LaFortune's "sports deals"

[MichaelC]

From Tulsa World

quote:
Subsidies for sports events are criticized

Contracts signed by former Mayor Bill LaFortune that provide large subsidies to two local sports teams and a rodeo have drawn harsh criticism from city councilors.

The council approved payments Thursday of up to $150,000 to the Oilers hockey team, up to $35,000 to the Talons arena football team and $50,000 to the Professional Rodeo Cowboys Association.

"This is clearly an example of corporate welfare," Councilor Bill Martinson said earlier this week. "It's a subsidy to private operating businesses. I find it offensive."

Nonetheless, he said, the city is bound by the LaFortune deals, he said.

"We're in a box, and I don't see that we have any choice but to approve this."

The subsidies the city faces in its current budget year may come back again next year, officials said.

Because of LaFortune's changes in the sports teams' contracts to use the Convention Center, and a $50,000 deal with another rodeo scheduled for next fiscal year, similar costs have been figured into the city's proposed 2007 budget.

The budget authorizations approved Thursday prevent the sports incentives negotiated by LaFortune from causing drastic
budget problems for the convention center, said Budget Director Pat Connelly.

Without the authorization, the convention center "would have to shut down, or not pay its energy bills, or do something drastic because there are still two months left of this budget year," he said.

The incentives LaFortune gave the Talons and the Oilers were in the form of a revised formula for splitting concession revenues at the convention center.

A private contractor provides concessions at the Convention Center and pays the city a percentage of the net revenue, Convention Center Director John Scott said.

LaFortune agreed to give the teams incentives equal to 20 percent of gross concession sales, Scott said. So, while the city received revenue on the basis of net revenue, it paid incentives on the basis of gross revenue.

Under that deal the Talons received $33,359, leaving only $51,409 in concession revenue for the city. The Oilers received $102,592, and the city got $139,952.

Before LaFortune made the deals a different agreement had given the Talons a smaller cut of the city's concession revenue, and the Oilers had a separate deal with the concession contractor.

Scott said the concession deals amount to significant subsidies for the teams.

In fact, the teams will be getting a good deal more from concession sales than they pay in rent over the course of the season, Martinson said.

Both sports team pay $1,500 in rent per game at the center.

The Oilers played 32 home games for a total of $48,000 in rent this season. The city will pay the Oilers $102,592 from concessions.

The Talons play eight home games for a total $12,000 in rent, while the city will pay the team $33,359 from concessions.

In a telephone interview Thursday, LaFortune defended the incentives.

"Professional teams in our city are absolutely critical to our city's economic well-being," he said.

The city needs to do what is necessary to "ensure the health and viability and existence of these sports teams," especially with the arena, he said.

Talons owner Henry Primeaux made it clear "that a better share of the concessions was absolutely critical to its survival in Tulsa and remaining in Tulsa," LaFortune said.

Once he made the deal with the Talons, LaFortune said he granted the same deal to the Oilers.

Rodeo deals: LaFortune also made simpler separate contracts with two rodeo groups that gave each $50,000 in what was to be "sponsorship money."

The costs of only one of those deals was dealt with in Thursday's actions because the other event happens in the next budget year.

The deal was first offered to the Professional Bull Riders, whose event is set in July.

Then LaFortune gave the same deal to the Professional Rodeo Cowboys Association event, which was held last weekend.

Again, the incentive to the PRCA event exceeded the city's rent revenue from the event.

The PRCA was charged $20,000 in rent for the three-day event.

LaFortune said he intended to raise private funding to cover the $50,000 in PRCA incentives, but did not because he was too busy campaigning for re-election.

The convention center has dates held for 2007 and 2008 for the PRCA and in 2007 for the PBR, but no contracts have been signed.

During Mayor Kathy Taylor's 2007 budget presentation to the council on May 1, she referred to "unprecedented subsidies" for the rodeo events.

She said all the contracts will be reviewed to make sure the best interest of the city is being served.

Taylor said Thursday that she wants to know more about the other deals before she decides how to proceed.

"I don't want to change the contract without talking to our partners, the Talons and the Oilers. I don't know the background as to why the contracts were changed," Taylor said.

She said the additional costs resulting from the contract changes were included in the proposed budget by LaFortune before she took office. She said they were left in the budget in case the city decides to renew the concession contracts or that the city is contractually bound to those contracts.