President Obama's callous indifference to his drilling moratorium's negative impact on Louisiana is worthy of the "Let Them Eat Cake" Hall of Shame. When pressed by Gov. Bobby Jindal to reconsider the drilling ban and corresponding shallow water permit foot-dragging on the state's economy, the President responded by suggesting that laid off workers might apply for BP funds, or failing that, unemployment compensation.
The President and the Ivory Tower Gang of advisers he's selected understand neither Basic Economics nor the Law of Unintended Consequences. Sometimes effects of a bad economic policy are felt in unexpected places.
Case in point: The New Orleans Hornets of the NBA.
For a couple of years, it has been widely rumored that the majority interest in the Hornets franchise (currently sporting a 13-6 record) would be sold to minority owner Gary Chouest. Chouest currently owns 35%, and would take out George Shinn in a deal that would value the franchise at $300 million.
Now, Chouest suddenly has cold feet. He's opted not to buy Shinn's interest.
Gary Chouest, reportedly a billionaire, lives in Galliano, LA. He's the owner of Edison Chouest Offshore, which owns a worldwide fleet of boats which serve the deepwater drilling industry.
Chouest is concerned about a potential work stoppage, according to sources, as the league’s players and owners renegotiate the collective bargaining agreement, set to expire at the end of this season.
Sources also indicated that the billionaire shipping magnate does not think he can devote the time needed to run an NBA franchise as its sole owner and operate his private business at the same time. His company, global marine service company Edison Chouest Offshore, was hit hard by the moratorium on deepwater drilling in the Gulf after the BP oil spill. [Source.]
The NBA is reportedly trying to find an investor group to keep the franchise in New Orleans. Good luck with that. [UPDATE: The NBA has reportedly agreed to purchase Shinn's interest in the team.]
I don't blame Gary Chouest. Even if he could write a check for Shinn's interest, as a businessman, he's entitled to choose his investments. With his primary business in some distress, the last thing he needs is a $300 million distraction.
The team has the contractual right to leave New Orleans if average attendance is under 14,700 by January 31. Current attendance is 900 per game shy of that mark. Who knows how much the moratorium contributed to lower attendance?
Of course, the players and coaches don't stand to be hurt, but for the city and the state the team's $75 million payroll is in jeopardy. Who knows how big the economic impact of the loss might be?
BP's spill fund won't help concession workers, ticket-takers or t-shirt sellers. None of them qualify for unemployment compensation, either.
An NBA franchise is a high-profile example. All over this economy, business owners large and small make incremental decisions. The impacts are hard to measure individually, but the cumulative effect can be crippling.