Louisiana pays the Pelicans millions in rebates to employ NBA players

The New Orleans Pelicans receive a $3.65 million cash rebate every year from Louisiana—more than any other company—by counting its professional basketball players’ positions as newly-created direct jobs under the state’s Quality Jobs program, an economic incentive that’s supposed to encourage companies to create well-paid, full-time jobs for residents.

In 2020, the Pelicans reported creating a total of 183 jobs with salaries averaging $608 per hour, according to documents from the Louisiana Economic Development agency received through a public records request. The wage rate is so high because it includes NBA players’ salaries in the Pelicans’ average wage. 

The basketball franchise is an outlier among the companies receiving quality jobs rebates from the state. The company paying the next-highest hourly wage is Brown & Root Industrial Services with a rate of $68 per hour.

The Louisiana Legislature established the Quality Jobs program in 1995 as a way to attract businesses. Under the program, the state provides between a 4% to 6% annual payroll rebate based on the total wages of newly-created jobs. The jobs must pay a salary of at least $18 per hour to qualify for the 4% rebate and at least $21 per hour to qualify for the 6% rebate. 

Paying a higher average salary leads to a larger rebate for companies participating in the program, which explains why the Pelicans tax break is so generous. Most other companies in Louisiana don’t have multiple employees making millions of dollars in a single year. 

Louisiana’s only NBA franchise, which is owned by Louisiana’s wealthiest resident, Gayle Benson, has been receiving between $2.8 million and $3.65 million in annual payroll rebates since 2004—back when the team was called the Hornets. 

For their part, the Pelicans have merely taken advantage of an opportunity the state provided the team years ago. 

Normally, the Quality Jobs incentive is available only to businesses from certain industries or businesses that have mostly out-of-state sales. The eligible industries include bioscience, manufacturing, software, clean energy technology, food technology, advanced materials, headquarters of multi-state businesses, aircraft MROs (maintenance, repair and overhaul), or oil and gas field service. 

As an NBA franchise, the Pelicans don’t fit any of those industry descriptions. Still, the state offered the Quality Jobs incentive during its negotiations to bring the team to Louisiana in 2002. Pelicans spokesman Greg Bensel said the state included the 5% payroll rebate from the Quality Jobs program as a provision in its lease agreement with the team.

The Louisiana Legislature has amended the program many times over the years. In 2002—the same year the state was trying to lure the basketball franchise to New Orleans—lawmakers passed a bill that allowed the team to qualify for the program. 

“When the Hornets were looking to relocate to New Orleans, one of the incentives that was offered to them by the state was this program,” Bensel said. “As part of their agreement to relocate to Louisiana, the Hornets were approved by the state to participate in this program.”

But the team’s participation has some lawmakers questioning the program’s return on investment. Read the full story from Louisiana Illuminator.