The Buffalo Bills on Friday signed a memorandum of understanding for a 10-year lease extension at Ralph Wilson Stadium.
Erie County Executive Mark C. Poloncarz called the agreement “an early Christmas gift for all the Bills fans everywhere across the world.”
More noticeable than Santa Claus, however, was the exit clause.
The first seven years of the lease agreement are practically ironclad, so secure that Bills Chief Executive Officer Russ Brandon gave a guarantee the Bills would stay at least that long.
In that time, even if owner Ralph C. Wilson Jr. passes away and somebody purchases the team with the intent to move it, the Bills would have to pay $400 million.
But after the seventh year, the Bills have a one-time option to buy out the remaining three years of the deal for $28.4 million, less than half the value of quarterback Ryan Fitzpatrick’s contract.
With a 94-year-old owner, a stadium in need of massive renovations and a league hungry for teams in Los Angeles, the stadium buyout clause was reason to pause.
“That was a provision that was negotiated,” Poloncarz said. “Each party asked for more than they probably got.
“You have a give and take in every negotiating session. You don’t get exactly everything you want, but I think when you look at the terms of this agreement, it’s a very impressive agreement.”
Many Bills fans are anxious about what will happen to the team when Wilson dies. The Bills will operate under a trust for an unspecified amount of time until the trust determines it is time to sell.
Wilson did not attend Friday’s news conference. Neither did Wilson’s influential administrator, Bills Chief Financial Officer Jeffrey Littmann.
If a new owner wanted to move the Bills, then the county and state would have two remedies, under the lease agreement.
The first is to file an injunction to prevent the move. If a judge declines to order the Bills to stay, then the Bills would have to pay $400 million in liquidated damages – with the exception of a window after the seventh year of the deal.
Deputy County Executive Richard Tobe said the 2020 buyout deadline will be negotiated into the next set of documents. If the Bills don’t buy out the lease by that deadline, then they again will need to pay $400 million to break the lease afterward.
Tobe said the seven-year “ironclad” portion of the deal was set up to coincide roughly with the NFL’s collective bargaining agreement, which ends after the 2020 league year.
The Bills could have gotten out of their previous lease for only $20 million, starting in 2004, and for a declining figure each year after that.
“For the last few years, the Bills could have left for a pittance,” Poloncarz said. “They had the option going into this final year to leave on a $2 million payment. It’s very important for the fans to know the Bills could have left. They didn’t.”
Any new owner who would want to move the Bills also would be subject to the NFL’s relocation fee.
“Today is a monumental day,” Brandon said, “because today is a significant step in securing the long-term future of the Buffalo Bills in Western New York.”
The new lease is substantially shorter than the previous one and will cost Erie County more money. Ralph Wilson Stadium, meanwhile, will receive only $130 million in renovations as opposed to the $230 million the Bills desired.
The Bills, county and state acknowledged for the first time a new stadium might be necessary to keep the team in Western New York.
A committee will explore the feasibility of such a stadium. Starting in the sixth year of the lease, funds can be diverted from The Ralph into new stadium development. Poloncarz said his personal preference would be to build one in downtown Buffalo.
“Any new owner, if they’re interested in buying this team, in the future would like to have a new stadium,” Poloncarz said. “We understand it’s important to start talking about that now. That increases the economic value of the team, and it lets the public know we’re considering not just the seven-year agreement or 10 years, but looking beyond that to ensure the Bills play in a state-of-the-art stadium.”
The Bills’ previous lease would have expired on July 31, 2013. Erie County didn’t spend a nickel on renovations under that agreement, with the state paying for everything aside from working capital and game-day expenses.
The Bills will pay $800,000 a year in rent; previously they had been rent-free tenants.
Overall, the county will spend $11 million more for the 10-year lease, that possibly could be as short as seven years, than it spent under the previous 15-year lease.
Under the new lease, Erie County will pay $41 million for upgrades at Ralph Wilson Stadium. Poloncarz admitted – “truthfully, to hide it, so the media wouldn’t see it” – the money was included under a purposefully vague contractual-obligation entry in his previous budget plan.
The state will pay for $54 million in renovations. The Bills will contribute $35 million.
Among the proposed Ralph Wilson Stadium upgrades outlined in the memorandum of understanding are a new $8.76 million high-definition scoreboard, an $8.33 million expansion and renovation of the east end-zone concourse and $7.1 million on entry plazas with wrought-iron security fences.
Other planned improvements include a $7.68 million expansion to the training facility and $3.7 million for an operations and storage complex.
“We’re committed to making this fan experience as good as it gets in the National Football League,” Brandon said. “We’ll see in the next decade if we can keep our revenues in line with where we want to go and where the National Football League is heading at that point.
“But it’s a true partnership. It’s progressive. It’s proactive.”
Other terms of the lease:
• The county and state will share annual payments that will start at $3 million for working capital, $2.9 million for operating expenses and $1.8 million for game-day expenses.
• The Bills retain naming rights to the stadium.
• The Bills still can play one preseason game every other year and one regular-season game a year in Toronto.
• The Bills are allowed to play one more international game over the next 10 years in addition to the Toronto game.
• The state gets a suite at Ralph Wilson Stadium to be used in its “I Love NY” promotional campaign.
“Those that would criticize the state and Erie County for investing taxpayer money to keep the Bills here would be the same ones criticizing if the Bills left,” Lt. Gov. Robert J. Duffy said. “The Bills are a big part of the fabric of Western New York.
“This is a great investment. It’s a wise investment. We could not afford to have the Buffalo Bills leave.”