Depraved Owner of the Week: Tom Benson

Tonight the Bulls take on the New Orleans Pelicans, viagra buy ampoule or last season’s Hornets by another name.  So let’s take a look at Louisiana taxpayer “investment” in the various enterprises of Pelicans owner Tom Benson, site view or extortion by another name, thumb in this holiday double-length edition of Depraved Owners.\n\nName: Tom Benson\n\nNet Worth: $1.3 billion\n\nTeam: New Orleans Pelicans (formerly Hornets)\n\nForbes Team Valuation: Value $340 million; Revenue $100 million; Operating Income $3.3 million\n\nTenure: Since 2012, when he acquired the Hornets for $338 million.  Good luck with that!\n\nArena: New Orleans Arena (1999)\nOriginal Capital Cost (2010): $160 Million\nOriginal Public Capital Cost (2010): $160 Million (18%)\nSource: Judith Grant Long, Public-Private Partnerships for Major League Sports Facilities (Routledge)\n2013 Renovations: $50 million\nPublic Cost: $50 million\n\nCost of Game for a Family of Four (2012-13): $220.40\n\nOngoing Subsidies:\n\nIt’s difficult to separate Tom Benson the Pelican’s owner from Tom Benson the New Orleans Saints NFL team owner, and why try?  Through his ownership of both teams and property adjacent to the taxpayer-owned New Orleans Arena and Mercedez-Benz Superdome, Benson regularly receives oodles in renovation funding and tax breaks from the government.\n\nHere’s part of the recipe for the subsidy gumbo that Benson has cooking with the state of Louisiana (mostly from Dan Alexander’s outstanding Forbes article)…\n\nThe Superdome:\n\nTerms of the 2009 lease agreement (lasting through 2024) between Louisiana and the Saints, a team with estimated profits of around $30 million annually.\n\nFollowing hundreds of millions in renovations and cash payments to Tom Benson over the decade preceding the new lease, in 2009 Louisiana agreed to an additional $85 million in upgrades to the state-owned Superdome.\n\nBenson generates an estimated $12 million more per season as a result of the new taxpayer renovations to the stadium.\n\nOver the 15 years of the lease the state guarantees Benson at least $198 million in increased revenue (or revenue above what Benson was making prior to the renovation) from the Superdome.  If he does not, the state makes up the shortfall with taxpayer dollars.\n\nThe Saints get $5 million every time the Super Bowl is played at the Superdome in New Orleans (like in 2012) because, well, because.\n\nIn 2011, Mercedes-Benz agreed to pay $50-$60 million for the naming rights to the Superdome; the Saints get all of this money because, well, you know.\n\nBenson collects revenue from all non-football events at the Superdome, an estimated $5 million per year because, well, because why buck the trend?\n\nBenson Tower:\n\nAs part of the lease deal, Tom Benson agreed to purchase a parking garage, shopping mall, and vacant 26-story office tower next to the Superdome, where the state moved its administrative offices.\n\nBenson spent $77 million to purchase and repair the building and property but will receive an estimated $154 million in rent over the 15 years of the lease.\n\nThe state pays Benson about one-third higher than market value in rent for its office spaces, in what an academic sports economist called “just another form of subsidy.”\n\nOver 15 years the state will pay Benson $112 million in rent.\n\nThe state helped Benson tear down part of the mall to build an outdoor party and concert venue and then leased it from Benson for $2 million a year.\n\nBenson’s garage will earn him $450,000 over 15 years on Saints game parking alone.\n\nOver 15 years, Benson will save $2.6 million in taxes on the property compared to its previous owner.\n\nAccounting for repairs but not for operating expenses or depreciation, Benson will make an estimated $306 million from direct and indirect subsidies and his investment in the tower property over the 15 year life of the lease.\n\nNew Orleans Arena:\n\nIn 2012, Tom Benson purchased the New Orleans Hornets from the NBA.  As part of the deal, city and state governments agreed to a $50 million renovation of taxpayer-owned New Orleans Arena.\n\nThe changes to the stadium mostly involved adding luxury boxes and accommodations for elite and corporate clientele (including a “wine room” and “fire fountain”).\n\nThe additional ticket revenue generated from these renovations won’t benefit taxpayers of course—it’ll just mean more money for Benson to go along with a ten-year $3.65 million annual tax break for all of the \”quality jobs\” his NBA team will bring to the state.  Even though it won’t compared to other things.\n\nThe total public cost of Benson’s private purchase of an NBA franchise last year?  $78 million.\n\nGreat Moments in Cynicism:\n\nWhen Katrina hit in 2005, the Superdome served to shelter thousands displaced by the storm.  So the Saints played their home schedule that season in Baton Rouge and San Antonio.\n\nIn the aftermath of the storm, Tom Benson, a New Orleans native with the wealth of a Pacific island nation, realizing his riches were in no small part attributable to New Orleans taxpayers, swooped in to lead efforts to help those in need by funding affordable housing projects and providing stable, well-paying jobs.  And he vowed never again to demand ransom payments in the form of large government subsidies and tax breaks as long as there was a need in New Orleans for adequate public services like housing, schooling, health care, or safety.\n\nJust kidding of course.  Actually, after the storm Tom Benson took the opportunity to threaten to move the Saints to San Antonio permanently if he wasn’t given hundreds of millions of dollars pronto.\n\nFearing that letting the Saints leave would send the message that New Orleans was finished, government officials rushed to piece together a $300 million Superdome renovation package to appease Benson, including $156 million from the Federal Emergency Management Agency.\n\nThat’s right, FEMA!  The government organization that failed in their disaster response—leaving many storm victims without water, food, or shelter—partly because of underfunding.  The government agency that to this day refuses to pay first-responder wages to police, fire, and medical personnel.\n\nBut Tom Benson got his weighty disaster relief check right quick.  And as a result all American taxpayers paid to keep the Saints in New Orleans.\n\nNever mind that economists said the Superdome was a questionable public investment before the storm; and afterwards they were saying the same thing, but with more feeling.\n\nEight years after Hurricane Katrina, 100,000 people haven’t been able to find their way back to New Orleans.  The public schools all have been converted into cheaper charters.  Nearly half the African American men in New Orleans are out of work, and African American households around New Orleans earn 50 percent less than white households.  The jobs that businessmen like Tom Benson bring to the city are mostly “low wage tourism jobs,” the largest sector of work in New Orleans.  One-third of households in New Orleans earn less than $20,000 per year.\n\nAll major public housing complexes have been demolished, displacing thousands in a city where rents have risen dramatically.\n\nMeanwhile, the Superdome has received more than $470 million in public support since Katrina.\n\nAnd with the help of the state, Tom Benson has become the wealthiest person in Louisiana.\n\nThe Quotes:\n\n\”The role of sports in the economic recovery of the city is dubious other than serving as a symbol that the city remains vital. The repair of the Superdome and the New Orleans Arena is an expensive tease in that regard, but does little to provide what is needed for the community to recover from the storm. Sports and the hosting of mega-events may actually undermine longer term recovery through deflecting capital spending from where it is needed most and crowding out those workers and residents who are involved in the essential rebuilding process…Sport may provide hedonic value, but at this juncture hedonic value and the economic interests of the sport elites must, out of financial and developmental necessity, take a back seat in the interest of the greater good.\”\n—Professors Victor A. Matheson and Robert A. Baade Can New Orleans Play Its Way Past Katrina? The Role of Professional Sports in the Redevelopment of New Orleans, Feb 1, 2006\n\n\”New Orleans was put in a position where it had to pony up or lose the team. . . [Benson] saw an opportunity and seized it.\”\n—Robert Baade, Jan 31, 2011\n\n\”The city is coming back and Tom Benson is an important player…He knows how to seize a financial advantage.\”\n—Former Louisiana Governor Kathleen Blanco, Jan 31, 2011\n\n\”Now the richest man in Louisiana—worth $1.2 billion—Benson is set to rake in an estimated $392 million from state subsidies through 2025.\”\n—Dan Alexander, Forbes, July 31, 2011\n\nOwner Depravity Equivalency Rating:\n\nJournalist and sports stadium subsidies expert Neil deMause said of Tom Benson to Forbes “He’s pretty savvy in terms of figuring out how to maximize his revenue at somebody else’s expense…Whether you consider that to make him a great businessman or a supervillain depends on your perspective.”\n\nWell, here at Chicago Sport and Society our perspective is that one does not preclude the other!  Tom Benson is a highly-effective wealth amasser and a diabolical mastermind who preys on the city’s most vulnerable citizens.\n\nRating: Obscenely Wealthy Comic Book Villain\n\n\n\n \n\n 

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