Political Football: A New Stadium
Is Low on the List for New Orleans

The future finances of the National Football League's New Orleans Saints are likely to become a political football as Louisiana struggles to rebound from the devastation wrought by Hurricane Katrina.

The Saints' home field at the Superdome is a wasteland, which is why the Saints are playing their "home opener" against the New York Giants as guests in that team's New Jersey stadium tonight. The Superdome -- which hosted Pope John Paul II in 1987, the Republican National Convention in 1988 and a record six Super Bowls -- now stands as a grim symbol of human misery. The memories of families crowded in sewage and stench as New Orleans fell into bedlam won't easily fade.

Construction of a stadium is likely to be a low priority given all the destruction that was left in Hurricane Katrina's wake, especially in the Big Easy.

"We're more focused on operational finances for New Orleans, which has no income streams" at this point, says Alexis Thompson, assistant director of the Louisiana State Bond Commission. Speculation about a rebuilt or new stadium may be fodder for sports enthusiasts but not state officials. "Not to my knowledge," Ms. Thompson says.

At Loggerheads

The Saints and the state were at odds before the hurricane hit on Aug. 29. In 2002, then-Gov. Mike Foster agreed to provide the team, which pays no rent to use the stadium, with $186 million in subsidies over a 10-year period. Louisiana Gov. Kathleen Blanco tried to renegotiate the deal earlier this year amid a fiscal pinch but was rebuffed by Saints owner Tom Benson.

The Superdome is operated by the Louisiana Stadium and Exposition District, an entity of seven members appointed by the governor with consent of the state Senate. The district was on the hook for a $15 million payment this year to the Saints and, lacking the necessary funds, had to sell short-term revenue anticipation notes to fund the payments.

The district's budget is funded through an occupancy tax on hotel and motel rooms in the state's Orleans and Jefferson parishes -- most of which are uninhabitable. Yet the subsidies to the Saints increase in succeeding years.

"It's a significant amount of money that would be difficult to support long term," said Alexander Fraser, credit analyst at Standard & Poor's, which placed its single-A rating on the district on watch for possible downgrade after the hurricane. Moody's Investors Service followed, placing its equivalent A2 rating on review, affecting $141.2 million of debt, said Doug Benton, senior credit officer at the rating agency.

Investors in the district's debt are protected, however. The bonds are insured by Financial Guaranty Insurance Co. and carry triple-A ratings from both credit agencies.

The loss of a stadium in New Orleans, and thus the Saints, would be a blow psychologically to the people of Louisiana. Its impact on the economy is less obvious.

Big sports stadiums have "ancillary economic benefits," boosting nearby hotel, restaurant and bar receipts, said Fitch Ratings analyst Dan Champeau. They can lead to regentrification of urban areas, as has been the case in Baltimore and Cleveland, both of which have relatively new NFL franchises, he said.

'Strong Position'

Given the limited number of NFL franchises, "owners are in a strong position to get favorable lease terms," Mr. Champeau added, making the potential benefits to the host city less attractive.

Louisiana has three choices regarding the Superdome and the Saints, in Mr. Champeau's opinion. It can rebuild the 30-year-old stadium, build a new one, "or the team could move, likely outside Louisiana," he said.

The Saints could tap into a special NFL stadium-financing program that had $598 million outstanding at the end of its fiscal 2004 year, according to Fitch, which it rates as single-A-plus.

"The stadium-financing program is available to any of our teams," said NFL spokesman Greg Aiello. A loan to the Saints "could very well happen down the road," he said, adding that it would be premature to discuss that possibility given the current circumstances in New Orleans.

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