Jindal Handling Hornets Situation Correctly, So Far

Yesterday’s press conference at which Louisiana Gov. Bobby Jindal stood with New Orleans mayor Mitch Landrieu and other local officials and exhorted the state’s sports fans to get out and support the New Orleans Hornets, in hopes of raising the team’s attendance to meet the NBA’s mandated average of 14,735 per game by Jan. 31 represents the kind of leadership you’d want in your governor.

Hopefully Jindal won’t go beyond the bully pulpit and put nonexistent state resources behind what looks like a bad business model in a vain attempt to boost Louisiana’s brand.

The Hornets, as it happens, have been losing money hand over fist for a long time. Even in the 2008-09 season, when the team made it to the Western Conference semifinals, any real accounting would show a seven-figure loss. The club has been short-stacked due to former majority owner George Shinn’s financial weakness and some rather glaring mismanagement, and the NBA has been subsidizing them and providing loans for years prior to essentially foreclosing on Shinn in a recent takeover.

It is this weakness, plus a sea of red ink throughout the NBA, which played a part in local billionaire and former minority owner Gary Chouest’s decision not to buy a majority stake in the team in a deal which would have valued the Hornets at $300 million. It’s difficult to see how the team is worth anything close to that amount.

New Orleans attorney Morris Bart, who sponsors Hornets TV broadcasts and is seeking to purchase a 10 percent state in the team, says Chouest is still interested in becoming a majority owner of the club. Chouest, the owner of Edison Chouest Offshore Services, has been suffering mightily from the effects of the Obama administration’s offshore moratorium on offshore oil drilling, which is drying up much of the company’s customer base. If he’s going to sink a hundred million dollars into an NBA team he’s going to want the best possible deal he can get and assurances the business model he’s buying into is a viable one.

The league’s collective bargaining agreement, which expires at the end of next June, is not a particularly good one and will need to be changed to reflect the new economic reality across the country. That means lower salaries for NBA players and lower ticket prices for cash-strapped fans. It’s only prudent that Chouest may want to wait to evaluate the new circumstances before making the jump – and perhaps getting a better deal from NBA commissioner David Stern, who has invested a lot of personal prestige in keeping a team in New Orleans, than he was getting from Shinn.

Landrieu says he’s been making inquiries with the big-money folks in New Orleans and other parts of the state in an effort to put a local ownership group together. What the NBA – and every other sports league – likes, though, is as small a group as possible. Chouest is the linchpin of any local group. So if Bart is correct and he’s still interested, that’s excellent news.

Thus there appears to be a fighting chance for New Orleans to keep the Hornets, at least for the short term. But if the team can’t increase its current average attendance of 13,735 to 14,735 in the 12 home games remaining before Jan. 31, the club can opt out of its lease at the New Orleans Arena next year, which would open up competition for cities like Seattle, St. Louis, Kansas City and Pittsburgh to put ownership groups together and try to steal the team away.

Recognizing this, Jindal put his Hornets event together yesterday. And hopefully it will induce some 1,200 or so extra fans to darken the Arena’s ticket windows and pump the attendance up enough to avert a lease abrogation. The team, after all, is quite good this year. They got off to an 11-3 start before the current ownership mess flared up and became a distraction, and the Hornets still boast a 14-10 mark which would put them in the playoffs if the season ended today.

It’s inevitable at some point that the league will approach the state with a corporate-welfare plan aimed at subsidizing its bottom line and demand that Jindal pony up if he wants to avoid being the governor who let the Hornets get away. But while Jindal should certainly do what he can to facilitate a successful club in New Orleans, the spigot is simply dry. We don’t have $5 million a year or more to pay the Hornets to make their home in the Big Easy. And Jindal knows that creating a state-capitalist program with respect to sports teams won’t mesh with the conservative philosophy he’s advertising that his administration is based on.

The governor largely resolved a similar issue with the New Orleans Saints by working a win-win deal with owner Tom Benson by using what had become feral real estate next to the Superdome to hook the team into a long-term lease and do away with a thorny cash-payment program. Some similar program should be put in place with the Hornets. But monthly, quarterly or yearly checks from the state treasury won’t wash with the voters in the current circumstances, and hopefully Jindal knows this.



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