Sports in New Orleans: Not the Big Easy
Saints are set to return to New Orleans this season, Hornets aim for next year, but long-term success will be tough in market that was iffy before Katrina.
NEW YORK (CNNMoney.com) -- New Orleans fans are about to welcome back their sports teams with open arms - and wallets.
But as we approach the one-year anniversary of Hurricane Katrina making landfall on the Gulf Coast, it's still not clear how long the National Football League and the National Basketball League will stay in the troubled city.
Yes, the Saints, which split their "home" games between San Antonio and Baton Rouge last year, have nearly sold out their 2006 season, a record for the franchise. The team was helped by a combination of star draft pick Reggie Bush and a pricing plan that cut the price of 20,000 seats to less than $35, with many at the bargain-basement price of $14.
But outgoing NFL Commissioner Paul Tagliabue said "it's still an open question" when he was asked about the long-term chance of success of the NFL there last week, citing the local economy as the key to the team's future in the city.
Ben Hales, the Saints' vice president of marketing and business development, said the team is doing everything it can to make a go of it in New Orleans. But he also wasn't willing to make any long-term promises.
"It's a challenge," he said. "We're not any different from any other business in the region. There's a lots of unknowns."
Hales said while the team is gratified by ticket sales and sponsor dollars for the coming year, revenue needs to keep growing for the team to be competitive longer term.
"Before the hurricane, we were already in a market that was difficult," he said. "We were already set up to work with small and midsize companies. Those companies are all in a state of flux."
The Saints were eager for a new stadium in New Orleans before Katrina. The Superdome, which was used as an evacuation center after the hurricane hit, needed $185 million in repairs just to get back in playing condition for this season. Much-maligned FEMA contributed $116 million of federal tax dollars to those repairs.
That money was spent even though the team has the right to get out of their current lease after this season. And even if the Saints agree to return, the team is only committed to playing there through the 2010 season.
"One could make the argument that the city will never be able to keep a viable major sports franchise and it's throwing money down a rat hole to try to keep something," said Tulane Law School professor Gary Roberts, who teaches sports law. Roberts added though that it made sense - both economically and psychologically - to repair the Superdome even if the Saints decide to leave New Orleans.
While Hales won't comment on the team's stadium preferences going forward, chances for a new stadium are pretty much gone for the foreseeable future. So it's quite possible the Saints will be gone sooner or later, even with this year's rush of ticket sales.
Hornets test the waters
The New Orleans Arena where the NBA Hornets played before the storm wasn't nearly as damaged by the storm as the Superdome. The Hornets actually were able to play three of their games there last season, while playing most of their "home" games in Oklahoma City.
This year they'll play their home opener in New Orleans, along with five other games, but they'll play 35 games in Oklahoma City once again. It's the continued problems with the market, not the facility, keeping them from playing more there.
The football team only needs to attract fans for eight Sundays a season and can sell tickets throughout the region as well as to tourists who might be cheering for opposing teams. But the basketball team needs a vibrant city business and strong interest from the local population to fill the stadium up for 40 or so nights.
"The state of Louisiana came back to us and said, 'We're not ready to support a franchise for an entire season,'" said team spokesman Michael Thompson last week.
The Hornets also were struggling pre-Katrina, finishing last in attendance during the 2004-05 season.
Still Thompson said the Hornets hope and expect to return permanently for the 2007-08 season. He said the team's dismal 2004-05 attendance was due greatly to the poor on-court performance, with the team finishing with a Western Conference worst 18-64 record.
He said the ticket sales were improving last summer before the storm forced a relocation. The team also more than doubled its win total and narrowly missed the playoffs last season and assuming that the team continues to play well this year, that should help. Thompson said he expects sellouts or near sellouts for the six games in New Orleans this season.
But ticket sales are only part of the revenue picture for a basketball team, Thompson admits. First of all there's the question of broadcast revenue for the team.
The number of TV households in New Orleans has dropped an unprecedented 16 percent due to the number of people who left the city after Katrina. New Orleans is now only the nation's 54th largest market (down from 43rd a year earlier.) And even that estimate from Nielsen Media Research may be generous and is subject to change.
Thompson said the team is also trying to line up corporate partners for this season and the long term. That is difficult following Katrina.
Doug Thornton, regional vice president of SMG, which manages the Superdome and New Orleans Arena for the state, agrees that the push for corporate dollars - signage and suite sales as well as sponsorships - will be the challenge for both teams as they try to make a go of it in New Orleans. So even if the fans come back, that might not be enough.
"We're finding there's a lot of disposable income in the hands of the people living here," said Thornton. "Everyone who is able to work is working, and they're being paid higher wages. There seems to be a lot of pent up demand for entertainment.
"What we don't yet see is the depth of the corporate market here," he said. "That will probably be slower to recover. If you're not a construction company or making money off of the recovery, it seems those companies are slower to come back."