Taxpayer hit on Bills stadium tops $1 billion
The fear: A new Bills stadium would cost taxpayers $1 billion.
The reality: It’s going to cost even more.
The deal announced Monday commits the state to spending $600 million upfront to help cover construction costs. Erie County would put up an additional $250 million.
But the subsidies don’t stop there.
The state is also on the hook for $100 million over 15 years to cover stadium maintenance and repairs. The county and the state authority created to oversee the stadium would be obligated to kick in $180 million over the 30-year lease for capital improvements. Most, if not all of that money would be raised through a surcharge on tickets, parking and concessions.
Add it all up and county and state taxpayers would spend at least $1.13 billion over the 30-year term of the lease. That’s the largest subsidy ever for an NFL stadium, surpassing the $750 million Las Vegas committed to lure the Raiders from Oakland.
“It’s a whole lot of money. It would be the largest stadium subsidy in American history,” said Pat Garofalo, director of state and local policy for the American Economic Liberties Project, a non-profit that advocates for corporate accountability.
Under a term sheet that county and state officials refused to release Monday, the Bills would put $350 million towards stadium construction costs. The National Football League has committed to loaning the Bills $200 million as part of its G-4 program. Under the terms of the loan, up to $150 million could be repaid through the visiting teams’ share of Bills tickets. The Bills plan to sell fans personal seat licenses, which the team expects would raise the remaining $50 million.
The total funding would cover the cost of building and maintaining a 62,000-seat open-air stadium across the street from the team’s present home in Orchard Park. The new stadium would be built on land that’s presently part of the south campus of Erie Community College. The state would own and operate the venue through an authority it would establish and lease the stadium to the Bills.
Erie County Executive Mark Poloncarz characterized the tentative agreement as a “fair deal” for taxpayers, suggesting it includes “ironclad” non-relocation terms that would make it financially difficult for the Bills to move. Poloncarz said if the team were allowed to consider a move by the courts, it would be required to pay back all contributions by the state and county for the first 15 years of the lease.
“I feel very confident that the Bills are going to be here for decades,” he said.
Without a deal in place, Poloncarz predicted the Bills would move out of Western New York.
“The Pegulas could make a lot more money elsewhere and the NFL could make a lot more money elsewhere,” he said.
State money would cover 61 percent of construction costs. That’s substantially higher than what Albany has earmarked for other big league venues built in recent years: The average has been 6 percent.
Notably absent from the deal is any mention of ancillary development such as shops, restaurants and hotels, common to most other stadiums built in recent years.
Poloncarz did not rule out the possibility of development springing up around the stadium in the future, but said it is not part of this agreement.
“This deal is for the construction of a new stadium and the 30-year lease that goes along with that,” he said.
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Also missing is a community benefits agreement, a legally binding document that would require the team to invest in initiatives to tackle poverty and guarantee good-paying jobs during and after stadium construction.
Poloncarz said the Bills have committed to signing a CBA as part of the stadium deal, but the terms have not been finalized.
April Baskin, chairwoman of the Erie County Legislature, has proposed a CBA. But given that Poloncarz wants the county Legislature to vote on the stadium deal within 30 days, it seems unlikely a CBA will be negotiated by then. It’s questionable how much leverage Baskin would have if the stadium deal is approved before a CBA is negotiated.
Garofalo, the stadium subsidy expert, said a CBA could soften the blow of a costly subsidy.
“I don’t want to do stadium subsidies, but at least if you are going to do stadium subsidies, at least ensure that the community is getting something in these agreements,” he said.
The stadium agreement continues some of the terms contained in the team’s current lease on Highmark Stadium.
The rent remains about the same at $900,000 a year, but it will not go to the state as landlord, but rather be earmarked for capital improvements.
The Bills would continue to keep all stadium revenues, including parking, concessions and naming rights.
One notable change: The team, rather than the state and county, would cover game-day expenses such as ushers, security, cleaning staff and medical personnel.
The team would also be responsible for the cost of demolishing HighMark Stadium, if it comes down, and covering cost overruns for construction of the new venue.
Poloncarz on Monday signed what he described as a term sheet, but his office refused to release it, saying it still awaited the governor’s signature. The governor’s office failed to respond to phone calls and an email from Investigative Post seeking release of the agreement.
“It seems to me the government has a very weak argument to withhold the document, given that the deal has been reached,” said Heather Murray, managing attorney of the Local Journalism Project at the Cornell Law School First Amendment Clinic.
The clinic is representing Investigative Post in an ongoing lawsuit against Erie County seeking the release of an engineering study that assessed the condition of Highmark Stadium and the costs associated with renovating it. Investigative Post previously successfully sued Empire State Development Corp. to obtain the release of other public documents related to the stadium project.
In announcing the tentative stadium deal, Hochul pointed to a state-sponsored study that determined the Bills contribute $27 million annually in personal income taxes paid by players and staff, sales and other taxes. Her administration claims the revenues will grow to a “cumulative amount” of more than $1.6 billion over the proposed 30-year lease.
“New Yorkers can rest assured that their investment will be recouped by the economic activity the team generates,” Hochul said in a press release.
Neil deMause, editor of Field of Schemes, a website that has tracked stadium subsidy deals since the 1990s, noted that economists have found new stadiums do not produce new spending in the communities where they are built.
With more than $1 billion of public funds involved, deMause said even accepting the state’s argument that the Bills contribute $27 million in tax revenue each year, the deal “looks like a massive money loser” for taxpayers.
“We have to see the fine print, but ask any economist or anybody who has studied sports economics if you can possibly get back a billion dollars in public benefits for a billion dollars in public spending and they would say that’s going to be nearly impossible if not completely impossible,” deMause said.
Poloncarz said his administration intends to apply $75 million from the county’s 2021 surplus to cover part of the cost for the county’s portion of the stadium deal. The county would borrow the remaining $175 million.
Poloncarz said his administration expects to present the county Legislature with a formal memorandum of understanding outlining the terms of the stadium agreement within the next week.
Poloncarz said he expects Hochul to include funding for the Bills stadium in the upcoming state budget, which is due April 1.