Taxing questions regarding the Bills

Reporting, analysis and commentary
by Jim Heaney, editor of Investigative Post

The key study isn’t done, and negotiations have yet to start in earnest, but it’s not too early to start posing questions about who should pay for what to keep the Bills in Buffalo.

The teams’ lease on Ralph Wilson Stadium expires in July 2013 season and a story in The Buffalo News on Sunday reports that sources are saying the cost of renovating the facility will run north of $200 million. Given the cost of upgrading the home of the Green Bay Packers and Kansas City Chiefs ran $295 million and $400 million respectively, that seems like a safe, perhaps conservative estimate.

Those who say the taxpayer shouldn’t subsidize a facility used 10 times a year – and by extension a profitable business worth hundreds of millions of dollars have a valid point.

But the political reality is that there is a broad constituency to spend within reason to keep the Bills here. And no politician wants the team to leave on their watch.

That’s helped by the fact the team isn’t seeking a new facility, but renovations that will cost considerably less than new digs.

There’s also the precedent set by Albany and downstate pols to dig deep to help underwrite the cost of new baseball stadiums for the Yankees and Mets and a basketball arena in Brooklyn that will be home to the NBA Nets. And while $850 million in ongoing renovations to Madison Square Garden are being privately financed, the property is benefiting from tax breaks worth $14.8 million a year.

Suffice to say, the precedent has been set.

Regarding Ralph Wilson Stadium, there are some key issues that need addressing. They include:

How much of a public investment is warranted, given the tax revenues the Bills will generate? To me, this is a key question, as it speaks to the public’s return on investment. The Bills generate whatever-million in sales and income tax revenues, money that would be lost if they leave. An argument can be made that investing all or some of those revenues would represent a good investment of public funds. The question is, what is that number?

How much are the Bills willing to invest? I mean, they just guaranteed Mario Williams $100 million when they signed the free agent, so they have disposable income. TV money is constantly going up. The NFL’s labor contract should help small market teams like Buffalo. The team makes money and continues to grow in value, and the improvements would enable the team to increase ticket prices and otherwise increase revenue.

How should non-capital expenses be handled? Right now, the public picks up a lot of operating costs. The News calculated that the expiring deal involves more in operating subsidies, $111 million, than in capital costs of $101 million. Should the Bills pick up more of those costs under a new deal?

What guarantees should be built into an agreement to ensure the Bills remain here after Ralph Wilson dies? And what is Wilson willing to do by way of a succession plan? His message to the community thus far is, “don’t worry about it.” But if the public is expected to pony up for stadium improvements, it has reason to want to protect its investment.

Will the Bills take steps to expand use beyond football? Rock concerts used to be a staple. They were fun. What happened? And what can be done to change that? Should we as a community be satisfied with a football-only venue, or should we insist on an operations plan that provides other entertainment opportunities?

Also to consider is the manner in which the franchise has been run the past decade. The Bills have not been a well-managed business.

They haven’t made the playoffs since 1999, the longest drought in the league, and have posted only one winning season during that span. Season ticket sales, at least prior to the Williams signing, had dropped to the lowest level since 2001. The teams has hired four general managers and a half-dozen coaches since 1999.

In short, Ralph Wilson Stadium has seen more than its share of lousy football players, drunk fans and, of late, empty seats and blacked out games. Not the hallmark of a well-run business.

Are the Bills the next Chicago Blackhawks, who managed to resurrect the franchise after a really bad stretch due to poor ownership, or the Toronto Maple Leafs, a perennially miserable team with a frustrated but forgiving fan base? At least the Leafs paid for their arena.

Negotiations put Erie County Executive Mark Poloncarz in a tough spot. Losing the Bills would likely mean a political death sentence. But at the same time, he needs to drive a hard bargain on behalf of taxpayers, in this, one of the most highly taxed communities in the nation.

There aren’t a lot of answers to be had just yet. But a lot of the questions are pretty obvious.

What’s your take?