Posted Mar 16 2012 1:46PM - Updated Mar 16 2012 5:37PM
NEW ORLEANS (AP) -- The Hornets and State of Louisiana have reached an agreement in principle that would keep the NBA club in the New Orleans Arena through 2024 and pump about $50 million in improvements into the stadium.
Gov. Bobby Jindal, NBA Commissioner David Stern and top Hornets officials jointly announced the agreement on Friday afternoon, calling it an important step toward securing a new permanent owner for the club, which is currently owned by the league.
The deal requires state legislative approval of a bond issue that will help fund about $50 million in arena improvements designed to give the Hornets more opportunities to generate revenue, but would not require any new taxes. It also includes a provision calling for the NBA to award New Orleans an All-Star game.
"This proposed agreement shows that we're changing the way we do business with our sports teams," Jindal said in a written statement. "By upgrading the New Orleans Arena, we will help the Hornets earn more revenue and also make the site more competitive to attract entertainment and sporting events that generate economic development for the city and the state."
In addition to legislative approval of the money for arena upgrades, new ownership would have to be in place for the lease to take effect.
Jac Sperling, who was appointed by Stern to oversee the club while it is owned by the league, said in a meeting with reporters that the governor and team "have a high degree of confidence" that both steps necessary for the lease to take effect will be completed.
"We wouldn't be sitting here today having this conversation if we didn't have that confidence," Sperling said, adding that an announcement on a new owner is probably "weeks away."
State Senate President John Alario, a Republican from suburban New Orleans, and a number of his fellow state lawmakers quickly threw their support behind the announced lease agreement.
"It has always been our goal to keep the Hornets in New Orleans and today's announcement is an important step forward for our city and the fans," Alario said. "This agreement makes good financial sense for Louisiana taxpayers."
The new lease is set to take effect in July 2012, supplanting the Hornets old lease that runs through 2014, and which has escape clauses tied to attendance benchmarks that allow the club to terminate the lease early and move to another city.
The new lease would lock the team into the New Orleans Arena for the next 12 seasons.
"The idea of not being able to bring up word benchmark or attendance threshold and all of those things really is sigh of relief for all of our fans," Hornets team president Hugh Weber said.
While the deal would require public money to fund arena improvements, it is expected to significantly reduce annual state subsidies to the club.
Currently, the state has to pay up to $8 million a year to make up the difference when ticket revenues fall short of benchmarks outlined in the lease. Those payments will now be set at about $2.8 million, giving the Louisiana Stadium and Exposition District more certainty in its annual budget, said Doug Thornton, vice president of SMG, the company that managers the Superdome and New Orleans Arena for the state.
Thornton said the change "shifts the risk to the team, where it should be."
Thornton also said plans for upgrades to the arena include both interior and exterior renovations which he called "spectacular," but added it was too early to go into specifics.
The arena sits next to the Superdome, which has undergone more than $330 million in renovations since Hurricane Katrina and will host the next Super Bowl.
"We have a very, very vibrant sports district now," Thornton said. "The Hornets are an important part of that. ... We need to have Hornets here long term."
The hope is that the new lease and new ownership will stabilize a franchise that has at times been on shaky ground since moving to Louisiana from Charlotte in 2002.
The Hornets also spent two full seasons in Oklahoma City after Hurricane Katrina devastated New Orleans in August 2005.
In 2010, former owner George Shinn decided to pull out. He was unable to find a buyer who would commit to keeping the team in New Orleans, so the NBA took the unprecedented step of taking ownership of the team.
As part of the effort to attract a new owner, team officials spent the past offseason conducting an unusual campaign to build the club's season-ticket base to 10,000, which the league considers a benchmark for successful franchises. The campaign involved social mixers in the homes of prominent business people in the region.
"Today is really the first of many good things to come," Weber said.
|Inside Stuff: Brandon Ingram|
Grant Hill speaks with the Los Angeles Lakers' Brandon Ingram to talk about the draft, Ingram's workouts and playing in the NBA.
|Inside Stuff: Recap|
Grant Hill and Kristen Ledlow recap select clips from the 2015-16 season of Inside Stuff.
|Inside Stuff: Rewind|
Take a look back at Game 7 of the 2016 NBA Finals between the Cleveland Cavaliers and Golden State Warriors.
|Inside Stuff: Jam Session|
Check out some highlights of the Cleveland Cavaliers run to the 2015-16 NBA Championship set to the song "Waves" by Miguel.
|Inside Stuff: Draft Recap|
Take a look at some behind the scenes footage of the 2016 NBA Draft courtesy of Inside Stuff.