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  1. mikey

    mikey In the Starting Line-Up

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    http://www.nytimes.com/2006/02/05/magazine/05colbusiness_68_70_.html?pagewanted=1

    February 5, 2006
    The Business
    Take the Money and Stay
    By JOSEPH NOCERA

    Last May, three and a half months before Hurricane Katrina devastated New Orleans, a San Antonio lawyer named Stanley Rosenberg told a local reporter that the New Orleans Saints might be contemplating a move to San Antonio. This was no idle chatter, as the reporter well knew. One of Rosenberg's longtime clients is Tom Benson, who has owned the team since 1985. Although a New Orleans native, Benson has deep roots in San Antonio, where his car dealerships have helped make him wealthy. Benson also owns a ranch, said to be his favorite place in the world, just north of the city.

    For years, there have been rumblings that Benson, 78, might be looking to move the Saints to San Antonio. Economically, San Antonio and New Orleans have seemed for some time to be going in opposite directions. With a population of 1.2 million, San Antonio is a city on the rise, with a growing business community and a sense, in the words of the local writer Jan Jarboe Russell, "that it has finally caught up to the rest of Texas and is getting rich."

    New Orleans, meanwhile, was a small market getting smaller, with a declining urban population that had fallen below 500,000. It has been years since the Saints sold out the 137 luxury boxes in the Louisiana Superdome, and boxes are a key revenue source for most National Football League teams. Although Benson has perhaps the sweetest lease deal in all of football — the Saints pay less than $1 million rent for the Superdome, pocket every penny from concessions and parking, and receive a stunning cash payment from the state of Louisiana that averages about $18 million a year — he was unhappy with the 30-year-old stadium and had been trying for several years to persuade the state to build him a new one. What's more, the Saints' lease agreement with Louisiana had an "out" clause, allowing the team to walk away from the Superdome — and New Orleans — after the 2005 season, as long as Benson repaid the $81 million the state had already given him.

    For many people in San Antonio, the prospect of landing the Saints was joyous news. Like many rising Sun Belt cities, San Antonio viewed an N.F.L. franchise as more than entertainment, more than even a home team to root for. It would be a kind of validation that the city had hit the big time. "Had there never been a hurricane," said Mayor Phil Hardberger of San Antonio, who had made landing the Saints a campaign issue, "I think the Saints might have come here."

    But there was a hurricane, one of the most destructive in this country's history. And though you might assume that New Orleans's ability to retain its football team would become even more tenuous after the disaster — that the economic arguments in favor of San Antonio would become much stronger — just the opposite took place. Katrina made it absolutely impossible for Benson to move the Saints, illustrating at once the power of the N.F.L., the unusual economics of professional football and the amazing hold a sports franchise can have on a city.

    For the 20 years that Benson has owned the Saints, the team has always seemed to be two different organizations. One was composed of the players and the coaches; by and large they haven't had much success. True, the Saints won their only playoff game ever during the Benson era — that came four years ago — but most seasons, they don't come close to making the playoffs. (This year was no exception: the team wound up with a 3-13 record, and the head coach, Jim Haslett, was fired pretty much the minute the season ended.) Nobody doubts that Benson would like to field a winning team, but he doesn't seem to have the faintest idea how to go about it.

    What he does know how to do is make money. In this regard, the Saints' organization has performed brilliantly. To be sure, it's almost impossible to lose money in the N.F.L., thanks mainly to the league's policy of sharing equally the almost $4 billion it reaps from its TV contracts and certain other revenues. For this past season, each of the 32 teams will get $112.5 million from what's called the N.F.L.'s central fund — an amount well in excess of the $100 million salary and benefits cap. "The N.F.L.," says Red McCombs, a San Antonio native who used to own the Minnesota Vikings, "has built the best business model in sports."

    Even so, the Saints' financial performance has been exceptional. According to two former front-office executives, the Saints under Benson have regularly been among the most profitable teams in the league, despite operating in one of the smallest markets. Although the books are closely guarded, Forbes magazine estimates that in 2004 the Saints made almost $43 million on $175 million in revenues, making it the eighth most profitable team in the league. By contrast, the Detroit Lions, which generated $186 million in revenues, made only $15 million in profit, according to Forbes.

    One way that N.F.L. owners make money is by pleading poverty — and threatening to leave for greener pastures — in order to get either a new stadium or a better deal from the state or local government. And so it has been with Benson, who swears up and down that the Saints make only average profits. Three times he has gotten the state of Louisiana to sweeten his lease deal, culminating with that extraordinary lease he negotiated in 2001 with Governor Mike Foster. Before Katrina, the current governor, Kathleen Blanco, had been saying openly that the state simply could not afford to continue handing Benson a multimillion-dollar check each year. But her attempts to get the lease deal renegotiated went nowhere.

    This, then, was the state of play when the hurricane hit. Louisiana and the Saints were at a stalemate. San Antonio and Benson had begun to play footsie. The deadline for the out clause was fast approaching. Plainly, New Orleans's hold on the Saints was looking a little shaky.

    Professional sports teams aren't just cold, hard businesses, and never have been. They are public symbols in which cities take enormous pride. In New Orleans after the storm, though, the Saints assumed a symbolic importance far beyond the norm. With so many questions surrounding the city's rebuilding — Would it inevitably have to become a smaller place? Would it be able to hold onto businesses? — the immediate future of the Saints became a kind of proxy for the future of the city. The departure of the Saints would mean, in some deep way, defeat. Keeping the Saints would say something good about New Orleans's ability to rebuild.

    Perhaps because he has always looked at his team primarily through the prism of business, Benson never seemed to fully comprehend what the Saints meant to the city after the hurricane. The team wound up splitting its home games between Baton Rouge, where it used the 90,000-seat stadium owned by Louisiana State University, and — shudder! — San Antonio, which welcomed the team with open arms, selling 63,000 tickets for a game on Christmas Eve in the Alamodome. San Antonio wanted to show Benson and the N.F.L. that it was ready for a team.

    Benson, for his part, continued to talk quietly about moving the team, which infuriated the New Orleans sports media and fans when word leaked out. In no time at all, Benson was the most hated public figure this side of Michael Brown, the former boss of the Federal Emergency Management Agency. After the first game in Baton Rouge — an ugly loss to the Miami Dolphins, coached by Nick Saban, the former coach at L.S.U. — Benson felt threatened by fans, and then wrote an angry e-mail to Paul Tagliabue, the N.F.L. commissioner, saying that he would never return to L.S.U. because he feared for his safety. Benson's e-mail was promptly leaked to the news media.

    "The Saints are everything to this community," says Michael Siegel, a New Orleans developer, "but Tom Benson is a businessman at heart and not a sports enthusiast."

    Few organizations in American life are as conscious of public relations as the N.F.L. — "politically correct," Red McCombs sneeringly calls the league. Not surprisingly, the league absolutely understood what a public relations calamity it would be if the Saints left New Orleans in the wake of the hurricane.

    The N.F.L. didn't much care that Benson was unhappy with the Superdome, or that the state was unlikely to pay him his $18 million after the hurricane, or even that he was likely to lose money, given the extraordinary extra expenses he had to cover, including, for instance, refunds for season-ticket holders. What mattered was that the Saints stay in the city. "We had to make it clear to the people in New Orleans that the Saints were their team," Tagliabue says. "We had to be part of the recovery."

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  2. mikey

    mikey In the Starting Line-Up

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    Continuation ...

    Here, then, was the advantage of running a league that doles out over $100 million a year to each team: you get to call the shots. On the one hand, the league requires a three-quarters vote by the other owners for a team to relocate, and there was no way Benson was going to get such approval after the hurricane. But it was more than that. "The Saints are maybe a $150 million business, whatever their revenues are," Tagliabue says. "The league is a $5.5 billion to $6 billion business. And I told the owners from the beginning that we needed to view this as a league responsibility."

    Thus did Tagliabue insert himself, and the N.F.L., into the aftermath of the hurricane. It was Tagliabue who insisted that the Saints play some games in Louisiana. Tagliabue persuaded the state and Benson to delay the out clause by a year to give everyone more time to figure out how to proceed. Tagliabue had the N.F.L. deal directly with the Superdome officials overseeing its repair. And on the last weekend of the season, after hearing that the Superdome might be ready by as early as next September, Tagliabue and Benson announced that the Saints would be in New Orleans for the 2006 season.

    Will Benson make money next season? Possibly, though the Saints will certainly drop out of the top five, given the city's hobbled condition. But beyond his powers of persuasion, Tagliabue has another tool at his disposal: he controls the bulk of the revenues that go to the 32 teams. It seems highly probable that he will see to it that a little extra revenue sharing goes to the Saints, to help salve Benson's wounds. That is the language Tom Benson understands best. It's quite likely that Benson won't even lose money for the season just ended, thanks to a combination of insurance and help from the league. It's a nice little business they've got over there at the N.F.L.

    When I spoke to Benson for this article, the main point he wanted to make was that he had been grievously misunderstood all season. "What we went through," he said, "was unbelievable." FEMA, he pointed out, took over the Saints' $6 million practice facility outside the city, forcing the temporary move to San Antonio. All his actions, he said, were meant to show that "I was working real hard to do everything I could to make sure the Saints will be a viable part of New Orleans." He insisted that he never intended to move to San Antonio permanently and that it was his decision — not the N.F.L.'s — to return to New Orleans next season.

    But then I asked if he would commit to the city beyond 2006. "I don't know if I can commit," he said. "I don't know what the situation is going to be." He caught himself. Raising his voice a notch, he said: "I'll commit to 2050 if New Orleans will commit to 2050. I can't commit alone. Let's commit together. That's all I want."

    You get the implication of that statement, don't you? Hurricane or no hurricane, Tom Benson still wants his new stadium. Apparently, you really can't teach an old dog new tricks.

    Joseph Nocera is a business columnist for The New York Times and a staff writer for The New York Times Magazine.

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