State historically not a big funder of stadiums
Many fans and politicians are expecting, even counting on, the state to put up most of the money the Buffalo Bills want from the public to help finance construction of a new stadium.
The state has played no such role, however, in the construction or renovation of major league stadiums and arenas in the recent past.
The Bills have proposed a $1.4 billion, 60,000 seat stadium in Orchard Park and published reports have suggested the team’s owners want public financing to cover the “vast majority” of the cost.
“That’s certainly a step beyond anything else that’s been going on in New York state before,” said Neil deMause, editor of Fieldofschemes.com, a website that tracks stadium subsidies.
Watch our story tonight at 6 on WGRZ
In five prior projects, relatively little state money was involved. The projects cost $6.4 million; the state’s contribution was only $379 million, or 6 percent.
That’s the way state Sen. Liz Krueger prefers it.
Krueger, a Democrat from New York City and chair of the state Senate’s Finance Committee, generally opposes the use of public money to build stadiums and arenas for privately owned sports teams. She sees no reason why the Bills – New York’s only NFL franchise – should receive any more from the state than the other major league teams that have built sports venues.
“Objectively, I already told the governor I’m opposed to this,” Krueger told Investigative Post.
“It’s not a good use of the people’s money.”
Projects and subsidies
Major league sports teams have built or renovated five stadiums and arenas in the state since 2009, all of them in New York City. New construction projects include baseball stadiums for the New York Yankees and Mets, a hockey arena for the New York Islanders, and a basketball arena for the Brooklyn Nets. In addition, Madison Square Garden, home to the New York Knicks of the NBA and the NHL’s New York Rangers, was renovated in 2013.
Calculating the cost of the public subsidies for these projects is challenging because of the complexity of their financing deals and the refusal of state officials to release information or answer questions from Investigative Post.
Using published reports and verified project data from Empire State Development Corp. and other public sources, Investigative Post determined that the state put $379 million – or just under 6 percent – towards the construction of the five major league stadium and arena projects in the New York City area.
Subsidy deals by the numbers
|Team venue||Total cost||State share||State as %||Local share||Federal share||Total public cost||Private share|
|New York Yankees||$2.3 billion||$115 million||5%||$744 million||$327 million||$1.2 billion||$1.1 billion|
|New York Islanders||$1.3 billion||$68 million||5%||$0||0||$68 million||$1.23 billion|
|Brooklyn Nets||$1 billion||$100 million||10%||$170 million||$161 million||$431 million||$580 million|
|New York Mets||$830 million||$96 million||12%||$381 million||$137 million||$614 million||$216 million|
|New York Rangers/Knicks||$1 billion||0||0||0||0||0||$1 billion|
|Total||$6.4 billion||$379 million||6%||$1.3 billion||$625 million||$2.3 billion||$4.1 billion|
Source: Investigative Post research.
Local subsidies from the New York City government and its economic development and transportation agencies came to $1.3 billion. Federal support, in the form of tax-exempt bonds that are usually reserved for financing government totaled $625 million.
The balance – $4.1 billion – was borne by developers or team owners and their affiliated sports leagues.
With the previous stadium and arena projects, the state’s assistance came through:
- Grants and low-interest loans to cover the cost of land acquisition and infrastructure improvements.
- Issuance of tax-exempt bonds to reduce the cost of financing construction for developers.
- Forgiveness of mortgage recording taxes and sales tax on construction materials.
- Allocation of funds for capital reserves to support stadium or arena maintenance.
These subsidies coincided with assistance provided by city government and economic development agencies in NYC. Those subsidies included property tax abatements, land acquisition, infrastructure improvements, sales and mortgage recording tax forgiveness, rent credits and capital replacement reserves.
The state contributed the largest percentage of the overall construction cost for Citi Field, the baseball stadium the Mets have called home since 2009.
Of the $830 million project cost, the state covered about 12 percent through land and infrastructure improvements, tax breaks, and the issuance of tax-exempt bonds. While generally reserved for public projects, tax-exempt bonds have been used in the past for stadium construction projects. They allow developers to forego federal taxes on debt service interest payments.
Hockey arena on Long Island
UBS Arena, home of the NHL’s New York Islanders, is located near the Belmont Park horse racing track in Elmont, a hamlet described as the “Gateway to Long Island.” The 17,151-seat arena, built for $1.3 billion and opened in November, is part of a larger complex that includes 350,000-square feet of retail and entertainment space and a hotel.
While the arena developers initially claimed the project would be entirely “privately financed,” they did receive support from the state, including:
- $40 million in grants and loan-interest loans for the development of a $105 million train station connecting the arena complex to the Long Island Rail Road.
- $28 million in tax breaks for the retail, office and hotel development components of the project.
In addition, the arena developers leased 43 acres of state-owned land near Belmont Park. After the lease was signed, the state estimated that the property was worth between $36 million and $41 million and the developers paid $40 million.
However, published reports called into question the true value of the land, noting that the state entered into the lease without seeking an appraisal. One report suggested the market value of the property was likely significantly higher than the state’s estimate, resulting in a discount of between $74 million and $300 million for the developers.
Costliest project, largest subsidy
No deal involving a pro sports venue in New York has been as big as the one involving Yankee Stadium.
When the team decided to replace the original “House that Ruth Built,” the federal, state and local subsidies to build a new Yankee Stadium added up to $1.18 billion.
The state, according to deMause’s calculations, contributed $115 million, including $61 million for parking garages, $32 million in construction and mortgage recording tax savings and $4 million capital replacement reserves.
An analysis performed by the Tax Foundation found that the issuance of federal tax-exempt bonds helped the Yankees save between $231 million and $471 million over 30 years.
“Without this generous subsidy, it is unlikely that such an expensive stadium could have been built,” the Foundation concluded.
DeMause pegged the final tally for the federal subsidy at $327 million.
Support our nonprofit newsroom
That’s not all the assistance the Yankees received.
According to deMause’s estimates, New York City and the Metropolitan Transportation Authority contributed $744 million to the project, including infrastructure improvements and replacement of parkland lost during construction ($232 million), property tax abatements ($416 million) and forgiveness of construction and mortgage recording taxes ($30 million).
In 2012, the Barclays Center, the Brooklyn home of the Nets, opened at a cost of just over $1 billion. The arena was built as part of a larger, state-assisted $4.9 billion redevelopment project originally known as Atlantic Yards. That project, now referred to as Pacific Park, covered 22 acres and consisted of the 18,000-seat arena, an improved train yard for the Long Island Rail Road, subway upgrades and the development of 16 towers for residential and commercial use.
Empire State Development Corp. – the state entity involved in the Atlantic Yards-Pacific Park project – refused to provide an accounting of the subsidies tied to the arena development alone.
Project observers estimate roughly $270 million in local and state subsidies were involved, including $170 million from New York City and $100 million from the state. In addition, the arena developers saved money through the use of federal tax-exempt bonds, resulting in an estimated savings of $161 million.
Citi Field, home of the New York Mets, involved public subsidies, too.
The stadium, which opened in 2009, cost $830 million, with the team and Major League Baseball covering $216 million of the cost and public money and tax breaks accounting for the remaining $614 million.
As part of the Citi Field project, deMause estimates that New York City provided $72 million in land and infrastructure improvements and $252 million in property tax breaks. It also gave up $58 million in parking revenue and kicked in $31 million to help cover maintenance costs.
The state spent $69 million on land and infrastructure while granting the developers $21 million in breaks on mortgage recording taxes and sales taxes tied to construction materials. The state also provided tax-exempt bonds that saved the developer $2.5 million.
The federal government helped the stadium developers save $127 million through the issuance of tax-exempt bonds.
The state did not assist the owners of Madison Square Garden when they renovated the arena in 2013. The owners of MSG have not paid property taxes on the facility since 1982.
The New York City Independent Budget Office, responsible for reviewing the city’s budget, estimated that the tax break deal saved the team’s owners $41.5 million in 2019 alone and a total of more than $600 million since 1982.
What will the Bills get?
Gov. Kathy Hochul and Erie County Executive Mark Poloncarz have not shared details about the potential public contribution to Bills stadium project. Both officials have repeatedly declined interviews, citing ongoing negotiations.
Krueger, who chairs the state Senate’s Finance Committee, noted that Hochul did not include funds for a new Bills stadium in her state budget proposal when she presented it in January. Krueger said she has not received any information about what the final stadium cost might be or how much public money – local or state – might be involved.
“Nobody has floated anything by me,” she said.
In the past, Krueger has opposed state subsidies for new stadiums for the Yankees and the Mets and the new arena for the Nets. She noted that research shows such projects are not drivers of economic growth and, instead, primarily benefit wealthy team owners.
“The NFL owners are making a huge amount of money and can afford their own stadiums and I don’t know why anyone’s falling for this,” she said.
Krueger pointed to the findings of a state-sponsored study that found the Bills provide $27 million in tax revenues per year. In her opinion, that’s not a large enough return to warrant a huge public subsidy for a new Bills stadium.
“If we make a deal like that on a football stadium, we are going in with our eyes open – we’re not getting a return on our investment,” Krueger said.
Follow us on Facebook, Twitter and YouTube
In an interview last week with The Capitol Pressroom in Albany, state Comptroller Thomas DiNapoli said he believes it is in the best interest of the state and Western New York to continue to have a “great stadium and welcoming home in the Buffalo area” for the Bills.
While not privy to the negotiations, DiNapoli said he believes “everybody would agree that the lion’s share of the financial cost should be borne by the team and the private entity that owns it.”
DiNapoli also said the public should have an opportunity to weigh in on any proposal before it is finalized.
“I would hope it would not be an onerous partnership or commitment on our part,” he said.
State lawmakers representing Western New York, including Assembly Majority Leader Crystal Peoples-Stokes and Assemblyman Tim Kennedy, refused Investigative Post’s request for interviews.
State Sen. Sean Ryan, D-Buffalo, said he expects the state will be responsible for the larger portion of any public share.
“Generally, if you look at past stadium negotiations in the last lease, the county picked up a portion through bonding but also through maintenance costs, but the lion’s share was picked up by New York state, so I imagine that formula will stay the same,” he said.
Ryan said he does not envision, “under any circumstances,” that the state’s assistance will involve a direct cash subsidy to the team.
“We’re not doing it for the Bills. We’re doing it for the people of New York state,” Ryan said.
Erie County Legislature Minority Leader Joseph Lorigo, C-West Seneca, also expects the state will contribute more to the project than the county. However, he doesn’t think Albany should commit major dollars to the project.
“If that’s how New York state has done it in the past where it’s been a smaller dollar figure, infrastructure investments, that’s the way I think it should continue to go,” he said.
In any final deal, Lorigo said he’d like to see the team’s owners – Kim and Terry Pegula – and the league contribute more.
“The NFL is a multi-billion-dollar industry where billionaires own the teams and certainly can afford to pay for their own stadiums,” he said.
A Bills stadium deal that costs taxpayers $1 billion or more would eclipse the previous record for an NFL stadium subsidy currently held by Las Vegas, which provided $750 million to support the construction of the new Raiders stadium.
“Clearly, what is being talked about at the state and the county level is a top five or top 10 most expensive public subsidy for a sports stadium deal,” deMause said.