The Saints and the state of Louisiana have agreed to the terms of a long-term lease of the Caesars Superdome, but it hasn’t been signed because the two sides are still haggling over leases for Benson Tower, Champions Square and the team’s practice facility in Jefferson Parish.
The stadium lease deal, which would run for 10 years and then give the Saints options to renew every five years through 2055, has been finalized since last week, according to negotiators for the Saints and the state, which is represented by the Louisiana Stadium and Exposition District, also known as the Superdome Commission.
But Superdome Commission chair Robert Vosbein and Saints spokesperson Gregg Bensel confirmed Monday that leases for the other properties, most notably the Benson Tower skyscraper, are still being negotiated.
And while the state has pushed to sign the Superdome deal and then move on to the other properties later, the Saints say those other agreements, which are worth millions of dollars annually, must be handled along with the Dome lease.
“The stadium deal we are ready to sign now, so that part’s there,” said Vosbein, a lawyer who was appointed last year by Gov. Jeff Landry and has been the state’s primary negotiator with Saints representatives.
“We’re standing by but we’re not going to give in on the rest,” said Vosbein, referring to the real estate deals. “It’s a balance: You don’t want to lose the Saints, which are an important part of this community, but at the same time you want a deal that is fair to the public.”
Bensel said that the Saints are ready to finalize an agreement that “keeps the New Orleans Saints in Louisiana for generations,” helps improve the Superdome and delivers “meaningful economic benefit to the community.”
But he said that to do that, all of the leases need to be signed together, because splitting them up “creates financial and operational risks for both the team and the state.”
A long history of leases
The negotiating bottlenecks stem from a 2009 stadium deal negotiated by Saints owner Tom Benson when Bobby Jindal was Governor of Louisiana and Ron Forman was chair of the Superdome Commission.
The terms of that deal were described at the time by Forbes Magazine, which closely tracks NFL team deals and valuations, as “the most complex — and lucrative — stadium lease agreements in the NFL.”
That deal included provisions such as a $5 million bonus for the Saints when the stadium is chosen to host a Super Bowl. Also, a 42% share of game-day food and beverage revenues, a share of non-football event revenues, a share of the stadium naming rights, a piece of the parking revenue and rents from the Champions Square space.
The state also agreed to rent space in the Benson Tower, the building near the Superdome owned by the Benson organization and mostly occupied by Louisiana state agencies. In 2014, Daryl Purpera, then the Louisiana Legislative Auditor, said in a report that the rental rates for the state at Benson Tower started out above market and continued at above market rates.
“Because the Benson Tower lease has a provision that grants automatic rental increases in keeping with the Consumer Price Index, the 2014 cost per square foot has increased to $25.12,” Purpura wrote then. This meant that since 2010, “lease costs including amounts paid for vacant space have nearly doubled,” and were then more than 30% above market rate.
Those increases have continued, and Benson Tower’s rental rates for Louisiana state agencies as of March this year were $32.50 per square foot, covering almost all of the available space, according to current legislative auditor Mike Waguespack. Though that includes compensation for some upgrades made by Benson, it is still above rental rates for top of the line office space in downtown New Orleans, which according to consulting firm Goodwin Advisors averaged $20.67 per square foot last month.
Bensel disputed that rents for the Benson Tower are above market rate, and said that when parking, operating expenses and other concessions are included, “the effective rate tracks other downtown office leases in New Orleans.
“This is not the opinion of the team nor Forbes Magazine but instead local real estate experts that deal in this market daily,” he said, adding that the Saints have given the state “multiple examples” of comparable lease agreements in New Orleans.
“Tying Benson Tower and Champions Square to the broader stadium arrangement is not a windfall,” said Bensel. “It is the financial backbone that makes the overall package work in a small NFL market like New Orleans.”
In all, the office space at Benson Tower is costing the state $10.3 million this year, according to Waguespack.
Frustration between the negotiators
Shane Guidry, a business owner and close confidante of Landry’s who has been liaison between the state’s negotiators and the governor, expressed frustration at the Saints’ negotiating position.
“We are ready to sign the actual Saints extension for the team,” Guidry said. “They don’t want to sign the Saints lease unless they know they have a locked-in lease for Benson Tower (and) for Champions Square.”
Benson’s 2009 deal included a clause that automatically renews the Benson Tower deal at the same terms and for the same length of any new stadium deal. And it has terms that mean if the state defaults on certain provisions then the stadium lease defaults.
The state has been trying to “de-couple” those side agreements, which run through the end of 2029, from the stadium deal, but the Saints have stood firm.
“It’s two separate pieces of real estate for different purposes,” said Waguespack. “From an auditor’s standpoint, it should be two separate deals, unless the package is a better deal for taxpayers, and I don’t think it is.”
The standoff between the two sides has kept the final agreements from being signed for weeks even as they appeared to be close to a deal. In recent days, the difficulties in finalizing the leases has jeopardized New Orleans’ chances of hosting the 2031 Super Bowl because of a deadline set by the NFL.
If the city can’t bid on the 2031 game, scheduling issues would likely prevent New Orleans from hosting until 2038, though the Saints have said that should a deal be finalized soon, Gayle Benson could seek approval for the city to bid on 2031 from NFL Commissioner Roger Goodell.