Buffalo Bills owners Kim and Terry Pegula received a sweetheart deal from the state to finance their new stadium. Brett Carlsen/Getty Images
Victor Matheson, College of the Holy Cross
After New York lawmakers blew past the deadline to approve the state budget, they finally came to an agreement on April 9, 2022, that included a US$850 million subsidy for a new stadium in Buffalo for the NFL’s Bills.
As a sports economist who has studied stadium deals for over two decades, I am not exaggerating when I write that the New York Legislature has managed to craft one of the worst stadium deals in recent memory – a remarkable feat considering the high bar set by other misguided state and local governments across the country.
Study after study has shown that stadiums are terrible public investments. The taxpayers financing them rarely want to pay for them. So why are governments willing to subsidize them?
There were many things to dislike about the Bills stadium project. At $850 million, it is the largest taxpayer handout for a new stadium in U.S. history even before additional subsidies such as annual maintenance costs, property tax exemptions and tax exemptions for municipal bond interest are considered. These factors could easily drive the total government price tag well over $1 billion.
With taxpayers footing over 60% of the $1.4 billion price tag, it also runs counter to the trend of the past decade toward lower levels of public funding for stadium construction.
State and local governments on average had covered roughly two-thirds of stadium construction costs during the first wave of the modern stadium boom that began in 1991. During the Great Recession, however, government leaders found it politically unpalatable to hand over hundreds of millions of dollars to billionaire owners as they were laying off teachers and firefighters.
Over the past decade, my ongoing research has shown that public subsidies have fallen to only one-third of building costs, on average. In fact, the most recent Super Bowl was played in the entirely privately financed SoFi Stadium in Los Angeles.
The Bills deal evokes the bad old days.
Stadium subsidies in general are terrible public policy, and this arrangement is no exception.
The Bills and their owners, Terry and Kim Pegula, don’t need a handout. With a net worth of $5.8 billion, Terry Pegula ranks as the ninth-richest owner in the NFL. The generous revenue-sharing structure of the NFL means that even playing in one of the league’s smallest markets, the Bills have earned over $300 million in operating income since the Pegulas purchased the team for $1.4 billion just seven years ago. And since then, the value of the Bills has risen by another $900 million. The Pegulas have earned enough on their investment in just seven years to pay for the entirety of a new stadium on their own.
But the only thing better for a team owner than a new stadium is a new stadium that someone else pays for. Indeed, the new stadium is likely to further drive up the value of the Bills far more than the $350 million the Pegulas are contributing to the stadium’s construction costs.
These taxpayer-funded deals are often pitched as an investment in the local economy, but two decades of academic research on the topic have conclusively shown that stadiums and franchises have little or no impact on local economies. The Bills are not likely to be an exception.
For one, most of the customers at a sports venue are residents of the metro area who would simply spend money elsewhere in the local economy in the absence of the team. Second, stadiums often make poor neighbors. NFL venues, like the Bills’ current home, Highmark Stadium, are huge facilities that are rarely used: The Bills play eight home games each year in the regular season. This creates little incentive for investing in the surrounding neighborhoods.
The Buffalo Bills’ current home, Highmark Stadium, sits perched upon an island of concrete. Claus Andersen/Getty Images
And don’t think that NFL stadiums typically host a multitude of other events. Over its 50 years of existence, aside from a pair of annual high school football games and a few miscellaneous competitions, Highmark Stadium has hosted a grand total of 30 major concerts, three college football games and two large hockey games. And Buffalo’s venue is not out of the ordinary for any large, outdoor stadium.
Rather than creating a dense area of housing, retail establishments and restaurants, Highmark Stadium instead sits alone as an island of concrete in a sea of parking lots.
The stadium project is deeply unpopular, with one survey finding that 55% of New Yorkers are opposed to the plan, versus only 22% in favor of it.
So why did it get included in the state budget?
For one, stadiums are a perfect example of the classic special-interest problem. For a handful of passionate fans in Buffalo, a new stadium may determine which candidate gets their vote. But for the rest of the state, a small increase in their tax burden is unwelcome but not problematic enough to compel a voter to switch sides.
Teams have also gotten smart about minimizing transparency, which is bad for public policy but good for team owners. The Bills stadium proposal was added to the state budget and dropped on unsuspecting taxpayers just days before a final vote was scheduled in the Legislature. With such a short timeline, it was impossible for lawmakers to fully analyze the issue, and there was little time for public interest groups to mobilize against the handouts.
The Pegulas were essentially able to extort New York taxpayers by threatening to relocate the team if they didn’t pay up. Buffalo is only the 49th-largest metro area in the U.S. At least half a dozen cities across the U.S. without NFL franchises are both richer and at least twice as populous, including San Diego, St. Louis, Portland and Austin, not to mention the possibility of a franchise in London.
With their current lease expiring in 2023, the team had already indicated that the 2022 season could have been its last in Buffalo.
[Like what you’ve read? Want more? Sign up for The Conversation’s daily newsletter.]
This threat was a slap in the face of loyal Bills fans who have supported the team for over 60 years through subzero temperatures, lake-effect snow, four straight Super Bowl losses in the 1990s and more losing seasons than winning ones.
The NFL has long kept the number of teams lower than the number of cities that could profitably support a franchise. So as long as owners are willing to use the threat of relocation, I don’t believe any city’s fans – and any state’s taxpayers – are safe.
Victor Matheson, Professor of Economics and Accounting, College of the Holy Cross
This article is republished from The Conversation under a Creative Commons license. Read the original article.
In The News
>WEATHER: Mark Rosenthal's 7-day forecast (:37). High of 65 today in Worcester
>TOP OF THE NEWS
+Noon: See Worcester job, income, population changes over 30 years
+Noon: Rep. Mary Keefe on revising policies to upgrade Worcester schools
+Noon: Sean Rose on getting Mass. migrants into workforce
+Noon: Richard Thomas in "To Kill a Mockingbird" at The Hanover
+Noon: Daikaiju Pro to mix wrestling, martial arts, theater at White Eagle
+Noon: Listen Up: Ghost of the Machine, Weapon E.S.P. get "Savage" again
-Piccadilly Plaza in Worcester saved from wrecking ball as developer bring in new tenants
-In Worcester, barber offers free haircuts to help boost confidence ahead of M.C.A.S. tests (1:55). Article
-3 in custody after chase on I-290 ends in crash in Northborough (2:17)
-Related: Aerial footage of crash (:50)
-Related: Man's car stolen from outside his home, crashes during chase (2:03)
-Judge upholds prison sentence of Kevin Perry, former Worcester restaurant owner
-Sex assault suspect used dog to lure 13-year-old girl into his car, prosecutors say (2:04)
-Worcester projects benefit from $6.9 million in state neighborhood stabilization funds
-Local borrowers again hopeful for student loan forgiveness
-Third Worcester Public Library mini-golf fundraising days set to tee off
-See the neighborhood meetings this week in Worcester
-Worcester Tech culinary students head to France (1:00)
-Worcester Public Schools News (17:21): Burncoat Edition
-Radio Worcester Roundtable (45:58): City violence and upcoming State of the City address
-Unsolved: Worcester — The Gardner Fugitive and the Murder of Breanne Pennington. Video (13:59). Audio (13:58)
>FAITH: Turning away from our fleshly inclinations and toward the spirit of God
>DINING OUT: The Goods Bakery & Café is thriving in Spencer
-ICYMI: Developer seeks larger Table Talk Pies apartment project
-Worcester holds 34th annual Regional Environmental Council Earth Day clean ups
-Earth Day 2024: What the annual day means for our environment, planet
-West Boylston police seek suspects in sneaker store heist
-See the rest of the day's Worcester news
>HOLDEN (brought to you by Lamoureux Ford): Q&A with Wachusett teacher Mr. Chandonnet
-Lamoureux Ford salutes the UConn Huskies (:54)
-Holden ready for Main Street resurfacing
>THE BURBS (brought to you by North End Motor Sales): Winchendon "cottage" named a Vrbo Vacation Rental of the Year
-Utz sells former Wachusett Chip factory to producers of Popchips
-Sciuto's Bookshop in Douglas will close after a year in business
-Fitchburg woman driving on wrong side of road with flat tire arrested for child endangerment, O.U.I.
-Town Clean-Up Day helps keep Shrewsbury beautiful
-Clinton school borrowing placed on ballot
-Nashoba Regional awarded Innovation Career Pathway
-The Item's calendar of events
>BARS & BANDS: The Mayor's Live Music List for Tuesday
>SHOWTIME: FAM Jam! eyes new chapter in the "Worcester Renaissance" with fair
-Worcester County Wonders: The 1844 rapture that never happened and the rock that remains
-100FM The Pike Adventures with Mike Hsu (5:35): Line dancing at Off the Rails
-Stand-out spring ephemerals are a great way to celebrate Native Plant Month
-WCCA-TV's Rosen's Roundtable No. 533 (27:53): Rental Registry
-Unity Radio (55:12): Standups and Standouts
-WCCA-TV's Close to Home No. 564 (28:11): Paul DeBeasi
>OBITUARIES: Tribute to Worcester woman who passed away at the age of 102
>SPORTS: Bruins lose to Maple Leafs, 3-2
-Will Lionel Messi come to Gillette Stadium?
-Will McAlpine named Hilton Garden Inn Crusader of the Week
-Worcester hockey alumni highlights, NHL week 28
-Rugby team unites brothers, athletes from Worcester high schools
>CARS: Bertera has the all-star team to help you find your next Nissan car or truck (:39)
-Ford, Toyota, Tesla among 517,000 recalled
>NATIONAL: 5 icons you should know from Time's 100 most influential people of 2024 list
-Officials declined extra help before a deadly inferno engulfed Maui fire, killing more than 100 people
-Tragic: Young brother and sister dead, 15 injured when vehicle crashes into birthday party
>NEW ENGLAND: Woman dies, man hospitalized after being ejected from car in Nashua
-State tax collections up in first half of April
>COLLEGES: Anna Maria, Mass. Municipal Police Training Committee announce memo of understanding
-Clark Challenge. Change. podcast (13:50): How can microbes help farmers grow more food to feed the world?
-TODAY! Symposium at Nichols will showcase impactful projects by students, faculty
>TRAVEL (brought to you by Fuller RV & Rental): The best U.S. cities to see from the seat of a bike
>BUSINESS: Worcester earmarks $500,000 from Polar Park settlement for new diverse business grants
-LPL Research: The ever-changing market narrative
-Westborough media firm names Business.com executive as chief revenue officer
>HOMES: Mass. renters are paying more for an apartment than a year ago
>SHOPPING: 3 Mass. stores slated to close as Express files for bankruptcy
>HEALTH: Lilly's weight-loss drug reduces sleep apnea severity in late-stage trials
-UMass Medical School PhD candidate: Drugs that aren’t antibiotics can also kill bacteria − new method pinpoints how
>FOOD: Fresh and frozen imported strawberries highly contaminated with pesticides, report says
>TV/STREAMING: TV Shows canceled in 2024
>MOVIES: Deadpool and Wolverine trailer teams up Ryan Reynolds, Hugh Jackman
>CELEBRITY: "Shopaholic" author Sophie Kinsella reveals brain cancer diagnosis
>ANIMALS: Mama dog runs to rescuer to ask him to help her puppies (:59)
>HISTORY: Isaiah Thomas House — Walk in the footsteps of Worcester's revolutionaries
>GOOD NEWS (brought to you by Bertera Nissan): Hero mom saves 17-day-old baby in cardiac arrest
-Meanwhile, in Michigan, tarot prediction leads to $500,000 lottery win for woman
Latest obituaries | | Monday's highlights | | Today's horoscope | | Local Sports
Quick Links: Personalize your news | | Browse members | | Advertise | | Blogs | | Invite friends | | Videos
Animals | | Boston Sports | | Business | | Cars | | Celebrity | | Colleges | | Commute & Travel | | Crime | | Faith | | Food | | Good News | | Health | | History | | Homes | | Local Sports | | Lottery | | Movies | | National | | New England | | Politics | | Shopping & Deals | | SHOWTIME! | | TV & Streaming | | Weather