Saturday, November 05, 2005

Marching out?

Where to?

Rob Cook at and Len Pasquarelli at both wrote Friday about the NFL's dilemma vis-à-vis the New Orleans Saints. Team owner Tom Benson, who for years has tried to squeeze a new stadium or financial guarantees (or, preferably, both) out of the Crescent City, has been making noises since Hurricane Katrina about splitting town for good. Cook's column posits that Benson may well be justified in leaving -- that the considerably smaller New Orleans that's likely to emerge from the floodwaters won't be able to support the team. Pasquarelli, meanwhile, dissects the pickle the league finds itself in: It has wanted to put a team in L.A. for a decade. Now there's a suitably vagabond franchise looking for a new home. Yet it would be a PR nightmare to pull the Saints out of Louisiana. Pasquarelli quotes an AFC team owner who sums it all up quite nicely:
"There's no way [the Saints] can go back, and there's no way they can't go back. The honest-to-God truth is that none of us has a clue. The commissioner included. He has a preference, no doubt, about the situation, but he doesn't have a defined way of making it happen. None of us does."

I don't either. (Fortunately, no one has asked.) What I do know is this: Benson doesn't have a chance of getting the stadium deal he dreams of in New Orleans. Further, he didn't have a chance even before Katrina. It's not because of obstinacy or miserliness on the part of the city of New Orleans or the state of Louisiana. It's because such a deal was and is an economic impossibility.

Benson was part of an ownership group that bought the Saints in the mid-1980s (ironically, to keep them from leaving New Orleans), and he later bought out his partners. 1986 was only two decades ago in meatspace years, but by the calendar of sports economics it's pre-industrial times. Everything has changed since then. Back in the 1970s and '80s, when an NFL team needed a place to play, it paid rent on a city-owned multipurpose stadium. It made some money by selling tickets and local radio rights, but the real dough came from the network TV contracts and other shared, league-wide revenue. There was no free agency, so labor was relatively cheap, and owners prospered. Over the next two decades, however, the NFL instituted free agency and a salary cap set as a percentage of league revenue. (We won't be discussing the cap's fairness here. Sorry. Take it outside.) To be competitive on the field, owners had to take more of the money they got from revenue-sharing and devote it to labor. So how's an NFL owner to get the kind of money that'll keep him in top hats 'n' spats and $100 bills to light his cigars with? After all, the TV money is shared. The licensing money is shared. Even the gate receipts are shared.

As it turns out, any money you make inside the stadium, you get to keep. And so stadiums started changing. First came the luxury suites. Then the in-stadium corporate sponsorships. Then the naming rights. Then the various schemes by which fans who wanted to buy tickets were first required to purchase the right to buy tickets, known as the personal seat license. The aim of all of these is to dig deeper into the pockets of the fan base, to cash in on their loyalty to the owner's club.

Which brings us back to New Orleans. Even before Katrina came screaming in and residents went streaming out, New Orleans was a small market -- just the 35th-largest consolidated metro area, according to the 2000 Census. (The consolidated metropolitan statistical area, or CMSA, is the region from which an NFL team generally draws its paying fan base.) If you count Milwaukee as part of the Green Bay market, as you should, there are only three smaller metros with NFL teams: Buffalo, Nashville and Jacksonville. And it's not just the size of the market, it's also what's there. New Orleans had little in the way of a corporate community; the main industry was tourism. So there wasn't the corporate money available to buy up the naming rights. Same with the luxury boxes and "club" seats that generate fat stadium profits. (Think about it: The purpose of a trip to New Orleans was to spend money at hotels and restaurants and bars and casinos. People who came for football bought their own tickets. The hospitality industry didn't need to comp anybody.)

As was made so clear during Katrina, New Orleans is also one of America's poorer metropolitan areas. Sure, the Saints could sell out games. But as stated above, the kind of money NFL owners dream of is not made just by selling tickets. First you sell seat licenses for thousands of dollars a pop, then you charge as much as you can for the actual tickets. And here's the key to this system: You have to have demand that outstrips supply. Dan Snyder can charge pretty much whatever he wants for Washington Redskins tickets because he owns a team in a large, wealthy market. If one person doesn't want to pony up, there are thousands more who will: The Redskins have a waiting list for season tickets that's 100,000 names long. Though the Saints could and did sell 70,000 tickets to a game (when they were good), there wasn't nearly that kind of depth in the market.

(These principles, by the way, apply whether the team owner also owns the stadium, as is the case with the Redskins and Patriots, or the city owns the field, as in Philadelphia. With publicly owned stadiums, revenue from naming rights, seat licenses and the like are usually split between the club and the government.)

Add it up, and what you get is a city that was never going to be able to give Benson what he wanted. We could argue all day over whether leaving New Orleans is the moral/ethical/"right" thing to do. And we could argue over whether Benson had any right to expect that the city could give him such a deal. I don't know whether he's a bad guy. Personally, I see him as a Calvin Griffith figure, unable to discern that the economics of the game had changed, wondering why Snyder and Jerry Jones and Bob Kraft and Paul Allen were able to get new stadiums and he couldn't.

If Benson wants to move the team, the question will come up of whether these economic complications were unique to New Orleans. Hard to say. They certainly don't apply to Los Angeles. The nation's second-largest market is, of course, always tempting, but Pasquarelli makes the excellent point that some NFL owners don't even want a team in L.A., because as long as that market is vacant, they can use the threat of moving there to leverage a better deal in their own cities. Besides, the people of Los Angeles may not want any part of a Benson-owned team. Other options? San Antonio? Here's San Antonio's dirty little secret: The city is more than twice the size of New Orleans -- 1.14 million people vs. New Orleans' pre-Katrina 460,000 -- but its metro area isn't a whole heck of a lot bigger. See, several "small" cities, such as Minneapolis, Cincinnati, St. Louis and Cleveland, have NFL teams, but those towns all have highly affluent suburbs with several times more people than the central cities. The San Antonio area is mostly ... San Antonio.

This isn't to say San Antonio can't support an NFL team. Buffalo and Nashville get along just fine. But look at Jacksonville, which along with Phoenix was every NFL owner's tease of choice in the 1980s, as L.A. is now. Perhaps when expansion franchises were being awarded in the '90s, the league was wowed by Jacksonville's population of 700,000-plus, which places it among the country's 20 biggest cities. But Jacksonville, too, has a dirty little secret: It's the largest city in the country. Literally. The largest by area. It has so many people because it's so damn big. As is the case with San Antonio, the Jacksonville metro area is mostly ... Jacksonville. And what's happening? The Jaguars and the city are fighting over, guess what, stadium revenue.

Whether New Orleans can support an NFL team in the future will depend on what the owner's expectations are. Indeed, the owner's expectations will determine whether New Orleans was really able to support a team in the past, too.

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