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NEW ORLEANS (AP) — Gov. Bobby Jindal and the Hornets plan to announce an agreement on a 10-year lease extension at the New Orleans Arena, according to people familiar with the deal.
The people spoke to The Associated Press Friday on condition of anonymity because the deal had not been publicly announced. Jindal is expected to discuss the deal Friday afternoon.
People say the deal will run through 2024, but requires legislative approval of a bond issue of more than $40 million to help fund about $50 million in arena improvements that should give the Hornets more revenue streams.
The new lease would not require any new taxes.
The extension was done in conjunction with the NBA’s efforts to find a new owner for the team, which is currently owned by the league. A new owner would be bound to the new lease.
The people say the NBA is also expected to award New Orleans an NBA all-star game sometime during the lease.
NBA Commissioner David Stern has said he hoped to announce an agreement with a new owner this month, but it is not yet clear exactly when that process will be complete.
“This is a major step toward completing the sale of the team,” said one of the people familiar with the process, but he could not specify when a new owner might be in place.
The hope is that a long-term 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.
By 2010, owner George Shinn was saddled with too much debt to continue operating the club effectively and needed to sell. Shinn has said he did not want to sell the team to someone who would immediately move it out of Louisiana. However, he also could not reach a deal to sell his shares of the club to then-minority owner Gary Chouest, a Louisiana native and owner of a thriving business that builds and operates supply boats to the offshore oil and gas industries.
That led the NBA to step in, and for the first time in league history, take over ownership of one of its teams, with commissioner David Stern acting as the de facto owner.
Once the sale was completed in Dec. 2010, Stern appointed sports attorney Jac Sperling, a New Orleans native, to oversee the club and begin negotiating with prospective buyers, as well as with state officials concerning the team’s lease of the state-owned New Orleans Arena.
The old lease was set to expire in 2014 and contained provisions that allowed the club to break the lease if average attendance fell below 14,735 during a two-year period. Last year, that attendance threshold was surpassed only after an intense campaign, orchestrated with the help of politicians and business leaders, urging fans and businesses to buy up blocks of tickets,
The new lease does not have such an escape clause, which is meant to send a message to fans in Louisiana that the new ownership is committed to the region long-term.
As part of the effort to attract a new owner, team officials also 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, giving Hornets officials an intimate forum to explain the benefits of owning Hornets season tickets and having their city represented by a franchise the world’s top professional basketball league.
The 10,000 season ticket mark was surpassed right around the time the NBA’s lockout ended with a new labor agreement, and Stern praised the community for its support during a time when the league was dealing with labor strife. However, the club has played to small crowds as it has struggled to win since the NBA signed off on a controversial trade of Chris Paul to the Los Angeles Clippers.
New Orleans Hornets point guard Jarrett Jack (2) reacts after being called for a foul late in the second half of an NBA basketball game against the Charlotte Bobcats in New Orleans, Monday, March 12, 2012. The Bobcats defeated the Hornets 73-71. (AP Photo/Bill Haber)
