The Buffalo Bills Request $1.5 Billion

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Hey Friends,

The Buffalo Bills are ready to leave New York. Well, that’s what they say, at least.

After more than 60 years in Buffalo, one of the NFL’s most promising young teams is reportedly considering a move to Austin, Texas. The reason? They want Buffalo to provide $1.5 billion for a new stadium, completely funded by taxpayers.

According to the Buffalo News, the Bills ownership group “has floated to state and county officials an initial ask that the public pay all the costs for what will be, as is the current stadium, a county-owned facility.”

The new stadium — expected to be built adjacent to the team’s existing facility in Orchard Park — would cost at least $1.1 billion, with the remaining ~$400 million set aside for renovations at the Sabres’ Keybank Center, another Buffalo property owned by Bills ownership group Pegula Sports and Entertainment (PSE).

Here’s what Freeman Klopott, a spokesman for New York governor Andrew Cuomo’s budget office, told The Buffalo News:

When asked for a comment, Pegula Sports and Entertainment responded that the reported amounts were inaccurate but declined to say if the request by the team was higher or lower.

I imagine the financial models and economic forecasts used to determine the appropriate sources for public funding distribution within state and local governments are complex. However, I have never seen, reviewed, or put them into practice, so I won’t act like I know how they work.

But in my mind, the decision of whether or not to contribute taxpayer funds to the building of a new stadium really comes down to one simple question — will enough visitors attend games and spend money at and around the sporting venue to produce enough economic activity to pay for the stadium?

For the 28 out of 32 NFL teams that currently play in stadiums built using public funding, that answer appears to be yes, at least on the surface.

State and local governments typically comply based on two main theories:

• First, thousands of jobs, including construction, concessions, parking, etc., will be created when building the new stadium, providing financial gain for local residents.

• Secondly, spending on ticket sales, hotels, parking, restaurants, and other tourism activities will flow down, creating a boom within the local economy.

That sounds great, but there’s nuance, of course. On the surface, it’s likely true that a new stadium can produce enough economic activity to cover the cost of public financing. However, the increase in sales at local businesses doesn’t necessarily matter; what matters is that the taxes collected from all that activity is equal to or greater than the stadium cost.

For example, a Super Bowl visitor may spend $3,000 in expenses (tickets, hotel, food, etc.), but in reality, that only equates to ~$300 of tax revenue, which might be used to cover public expenses for the event (security, traffic control, etc.).

Furthermore, stadium boosters tend to forget the fiscal budget most families have. Attending an NFL game typically means spending less elsewhere, whether one less family dinner or a night out at the movies.

The key point is that other local businesses will lose a roughly equal amount in spending that I would have done with them instead. Both activities generate a similar amount in tax revenue, but the spending at sporting events isn’t necessarily “new” revenue.

Still, given that more cities want football teams than franchises available, state and local governments continue to pay the bills.

Top 5 Most Expensive Stadiums (ranked by taxpayer funds)

1. Allegiant Stadium: $1.9 Billion ($700M from taxpayers)

2. Nationals Park: $693 Million ($693M from taxpayers)

3. Yankee Stadium: $2.3 Billion ($600M from taxpayers)

4. U.S. Bank Stadium: $1.1 Billion ($498M from taxpayers)

5. Marlins Park: $634 Million ($488M from taxpayers)

But when it comes to the Buffalo Bills, this is an empty threat. If Los Angles were still an available destination, California would’ve been their choice. If Austin, Texas, were occupied, they simply would’ve picked another city.

I think most people are aware of the playbook by now: NFL owners strongarm state & local governments into providing hundreds of millions of dollars — billions in this case — in funding for new stadiums based on the idea that if they are unwilling to provide the capital, NFL franchises will pick up and move to a city that will.

The problem is that the NFL is running out of options. Los Angeles and Las Vegas are now occupied, while London is still not a desirable destination for players, owners, or even the league.

I doubt it will be for more than $1 billion, but my guess is that New York State will eventually blink, like all cities that have NFL franchises do. Regardless, the historical weight of threatening to move your franchise is becoming less valuable by the day.

Have a great day, and I’ll talk to everyone tomorrow.

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