislature has amended the program many times over the years. In 2002 — the same year the state was trying to lure the basketball franchise to New Orleans — lawmakers passed a bill that allowed the team to qualify for the program.
The bill itself is hilarious: It only adds one item with three bullet points to the law, stating that it will now cover “a National Basketball Association team which relocates to Louisiana and enters into a contract provided for in this Chapter prior to November 1, 2003,” that the subsidy is capped at $3.65 million a year, and that owners can’t pay themselves a salary and include that in their “job creation” calculations. At least somebody in the 2002 Louisiana legislature thought to close one obvious loophole! Not that it would have mattered, as the Pelicans soon enough maxed out their subsidy even without owner Gayle Benson, who the Illuminator informs us is Louisiana’s single wealthiest resident, including herself as a job created, because there’s plenty of money to be made by crediting herself with creating Brandon Ingram’s $29 million a year wage.
Louisiana has “a long history of enormous corporate giveaways,” according to the subsidy watchdog Good Jobs First, including film production subsidies and industrial property tax breaks as well as the payroll-rebate program; it was also one of the first states to offer to pay a sports team to play there, when it agreed to give Saints owner Tom Benson (Gayle is his widow) more than $18 million a year in cash grants to keep his NFL team in town. Compared to that, $3.65 million a year is a bargain, I guess, but given that it’s a subsidy that will never expire, it adds up over time: The New York Knicks and Rangers tax break didn’t seem huge when it was passed in 1982, but look where it’s gotten to now.
Hmmmn. I wonder if Ray Nagin can claim rebates under this program on the grounds that the people who now have to guard him in jail would be either unemployed or “less employed” if he weren’t in jail?
These sorts of things should be less shocking to me than they are after all these years. But they aren’t.