After celebrating the deal for the new Buffalo Bills stadium during his annual budget address last week, Erie County Executive Mark Poloncarz revealed yet another way that the deal will be stacked in the favor of the Bills, rather than county residents.
Speaking to reporters after his speech, Poloncarz said New York and Erie County structured the community benefits agreement — a key component of the overall stadium deal — to maximize tax write-offs for Bills owners Kim and Terry Pegula.
That would amount to an added benefit not previously reported. And that benefit would be on top of state and local officials agreeing to let the team build the new stadium in Orchard Park, rather than Buffalo, and in exchange for $850 million in public funding. The public funding represents more than half of the total stadium cost.
The tax write-off benefit would work like this:
In many CBAs, a developer or professional sports team will agree to contribute a certain amount of money to particular causes or programs. A CBA with the Los Angeles Clippers from 2020, for example, saw the team contribute $75 million to a revolving loan fund for affordable housing, among other monetary contributions. And a CBA with the Pittsburgh Penguins from 2008 saw the team contribute $8.3 million to various programs in the historically-Black Hill District neighborhood, including $1 million for a grocery store.
In the Bills case, the team agreed to contribute $3 million annually — for a total of $100 million over 30 years — to various initiatives including “affordable housing, food insecurity, educational access, social justice, and mental health,” according to the CBA agreed to last month.
But those annual contributions will result in no money exchanging hands. Rather than put the $3 million into a separate fund, the Bills will retain control of the money. The Community Benefits Oversight Committee, in fact, is prohibited from operating its own financial accounts.
Poloncarz said the state and county agreed to such a structure so that the Pegulas could enjoy a tax-write off for the $3 million annual contribution.
“If the Pegulas wanted to give $3 million, they could do a 501(c)3, they could get it as a tax write-off,” Poloncarz said. “If [that money] is given to our organization, it’s not. So we wanted to ensure that they had an opportunity, if they so choose, to do the tax write-off, if they give it to a 501(c)3.”
One eligible 501(c)3 would be the Buffalo Bills Foundation, which has given its largest recent gifts to two other foundations — $103,000 to the Community Foundation for Greater Buffalo and $100,000 to the Erie County Medical Center Foundation — and smaller gifts to various community groups and youth sports organizations. The Foundation gave those gifts, part of a total of $762,000, in 2020, according to its most recent tax filing.
Under the arrangement Poloncarz described, the Bills could transfer $3 million annually to its foundation — or another nonprofit organization — which would then give grants.
In a statement, a spokesperson for Poloncarz further explained that the county agreed to that structure so that the annual $3 million contribution could come from various sources and not just the Bills.
“For instance, the Pegula family itself could contribute funds, rather than just the team as a corporate entity,” the spokesperson said.
Proponents of the CBA, including Erie County Legislature Chair April Baskin, previously told Investigative Post that the Oversight Committee would exert significant control over the Bills’ annual contributions. It would be that committee, Baskin said, that would direct the funding to specific projects and programs.
But Poloncarz said the Bills will have a greater say in where the money goes than previously known.
“The Oversight Committee makes the recommendations to the Bills. The Bills make the donations,” Poloncarz said.
“And what we felt [is] this made it a strong method because they have to report back and show where the money went,” he added. “If they give it to an organization that we feel is not worthwhile, then they will basically get the, ‘Tsk-tsk, that was wrong. This is what you should be doing going forward.’”
According to the CBA, the Bills could depart from the Oversight Committee’s wishes two years in a row before any remedial action would begin. It would take even longer before the state or county would consider the team in violation of the CBA, which could land the Bills in court.
John Goldstein, an expert on CBAs, decried the Buffalo agreement’s provision that allows the Pegulas to use their annual $3 million as a tax write-off. Goldstein previously criticized the deal for not setting stricter enforcement of the agreement’s hiring and spending goals.
“The Pegulas can give the money to whatever organization they want,” Goldstein said. “Money they may have given anyway now counts as a community benefit. I can’t think of a stadium project with less accountability for public money.”
Baskin, for her part, has so far refused to weigh in on various concerns experts like Goldstein have raised about the CBA. Both Baskin and members of her staff refused to respond to repeated requests for comment from Investigative Post for this story.
Kevin Kearns, a spokesperson for the Buffalo Bills, also refused repeated requests for comment.
Poloncarz conceded that the Pegulas have leverage over the Oversight Committee, but argued that the Bills will follow the provisions of the CBA nonetheless. He added that Erie County has the ability to take the Bills to court if they violate the terms of the CBA egregiously.
“I’m not saying that every dollar as recommended by the Community Benefit [Oversight] Committee is where the dollars are going to go,” he said. “But I think the vast majority of them will.”