Bills Stadium Deal

Senator Donut

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https://www.nytimes.com/2022/03/28/nyregion/buffalo-bills-stadium-deal.html

Some bullet points

To be constructed next to the existing Highmark Stadium

$1,400 million total cost
$600 million paid by New York State
$250 million paid by Erie County
$200 million paid by an NFL loan
$350 million paid by the Pegulas

The new stadium would be owned by the state and rented to the Bills

The Bills would commit to playing 30 years at the new stadium

The stadium would seat about 60,000 near the smallest in the league, but would be partially enclosed, which would explain at least some of the high cost compared to other recent open-air construction

The deal requires approval from both the state legislature in Albany and the local Erie County government.
 

RG33

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Just stopping by to point out that Terry Pegula’s net worth is estimated to be around $5.8 billion.

It continues to amaze me that billionaire sports team owners get this kind of public money to build a stadium that they will massively profit from.
 

Super Nomario

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At least the state owns it (and presumably can rent it out for concerts or whatever). What gets me is when the public funds it and just gives it to the billionaire owner.
 

GB5

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its all about leverage. Buffalo has nothing else. If Pegula had another reasonable location making inquiries, maybe Toronto, then he could use the leverage to get the State, and the County to overpay, which is it appears he did. He didnt get as much, but this is why Kraft brought Hartford to the table.
 

steveluck7

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At least the state owns it (and presumably can rent it out for concerts or whatever). What gets me is when the public funds it and just gives it to the billionaire owner.
It’ll be fun in 20 years when the Bills want another new stadium and try to extract more money from the state and county
 

sodenj5

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Pegula knows exactly how huge the Bills are in Buffalo, and he knows damn well that a dozen other cities would line up for the privilege of throwing nearly a billion dollars at him for a stadium.
 

DontTauntOrtizMe

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After that joke of a game in the wind this past season, I wonder if whatever partial enclosure is built will protect against the elements.
 

PseuFighter

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I can't believe the public is still being fleeced for private stadiums, when these teams are worth more than ever (and before someone says "well, it's a public stadium" -- it's primary tenant will be the Buffalo Bills, not average taxpayer, and it will be closed 97% of the year). They create very short-term construction jobs, and that's about it. Politicians become mortified they don't want to be the ones that let the team walk. The team shows zero loyalty to the fanbase, who freaks out about the prospect of losing their team. The team will argue they need more luxury seating that won't help the average fans anyway. Rinse, repeat.

They rarely work out for the public good, and *never* work for buildings built in the middle of nowhere open 8-10 times a year. So much has been written on this. My favorite resource that's been covering this stuff for at least 20 years: https://www.fieldofschemes.com/
 

absintheofmalaise

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I don't have a NYT sub. Was there anything in the article about what the bullshit, bought and paid for, economic impact study said about how quickly the stadium would pay for itself?
The answer, of course, is never.
 

Manuel Aristides

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Interesting unrelated news that NY state has cut $800 million from the Children and Family Services budget. But then again, who can put a price on young people learning how to injure themselves at a tailgate. Farcical, and sad.
 

PseuFighter

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In the governor's press release, she mentions that they'll get the $1.6 billion back over 30 years. Some back of the envelope math here, if you have $1.6 billion to play with and want it to grow, at 8% returns, you can turn that $1.6 billion into $17 billion over 30 years. Seems like a better, um, investment than letting it sit like a rock in a new stadium that, if the team still moves, becomes completely worthless. Plus, 10-15 years after it opens, owners will say it's dated and needs another $200mm at least in renovations.

Also, public stadiums are a huge risk. Look at what's happening in Chicago with the Bears breaking their lease on the recently renovated Soldier Field to buy their own mega-stadium with a dome in Arlington Heights. The cost of breaking the lease is tiny. I'm sure Albany is going to screw this up too, such that if the Pegulas decide ten years from now, they want a domed stadium of their own to get a Super Bowl and/or continue to raise the value of the team, I bet it'll be very difficult to stop them.
 

Senator Donut

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In the governor's press release, she mentions that they'll get the $1.6 billion back over 30 years. Some back of the envelope math here, if you have $1.6 billion to play with and want it to grow, at 8% returns, you can turn that $1.6 billion into $17 billion over 30 years. Seems like a better, um, investment than letting it sit like a rock in a new stadium that, if the team still moves, becomes completely worthless.
The state is going to raise the money through bonds, so its not a matter of cleaning out their rainy day fund. Some back of the envelope math indicates the Bills and their opponents pay about $15-20 million in NY state income tax per year. If payrolls increase at a higher rate than their borrowing costs accrue, it probably turns a profit for the state after they collect rent. Of course this argument assumes the Bills would have left the state, absent a new stadium deal, which isn’t an outlandish thought.
 
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54thMA

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So glad that some of my tax dollars are going to a stadium for a team whose owner is worth billions of dollars. Who also built and funded a hockey arena at Penn State.
I'll defer to you and others here who know more about these sort of things than I do, but didn't Kraft pay for the stadium out of his own pocket and the state of MA kicked in for infrastructure upgrades around the stadium? Wasn't Kraft going to move the team to CT unless the state kicked in or am I wrong about that?
 

Phil Plantier

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Who's responsible for the inevitable cost overruns? That will be the state, right? The state that has spent 11 billion dollars and counting on a 2-mile rail tunnel?

I also liked this:

Striking a deal to ensure that the Bills remained in Western New York was a top priority for Ms. Hochul, a Buffalo native and avid Bills fan who took office in August and is running for a full term as governor this year.
I wonder how many Bills fans will vote D because she kept the team in the state.
 

Doug Beerabelli

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$550 million of the Bills own money, so about 40% going toward a facility they don't own. I assume the county and state get paid back via the aformentioned bonds, lease payments, surcharge on tickets and parking, maybe some local tax on hotels etc etc, and the 30 year lease ensures full repayment.

The devil is in the details, of course. And I'm sure the Bills ownership makes out very well under any arrangement it ends up being. But perhaps this won't be as horrible as some other stadium deals that have occurred in the past.

Pseu - it looks like the State is putting in $600 million, so it's $1.6 billion back on a $600 million investment. I'm also not sure if anyone is getting 8% guaranteed returns these days, but I"m not too knoweldgable about such things.
 

88 MVP

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$550 million of the Bills own money, so about 40% going toward a facility they don't own. I assume the county and state get paid back via the aformentioned bonds, lease payments, surcharge on tickets and parking, maybe some local tax on hotels etc etc, and the 30 year lease ensures full repayment.
First, $200M of that is an NFL loan that will mostly be forgiven. The Pegulas are nominally putting up about $350M, but I would bet my life that their contribution ends up being funded by selling PSLs to the fan base.

The state will own the stadium and maybe earn some marginal revenue on concerts or other events, but it’s an open air stadium in Orchard Park, NY. It really won’t have much residual value to the taxpayers.

The whole thing is gross and has me seriously considering voting against Hochul.
 

absintheofmalaise

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$550 million of the Bills own money, so about 40% going toward a facility they don't own. I assume the county and state get paid back via the aformentioned bonds, lease payments, surcharge on tickets and parking, maybe some local tax on hotels etc etc, and the 30 year lease ensures full repayment.

The devil is in the details, of course. And I'm sure the Bills ownership makes out very well under any arrangement it ends up being. But perhaps this won't be as horrible as some other stadium deals that have occurred in the past.

Pseu - it looks like the State is putting in $600 million, so it's $1.6 billion back on a $600 million investment. I'm also not sure if anyone is getting 8% guaranteed returns these days, but I"m not too knoweldgable about such things.
Taxpayers are putting in $850 million. The state will lose out on this. I can say with a large degree of certainty that the taxpayers will not even break even on the money they are being forced to pay for this stadium. There are many peer reviewed economic studies out there showing this.

JC Bradbury is a good resource for this. As mentioned upthread, Field of Schemes is good too.

edit: spelling
 
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wade boggs chicken dinner

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Just stopping by to point out that Terry Pegula’s net worth is estimated to be around $5.8 billion.

It continues to amaze me that billionaire sports team owners get this kind of public money to build a stadium that they will massively profit from.
Not just billionaire sports teams. Think about all of the subsidies that billionaire tech owners get as well.

There are a limited number of perceived economic engines floating around these days and there is a surplus of places that want them. And yes, it's easier to negotiate a deal when one side is spending taxpayer money.

I can't believe the public is still being fleeced for private stadiums, when these teams are worth more than ever (and before someone says "well, it's a public stadium" -- it's primary tenant will be the Buffalo Bills, not average taxpayer, and it will be closed 97% of the year). They create very short-term construction jobs, and that's about it. Politicians become mortified they don't want to be the ones that let the team walk. The team shows zero loyalty to the fanbase, who freaks out about the prospect of losing their team. The team will argue they need more luxury seating that won't help the average fans anyway. Rinse, repeat.

They rarely work out for the public good, and *never* work for buildings built in the middle of nowhere open 8-10 times a year. So much has been written on this. My favorite resource that's been covering this stuff for at least 20 years: https://www.fieldofschemes.com/
Look, I know it's super easy to bash sport stadium deals but professional sports teams do have non-economic benefits for cities, including the fact that it creates community bonds. That might not be such a big deal in some cities with multiple sports teams, but for Buffalo, I think it would be a big loss for the Bills to go elsewhere.

I haven't had a chance to look into the details but to the extent the state/local governments are lending money and not giving it away, those funds are really just securitizing a bunch of taxes that wouldn't be there if there were no team. At least that part of the equation shouldn't be seen as a giveaway.
 

Senator Donut

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I haven't had a chance to look into the details but to the extent the state/local governments are lending money and not giving it away, those funds are really just securitizing a bunch of taxes that wouldn't be there if there were no team. At least that part of the equation shouldn't be seen as a giveaway.
That’s a great way of putting it. NYS has graduated income had and an extremely high marginal tax rate at the salary range of professional athletes. By locking in the Bills for 30 years plus whatever time remaining across the street, they can borrow against that future income. Economic impact studies can say whatever they want, but tax revenue figures are a lot more concrete.

What’s less clear is how Erie County plans to recoup their $250 million portion. I presume there will be some tourism tax increase like rental car, hotel, or rideshare/taxi tariffs. They will also lose their ownership of the current stadium (and the associated operating costs). It seems like a crap deal for them.
 

54thMA

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Isn't the belief that Kraft was just playing poker and tightening the screws in MA, based on the small penalty agreed upon in the original proposal/contract, something like only $1M to Hartford/CT, when he withdrew from CT?
That was that how I believed things to be as well...............
 

mikcou

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That’s a great way of putting it. NYS has graduated income had and an extremely high marginal tax rate at the salary range of professional athletes. By locking in the Bills for 30 years plus whatever time remaining across the street, they can borrow against that future income. Economic impact studies can say whatever they want, but tax revenue figures are a lot more concrete.
They get some back, but its not that much in the context of $800M. Assume 8% average rate. $125M (assume $250M for simplicity x 50%) worth of game checks a year is ~$10M a year in state income tax. 30 years is ~300M. Further to that point, $250M is an aggressive assumption as signing bonuses can be structured to only be taxed in the state of residence. Given the structure of NFL compensation, theres a lot of potential leakage there.

Maybe theres some additional tax from people who are permanent residents and would not be if the Bills were located ex-NY, but you arent coming close to the $800M over 30 years even before considering the very long tail on these payments. On the flip side, if any players remained permanent residents, tax receipts wouldnt go down by the $10M a year above.
 

wade boggs chicken dinner

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That’s a great way of putting it. NYS has graduated income had and an extremely high marginal tax rate at the salary range of professional athletes. By locking in the Bills for 30 years plus whatever time remaining across the street, they can borrow against that future income. Economic impact studies can say whatever they want, but tax revenue figures are a lot more concrete.

What’s less clear is how Erie County plans to recoup their $250 million portion. I presume there will be some tourism tax increase like rental car, hotel, or rideshare/taxi tariffs. They will also lose their ownership of the current stadium (and the associated operating costs). It seems like a crap deal for them.
I can't find the details, but it's my guess that Erie County was enticed to do this deal because of the tremendous amount of taxes that the Bills generate for the area. This article - https://www.bloomberg.com/news/articles/2022-03-28/nfl-s-bills-to-get-600-million-from-n-y-in-hochul-stadium-deal - says that the Bills generate $27M a year in state and local taxes. I also can't quickly find a breakdown of how much Erie County gets but I presume they've done a long-term analysis on this and they project to recoup the $250M at some point during the lease.

Also, to answer another question upthread, there are two points that protect the state in the deal (assuming this is the final deal). (1) Cost overruns are covered by the team unless "caused" by state or local governments. (2) Bills have to pay entire construction cost if they relocate (nothing mentions how long this last but I presume it's for the life of the lease).

The deal could have been a lot worse.
 

wade boggs chicken dinner

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NortheasternPJ

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I can't find the details, but it's my guess that Erie County was enticed to do this deal because of the tremendous amount of taxes that the Bills generate for the area. This article - https://www.bloomberg.com/news/articles/2022-03-28/nfl-s-bills-to-get-600-million-from-n-y-in-hochul-stadium-deal - says that the Bills generate $27M a year in state and local taxes. I also can't quickly find a breakdown of how much Erie County gets but I presume they've done a long-term analysis on this and they project to recoup the $250M at some point during the lease.

Also, to answer another question upthread, there are two points that protect the state in the deal (assuming this is the final deal). (1) Cost overruns are covered by the team unless "caused" by state or local governments. (2) Bills have to pay entire construction cost if they relocate (nothing mentions how long this last but I presume it's for the life of the lease).

The deal could have been a lot worse.

The NY State Budget is also over $200 billion this year alone. I'm against publicly funded stadiums in general, but this isn't an outrageous sum of money at risk over the life of the stadium, which they own. I'd vastly prefer that there's no public money on this but it's all relative.
 

Humphrey

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IIRC the original stadium they play in now was a copy of Schaefer Stadium (they took the Foxboro blueprint and added another deck to it to make the capacity about 80K). Don't know who paid for the original or the renovations that occurred over the years; but they sure got their money's worth out of that building.
 

jsinger121

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IIRC the original stadium they play in now was a copy of Schaefer Stadium (they took the Foxboro blueprint and added another deck to it to make the capacity about 80K). Don't know who paid for the original or the renovations that occurred over the years; but they sure got their money's worth out of that building.
Erie County foot the bill for the original price (23 million) and the renovations.
 

mikcou

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edit: I guess I was wrong about Erie County. According to this study commissioned by the State - https://esd.ny.gov/sites/default/files/news-articles/ESD-Bills-Stadium-Analysis-Summary-FINAL-11-1-21.pdf - of the $27M in state/local taxes generated by the BIlls, only $4M goes to Erie County, so while NYS will get paid back over the life of the deal, I guess Erie County is just granting the money to the team, unless Erie County gets some revenue not captured in the analysis.
The two big components in the report are: (i) personal income tax of $19.5M and (ii) consumption taxes of $5.1M. I'd love to see a more detailed work-up of how they got to those numbers because they see stunningly high. Neither of those assertions can be taken at face value without some level of support - the income tax assumption seems wildly inaccurate to the level of laughable unless they have some magical economic enhancement priced in, which if I'm reading it correctly they are not doing.

$5M of sales/use is like $80M of taxable sales. Is that dynamic? Are they saying that the loss of the Bills is going to result in $80M of consumption just disappearing?

The personal income tax is even more difficult to track. Even at an average 8% rate (based on brackets would need to be close to $1M in comp), that requires $250M of NY source taxable income. That strikes me as all player compensation ($200-210M of rough cap) plus a reasonable estimate for coaching staff and management. The problem is that player compensation is not going to be anywhere near 100% NY source (i.e., taxable in NY). More like a max of 50% reduced by some bonuses that might be able to be solely sourced to a player's state of residence. Same thing for the coaching staff. They could capture a bit more through residence taxation, but its not getting anywhere close to state rate x compensation.

Their estimate to me implies total annual compensation of close to $400M+, which seems completely improbable given that would imply that they're spending the amount of league revenue per team on compensation.
 

Senator Donut

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The two big components in the report are: (i) personal income tax of $19.5M and (ii) consumption taxes of $5.1M. I'd love to see a more detailed work-up of how they got to those numbers because they see stunningly high. Neither of those assertions can be taken at face value without some level of support - the income tax assumption seems wildly inaccurate to the level of laughable unless they have some magical economic enhancement priced in, which if I'm reading it correctly they are not doing.

$5M of sales/use is like $80M of taxable sales. Is that dynamic? Are they saying that the loss of the Bills is going to result in $80M of consumption just disappearing?

The personal income tax is even more difficult to track. Even at an average 8% rate (based on brackets would need to be close to $1M in comp), that requires $250M of NY source taxable income. That strikes me as all player compensation ($200-210M of rough cap) plus a reasonable estimate for coaching staff and management. The problem is that player compensation is not going to be anywhere near 100% NY source (i.e., taxable in NY). More like a max of 50% reduced by some bonuses that might be able to be solely sourced to a player's state of residence. Same thing for the coaching staff. They could capture a bit more through residence taxation, but its not getting anywhere close to state rate x compensation.

Their estimate to me implies total annual compensation of close to $400M+, which seems completely improbable given that would imply that they're spending the amount of league revenue per team on compensation.
One part of this analysis is that you’re missing is taxes paid by Bills’ visiting opponents, which offsets some of the non-taxable income earned by the Bills players who live out of state.
 

Cotillion

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One part of this analysis is that you’re missing is taxes paid by Bills’ visiting opponents, which offsets some of the non-taxable income earned by the Bills players who live out of state.
But that will only be a game check per player, and based on how a lot of salary is tied up in bonuses (as noted above) game checks will already be low than divided by 17 (originally had this as 16 doh). It's not nearly enough to make up the shortfall I'd assume with just quick head calcs.
 

Gunfighter 09

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I did a bunch of reading about the stadium issue a few years ago when the Raiders left Oakland and am certainly aware of the consensus opinion on municipalities paying for stadiums. But as I sat in a completely full Allegiant stadium in Vegas for a concert last month, having just wrote a tax check to uncle sam for the other tickets we sold (at an occasionally ridiculous profit due to demand) for several concerts, wrestling events, soccer and College football games last year in Allegiant stadium, I kept thinking back to the analysts quoted above who talked about how that was the worst deal in stadium history and how there would never be enough events at the stadium to justify the cost. Walking around Vegas on the last weekend of February as 100K people came to Vegas to see Metallica on Friday night and Billy Joel on Saturday (I'm assuming they were mostly tourists who bought hotel rooms and with not much crossover), and getting near weekly opportunities to buy tickets for other concerts or events at the stadium, I have to think the State of Nevada is pretty happy with their investment (if you want to call a new tax an investment) so far. I don't think the city of Oakland or Alameda county feels great about the fact that they are about to lose their third sports team in 5 years and are left with a large lot with a huge demo requirement for their efforts.

I'm curious how many events the stadium can hold outside of Bills ( and I assume U of Buffalo) football games. Extra events beyond football in the summer is where I think the county believes they could make some of their money back - by getting events like concerts to the stadium that are going to bring people to the city for a weekend during the spring & summer. There are obvious differences between building an event venue in Las Vegas as opposed to Buffalo in terms of being able to draw events and tourists, but I think that is the hope that the municipalities are basing their investment on*.

They are paying the ransom to keep an irreplaceable civic asset that will 100% leave if not given the stadium. But in hoping to come somewhere close to balancing the ledger, I think the right stadium could also give them a draw for other events to bring tourism (even if only from western New York, Ontario & Ohio) to the city.


* Mark Davis gets the naming rights money at Allegiant stadium and a cut of every event in the stadium by using Jerry Jones' event management company to manage all of the events (concessions / security/ booking) there. I imagine the Pegula's have a similar sweetheart deal. I imagine the state / county don't want to run the events at the stadium, but I do hope they get a piece of the naming rights deals.
 

mauf

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A few thoughts:

— If a private business were to spend over a billion dollars on a stadium purely for business reasons, they probably wouldn’t build it in Buffalo, which hasn’t been a hot destination since the Erie Canal closed.

— With a $200M+ NFL salary cap and New York’s high income tax rates, the math seems to be directionally correct in terms of the revenue the Bills will generate. Obviously, it matters who bears the risk if revenue growth is less than anticipated.

— It’s not like states don’t give incentives to businesses besides pro sports teams. Because of New York’s high tax rates, their incentives are more generous than most. I’m sure this deal is a lot richer than what the Bills would get if they were building a new factory, but the latter number wouldn’t be zero.

There’s an argument that a state should never provide incentives to a professional sports team, but this deal appears to be better than most of its kind.
 

jose melendez

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I did a bunch of reading about the stadium issue a few years ago when the Raiders left Oakland and am certainly aware of the consensus opinion on municipalities paying for stadiums. But as I sat in a completely full Allegiant stadium in Vegas for a concert last month, having just wrote a tax check to uncle sam for the other tickets we sold (at an occasionally ridiculous profit due to demand) for several concerts, wrestling events, soccer and College football games last year in Allegiant stadium, I kept thinking back to the analysts quoted above who talked about how that was the worst deal in stadium history and how there would never be enough events at the stadium to justify the cost. Walking around Vegas on the last weekend of February as 100K people came to Vegas to see Metallica on Friday night and Billy Joel on Saturday (I'm assuming they were mostly tourists who bought hotel rooms and with not much crossover), and getting near weekly opportunities to buy tickets for other concerts or events at the stadium, I have to think the State of Nevada is pretty happy with their investment (if you want to call a new tax an investment) so far. I don't think the city of Oakland or Alameda county feels great about the fact that they are about to lose their third sports team in 5 years and are left with a large lot with a huge demo requirement for their efforts.

I'm curious how many events the stadium can hold outside of Bills ( and I assume U of Buffalo) football games. Extra events beyond football in the summer is where I think the county believes they could make some of their money back - by getting events like concerts to the stadium that are going to bring people to the city for a weekend during the spring & summer. There are obvious differences between building an event venue in Las Vegas as opposed to Buffalo in terms of being able to draw events and tourists, but I think that is the hope that the municipalities are basing their investment on*.

They are paying the ransom to keep an irreplaceable civic asset that will 100% leave if not given the stadium. But in hoping to come somewhere close to balancing the ledger, I think the right stadium could also give them a draw for other events to bring tourism (even if only from western New York, Ontario & Ohio) to the city.


* Mark Davis gets the naming rights money at Allegiant stadium and a cut of every event in the stadium by using Jerry Jones' event management company to manage all of the events (concessions / security/ booking) there. I imagine the Pegula's have a similar sweetheart deal. I imagine the state / county don't want to run the events at the stadium, but I do hope they get a piece of the naming rights deals.
A couple of thoughts:

1. If this is in fact a profictable enterprise for Davis, which it sure sounds like, the subsidy should be unneccessary to persuade him to build it. The subsidy is necessary because other places also give subsidies--> race to the bottom.
2. These assets are irreplaceable because pro-sports are cartels in the U.S. Supply is artificially constrained, you can'tjust start a franchise or move your franchise wherever you feel like. I've always been fond of the idea that there should be a federal law prohibiting the leagues from holding copytright over any event played in a publicly funded facility.
3. There have been approximately a billion studies that show stadium subsidies basically never work out. Even if they somehow break even, the counterfactual--what if we invested $850 in public money in something else good--is always there.

It was before I moved here, but I reluctantly supported the terrible public financing deal to get the Nats to DC, but it certainly shouldn't be necessary in a market like this--and wouldn't be if MLB wasn't a legal cartel. For a third tier city like Buffalo, you are right, that might be the cost of doing business, and in a world where you can't do business htat way, Buffalo just might not have a team.
 

Auger34

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I believe billionaires should pay for their own fucking stadiums
 

sodenj5

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After that joke of a game in the wind this past season, I wonder if whatever partial enclosure is built will protect against the elements.
Will probably just create an insane wind tunnel.
I did a bunch of reading about the stadium issue a few years ago when the Raiders left Oakland and am certainly aware of the consensus opinion on municipalities paying for stadiums. But as I sat in a completely full Allegiant stadium in Vegas for a concert last month, having just wrote a tax check to uncle sam for the other tickets we sold (at an occasionally ridiculous profit due to demand) for several concerts, wrestling events, soccer and College football games last year in Allegiant stadium, I kept thinking back to the analysts quoted above who talked about how that was the worst deal in stadium history and how there would never be enough events at the stadium to justify the cost. Walking around Vegas on the last weekend of February as 100K people came to Vegas to see Metallica on Friday night and Billy Joel on Saturday (I'm assuming they were mostly tourists who bought hotel rooms and with not much crossover), and getting near weekly opportunities to buy tickets for other concerts or events at the stadium, I have to think the State of Nevada is pretty happy with their investment (if you want to call a new tax an investment) so far. I don't think the city of Oakland or Alameda county feels great about the fact that they are about to lose their third sports team in 5 years and are left with a large lot with a huge demo requirement for their efforts.

I'm curious how many events the stadium can hold outside of Bills ( and I assume U of Buffalo) football games. Extra events beyond football in the summer is where I think the county believes they could make some of their money back - by getting events like concerts to the stadium that are going to bring people to the city for a weekend during the spring & summer. There are obvious differences between building an event venue in Las Vegas as opposed to Buffalo in terms of being able to draw events and tourists, but I think that is the hope that the municipalities are basing their investment on*.

They are paying the ransom to keep an irreplaceable civic asset that will 100% leave if not given the stadium. But in hoping to come somewhere close to balancing the ledger, I think the right stadium could also give them a draw for other events to bring tourism (even if only from western New York, Ontario & Ohio) to the city.


* Mark Davis gets the naming rights money at Allegiant stadium and a cut of every event in the stadium by using Jerry Jones' event management company to manage all of the events (concessions / security/ booking) there. I imagine the Pegula's have a similar sweetheart deal. I imagine the state / county don't want to run the events at the stadium, but I do hope they get a piece of the naming rights deals.
I think there’s a massive, Grand Canyon sized gap between a brand new venue in Las Vegas and an open air stadium in Buffalo, NY.

Along with it being limited in months where it can be a multi-use venue, what artist is going out of their way to go to Buffalo when they can go to MSG or Barclay’s in Brooklyn, or UBS in Belmont Park? They’re competing with a far bigger, more densely populated city within their own state for attractions.
 

wade boggs chicken dinner

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The two big components in the report are: (i) personal income tax of $19.5M and (ii) consumption taxes of $5.1M. I'd love to see a more detailed work-up of how they got to those numbers because they see stunningly high. Neither of those assertions can be taken at face value without some level of support - the income tax assumption seems wildly inaccurate to the level of laughable unless they have some magical economic enhancement priced in, which if I'm reading it correctly they are not doing.

$5M of sales/use is like $80M of taxable sales. Is that dynamic? Are they saying that the loss of the Bills is going to result in $80M of consumption just disappearing?

The personal income tax is even more difficult to track. Even at an average 8% rate (based on brackets would need to be close to $1M in comp), that requires $250M of NY source taxable income. That strikes me as all player compensation ($200-210M of rough cap) plus a reasonable estimate for coaching staff and management. The problem is that player compensation is not going to be anywhere near 100% NY source (i.e., taxable in NY). More like a max of 50% reduced by some bonuses that might be able to be solely sourced to a player's state of residence. Same thing for the coaching staff. They could capture a bit more through residence taxation, but its not getting anywhere close to state rate x compensation.

Their estimate to me implies total annual compensation of close to $400M+, which seems completely improbable given that would imply that they're spending the amount of league revenue per team on compensation.
Somewhat corroborative, I found this Buffalo News article from 2019 that reported on some financial impacts of pro sports in Buffalo. Of note, it reported that in 2019, PSE (which I assume is the Pelugas' corporate holding company) paid $396.5M in salaries, which resulted in $30.2M in withholding for state income taxes. That number included payroll taxes for the Sabres, which had about 1/4 of the salaries ($121.4M; Bills salaries were $238.6M), and all operational salaries.

The report also noted that according to a survey done in 2019, Bills fans spent about $65.39 per person in game day spending. (The article does not say if this included out-of-town fans or visiting fans, which I assume would be a much higher per person payout.)

Also, I just want to make the point that a lot of the stadium studies I've seen assume that if fans didn't spend money on the Bills, most of that discretionary spending would be spent in other local entertainment like movies or dinner or bars. I'm not so sure that's true and would be interested to see if anyone has studied that. Pro sports are big ticket items and it seems to me that people who don't spend that money on sporting-related purchases are going to spend the money on other big-ticket entertainment items, particularly out-of-state vacations or what-not, and thus that money wouldn't necessarily get funneled into the local economy. But that's just a WAG.
 

wade boggs chicken dinner

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Along with it being limited in months where it can be a multi-use venue, what artist is going out of their way to go to Buffalo when they can go to MSG or Barclay’s in Brooklyn, or UBS in Belmont Park? They’re competing with a far bigger, more densely populated city within their own state for attractions.
Most artists who can venues that size will go to both NYC and Western NY. They are six hours away.

BUF is competing more with TOR than NYC.
 

Gunfighter 09

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3. There have been approximately a billion studies that show stadium subsidies basically never work out. Even if they somehow break even, the counterfactual--what if we invested $850 in public money in something else good--is always there.

It was before I moved here, but I reluctantly supported the terrible public financing deal to get the Nats to DC, but it certainly shouldn't be necessary in a market like this--and wouldn't be if MLB wasn't a legal cartel. For a third tier city like Buffalo, you are right, that might be the cost of doing business, and in a world where you can't do business htat way, Buffalo just might not have a team.

The most cited studies and quoted experts - and I haven't read one since 2018 - don't seem to understand the stub hub / NFL ticket exchange era at all and seemed stuck in a construct where only the same 60K people are attending games for 30 years. They did not account for the fact that every NFL game now has a very sizable out of town contingent of road fans sitting in STH seats. Those people pay for hotels, meals & souvenirs in the locality with the stadium



The report also noted that according to a survey done in 2019, Bills fans spent about $65.39 per person in game day spending. (The article does not say if this included out-of-town fans or visiting fans, which I assume would be a much higher per person payout.)
This is what I am talking about - clearly they didn't factor in hotel costs for the 10K road fans that got their tickets off of stub hub and stayed for two days eating and drinking etc.

What I would really love to see is a study showing how Seattle or San Diego or Oakland have benefitted from letting their sports team's walk. The effort that Seattle and San Diego have put into trying to get replacements for the teams they let leave seems to indicate some value - and perhaps it is all just emotional / political - to having professional sports venues and teams in your market.


2. These assets are irreplaceable because pro-sports are cartels in the U.S. Supply is artificially constrained, you can'tjust start a franchise or move your franchise wherever you feel like.
It is really easy to sit in Boston, Chicago, Atlanta, NYC, LA etc. etc. etc. and talk about how municipalities should never pay for stadiums- rich dudes pay $5B to build a stadium in those markets. But in a place like Buffalo or Oakland, trying to put a price on keeping or losing - and the result of not funding a stadium is certain - a local institution is impossible.
 

joe dokes

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To answer a question from upthread: according to the Glob, (probably wire), the team is responsible for cost overruns. Although I expect that words like "responsible," "cost," and "overrun" do not carry the same meanings that most people think they do, because that's how these things seem to work.
 

wade boggs chicken dinner

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To answer a question from upthread: according to the Glob, (probably wire), the team is responsible for cost overruns. Although I expect that words like "responsible," "cost," and "overrun" do not carry the same meanings that most people think they do, because that's how these things seem to work.
An article I posted upthread said that Bills would be responsible for any cost overruns that were not the "fault" of the state/local governments. Yes, I'm sure the final language will be a bit more precise but hopefully will be drafted in a manner that will not invite litigation in the future.

Some more details about the deal are here: https://buffalonews.com/sports/bills/buffalo-bills-new-york-state-erie-county-reach-ironclad-30-year-deal-to-build-1/article_e3a8fe7e-ae95-11ec-bb85-f3fcd04852d9.html. Of note, $150M of the $200M of the NFL's contribution will be "forgiven" ("repaid" or "offset" is probably a better word) through "the visiting teams’ share of Bills ticket revenue over 25 years, according to the terms of the league’s 'G-4' loan program, which helps fund stadium construction and renovations."

The Bills will be responsible for the final $50M of the NFL Loan.
 

mikcou

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One part of this analysis is that you’re missing is taxes paid by Bills’ visiting opponents, which offsets some of the non-taxable income earned by the Bills players who live out of state.
That is fair, but that is not what the report says. The wording pretty clearly is talking about the Bills payroll - not visitor payroll. Here's the relevant language:

Personal income tax, primarily related to Bills team payroll, is the largest single fiscal revenue source, generating approximately $19.5 million per year for the State of New York.

Its also much harder to get top rate income from visitors - almost no player who only comes and plays 1 game is going to be in an 8% scenario. We're talking maybe they're paying half that. Most visitors arent going to have more than maybe 250-300k in NY source income from playing the Bills (and that is star level pay; median players are going to have like $20k). For people to get into the high brackets, they need millions.
 

Silverdude2167

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The most cited studies and quoted experts - and I haven't read one since 2018 - don't seem to understand the stub hub / NFL ticket exchange era at all and seemed stuck in a construct where only the same 60K people are attending games for 30 years. They did not account for the fact that every NFL game now has a very sizable out of town contingent of road fans sitting in STH seats. Those people pay for hotels, meals & souvenirs in the locality with the stadium





This is what I am talking about - clearly they didn't factor in hotel costs for the 10K road fans that got their tickets off of stub hub and stayed for two days eating and drinking etc.

What I would really love to see is a study showing how Seattle or San Diego or Oakland have benefitted from letting their sports team's walk. The effort that Seattle and San Diego have put into trying to get replacements for the teams they let leave seems to indicate some value - and perhaps it is all just emotional / political - to having professional sports venues and teams in your market.




It is really easy to sit in Boston, Chicago, Atlanta, NYC, LA etc. etc. etc. and talk about how municipalities should never pay for stadiums- rich dudes pay $5B to build a stadium in those markets. But in a place like Buffalo or Oakland, trying to put a price on keeping or losing - and the result of not funding a stadium is certain - a local institution is impossible.
I want to start by saying you are a great poster and I enjoy your contributions to this forum.

But right now you sound like a climate change denier. There are mountains of studies saying stadium deals never benefit the community and very few if any in support of such deals.

They are always bad deals. People do not live in Buffalo because of the Bills and if they did not spend money on the Bills they would spend there money on something else in the area. Americans are terrible at saving money.

Now if the community wants to invest 800 million in a mixed use development, or better schooling or support for disadvantage communities the return to the local economy would be exponentially better than this stadium.

These deals are bad for society and should never happen.
 

shaggydog2000

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It is really easy to sit in Boston, Chicago, Atlanta, NYC, LA etc. etc. etc. and talk about how municipalities should never pay for stadiums- rich dudes pay $5B to build a stadium in those markets. But in a place like Buffalo or Oakland, trying to put a price on keeping or losing - and the result of not funding a stadium is certain - a local institution is impossible.
It's also a name recognition thing for those third tier cities. How many times a year would you hear about Buffalo or Jacksonville if it wasn't for pro football? If it's more than twice, you're not living life right.
 

jose melendez

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The most cited studies and quoted experts - and I haven't read one since 2018 - don't seem to understand the stub hub / NFL ticket exchange era at all and seemed stuck in a construct where only the same 60K people are attending games for 30 years. They did not account for the fact that every NFL game now has a very sizable out of town contingent of road fans sitting in STH seats. Those people pay for hotels, meals & souvenirs in the locality with the stadium





This is what I am talking about - clearly they didn't factor in hotel costs for the 10K road fans that got their tickets off of stub hub and stayed for two days eating and drinking etc.

What I would really love to see is a study showing how Seattle or San Diego or Oakland have benefitted from letting their sports team's walk. The effort that Seattle and San Diego have put into trying to get replacements for the teams they let leave seems to indicate some value - and perhaps it is all just emotional / political - to having professional sports venues and teams in your market.




It is really easy to sit in Boston, Chicago, Atlanta, NYC, LA etc. etc. etc. and talk about how municipalities should never pay for stadiums- rich dudes pay $5B to build a stadium in those markets. But in a place like Buffalo or Oakland, trying to put a price on keeping or losing - and the result of not funding a stadium is certain - a local institution is impossible.
And yet lots of big cities do subsidize their stadiums like morons. I always thought NYC was absolutely insane to subsidize the Mets and Yankees. Move to NJ and see how it works out.