ALBANY – Now that a consultant has recommended four locations for a possible new stadium for the Buffalo Bills, a big question leaps out: Who would pay?
The total price tag, when road, rail and other infrastructure work are included, is likely to come to around $1 billion, so that question is important for taxpayers, both on the local and state levels.
Eighteen new sports stadium projects have been completed or started construction since 2005 with costs ranging from $250 million to $1.6 billion, a PricewatershouseCoopers senior executive told The Buffalo News last year. Direct public costs associated with those projects ranged from zero to 90 percent.
But the recent history of these sports stadium projects indicates that funding has come from other pots of money. For instance:
- National Football League team owners are contributing larger shares toward stadium costs.
- The NFL is offering a loan program to help pay the costs.
- In some cases, fans are helping to pay through “personal seat licenses,” which in return give them the best seats in the newly built house.
- Corporations often pitch in by purchasing a stadium’s naming rights.
Bills owner Terry Pegula has expressed his intent for the team to have a new stadium. However, he never has said whether he expects help from the taxpayers.
But invariably, taxpayers have contributed to just about every other new stadium in one way or another.
The 10 brand-new stadiums built with the assistance of the NFL loan program, which started in 2001, show that the average stadium price was $750 million.
The average private-sector share of that was $517 million; the average taxpayer share was $233 million.
So unless the Bills new billionaire owner breaks with tradition, taxpayers in some way will be on the hook if a new stadium is built.
The administration of Gov. Andrew M. Cuomo and lawmakers are not ruling out tapping the public’s bank account in order to build the kind of modern stadium that would prompt Bills owners Terry and Kim Pegula to put in writing what they have said about keeping the team in Western New York.
But asked if the state would contribute to a new stadium project, Cuomo administration officials said the question was “premature.” They also cautioned not to read too much into the timing the release of the stadium location study because it was considered part of an agreement when the when the state, the county and the Bills cut their last stadium lease deal in 2013.
“Nothing changes due to this,” a Cuomo administration official told The News about the timetable, or lack of one, for a decision on a new stadium.
The possibility that taxpayers across New York might help pay for a new stadium – whether directly in the form of cash or indirectly through tax incentives – has both conservative- and liberal-leaning watchdogs sounding alarms.
“The Buffalo Bills are a profitable enterprise, owned by a billionaire who has just bought his way into an exclusive, monopolistic club,” said E.J. McMahon, president of the Empire Center for Public Policy. “If Terry Pegula thinks a new stadium will make the Bills more profitable, he can and should finance the project himself and reap the rewards he will richly deserve.”
A key argument if taxpayers are asked to fund a stadium project will be over the financial return to the public. Study after study has shown taxpayers often get far less back in return, such as an increase in sales or income tax revenues, than governments have put into stadium construction projects.
“Over the past 20 years, the taxpayers of New York State and Erie County have dumped more than $100 million into the Bills stadium, including $95 million for the latest rehab. Enough is enough,” McMahon said, noting the deal finalized in 2013 by Cuomo and Bills founding owner Ralph C. Wilson Jr., who died last march, to have the state and county spend more money on the stadium in return for a lease extension.
Ron Deutsch, interim executive director of the Fiscal Policy Institute, a left-leaning organization in Albany whose board is composed of top union leaders and social service advocates, said the idea of using taxpayer money for a new stadium is “questionable at best.” NFL team owners’ claims of job creation from new stadiums are too often bloated, he said.
Both McMahon and Deutsch agreed that a pool of $5 billion that the state recently won in legal settlements should not be steered anywhere near a sports stadium. Deutsch said that such a route would “squander” money that should otherwise go to crumbling roads, bridges, sewer and water lines across the state, as well as for human services programs to help cities such as Buffalo, where more than half of the children now live below the poverty line.
The state came into the unexpected $5 billion in legal settlement proceeds from several major financial institutions, and there has been a push by many officials to invest the money in infrastructure needs. While a sports stadium would be a stretch to fit into the category of infrastructure, all the stadiums identified in the new report would require some level of major infrastructure improvements, whether new roads and parking areas or expansion of the light-rail system.
The new study on the possible Bills stadium locations outlines how the state and region could stand to financially benefit, especially if ancillary economic-development opportunities are created by building a new facility in one of the proposed downtown Buffalo locations.
But critics and even some early supporters of possible state assistance for a new stadium note that such benefits would be limited at best. In the case of a Bills stadium, temporary construction jobs would certainly be created. But the full-time jobs related to the team and stadium already exist.
In the State Legislature, some lawmakers are taking a wait-and-see attitude on state assistance until a proposal is made.
Much of the urgency for a new stadium was seemingly erased by Pegula when he took ownership of the team last year and vowed to keep the Bills in Western New York. At his first news conference in September, Pegula seemed inpatient at the prospect of having to answer stadium-related questions, though he did confirm what NFL officials and owners already said they want: a new stadium for the Bills.
By insisting that he will never move the team, Pegula seems to have removed a threat that NFL team owners have repeatedly used over the decades to extract public funds for stadiums, including the Bills themselves more than once, including in 1971 when Wilson threatened to take the team to Seattle and caught the attention of then-Gov. Nelson A. Rockefeller.
It is unclear whether this would even be a good time for Pegula to make a major expenditure. He runs a series of private oil and gas companies, among other interests, and it is no secret that dampened oil prices have hit some in that industry hard.
One thing that is certain is that state, county and federal officials will not be driving the stadium issue.
In the Legislature, which will have to approve any financial deal Cuomo may cut with the Pegulas for a new stadium, some lawmakers are taking a wait-and-see attitude until the situation becomes more clarified. With the Pegulas committing to keep the team in Western New York, State Sen. Patrick M. Gallivan, R-Elma, said the stadium issue “is pushed back a little bit further on the priority list.” He said he has heard of no discussions in the government about efforts toward a new stadium for the Bills.
“The people who will drive (the stadium issue) will be the Pegulas,” he said.
Gallivan raised some red flags about the use of taxpayer money for a stadium project.
While government’s subsidizing a private business is worthy of consideration, he said, that would have to be weighed against concern that it happens too often.
“It’s much too early to tell because I don’t know what direction the Pegulas might go, … but I’d be opposed to any level of financing where we can’t demonstrate that this is for the greater public good – where the investment will pay off in a return to the community that is greater than the public investment,” he said.
A couple of years ago, Assemblyman James F. Brennan, D-Brooklyn, chairman of the Corporations, Authorities and Commissions Committee, investigated the stadium lease involving the state, county and team.
He raised red flags in 2013 about a suite at the stadium that was set aside for the state’s use – a facility the state then turned over to a local business group to pick who gets to attend games as part of prescribed economic-development efforts.
Some will question the financial wisdom of taxpayers helping to finance an NFL stadium deal, Brennan said.
But it is not out of the question, the downstate lawmaker added.
“I think the upstate economy is not in great shape, so there’s a lot of rational reasons why preserving the professional sports team in the Buffalo region makes good economic sense for the state government,” he said.
There is a long history of the state’s providing financial assistance for private companies that invest private money in a project, Brennan said.
“This would probably be similar. It wouldn’t be writing a blank check,” he said.
“I think as long as the funds are spent prudently, it’s worthwhile. The upstate economy is unique – unique in that it needs a lot of stimulus to keep it productive and keep improving.”
© 2015 The Buffalo News