An agreement that would pump $130 million into Ralph Wilson Stadium to keep the Buffalo Bills in Orchard Park for at least seven years got a key approval from the Erie County Legislature on Thursday.
The unanimous vote by county legislators to approve a memorandum of understanding between the county, the state and the Bills is considered a significant step toward finalizing the terms of the deal into a formal 10-year lease.
“To me this is the key vote,” said Deputy County Executive Richard Tobe. “It should get easier unless we hit a glitch that leads to a change in the business terms. We don’t anticipate that. We think we’ve got a good, solid plan.”
Legislators cited the sales and income taxes the National Football League team generates, as well as the national spotlight the team brings, as factors in their decision to invest public dollars into keeping the Buffalo Bills in the region.
“What’s the price tag for the psychological cost of having an NFL team?” asked Legislator Lynn M. Marinelli, D-Town of Tonawanda. “It’s incredibly skewed economics of the National Football League and what drives the governance from those major cities, and the fact that Buffalo and Erie County, N.Y., can compete on that stage is incredibly significant.”
The deal is expected to cost the county $103 million over the next 10 years, excluding the cost of the interest on the money that is borrowed for renovations.
Several lawmakers sought to quantify the return the county will see on its investment by calculating taxes generated for the state and the county on ticket sales, team salaries and the expensive homes of players. Legislator Edward A. Rath, R-Amherst, estimated that amount will be at least $175 million during the 10-year life of the deal, including $120 million in payroll taxes.
“I am very confident from a quantitative standpoint this is a positive return on investment for the residents of Erie County,” Rath said. “That’s very important, because people have been asking the question: With all this money that we’re putting into it, is it worthwhile? And I firmly believe that yes, in fact, it is extremely worthwhile for the residents of Erie County.”
The county’s major upfront cost will be its $40.7 million investment toward a $130 million stadium project that includes a long list of work, including updating and expanding concessions areas, creating an Abbott Road entrance plaza with a team store and adding new technology, among other items. The Bills and the state also will share in the cost of the project.
The county is likely to borrow money through bonds for the work that would be paid back within 10 years, Tobe said.
Erie County also will share other costs for the lease with the state, including an annual $3 million team subsidy, reimbursements for the team for game day, and operating expenses and annual structural upgrades to the county-owned stadium.
The county estimates that the total public cost of the lease to the state and the county will be $226 million during the 10 years. That does not include interest on debt.
Legislature Minority Leader John J. Mills, R-Orchard Park, said he was on the fence about the deal for several weeks before touring the stadium last week with Bills executives and seeing that the planned renovations are largely focused on upgrading fan areas.
“I firmly believe that the Bills are serious about staying here long term,” Mills said.
Unlike the existing lease, which expires in July, the team will pay annual rent starting at $800,000 that would go toward the annual stadium upgrades. The Bills also will pay $35 million toward the stadium renovations and have agreed to pay $400 million if the team moves within the first seven years of the lease. The team will have one opportunity to buy out the remaining three years of the lease for $28.4 million.
Minor construction work on the stadium could begin later this year, but county officials expect the bulk of the stadium renovations to take place during the offseason in 2014, with the project wrapping up in 2015.
The memorandum of understanding also will need approval from two state agencies, Empire State Development and a subsidiary set up to handle the stadium improvements, as well as the owners of the other NFL teams. The state’s share of the renovation work is included in Gov. Andrew M. Cuomo’s proposed 2013-14 budget, which will need approval from state legislators.
Tobe, who was a key figure in negotiating the deal for the county along with County Executive Mark C. Poloncarz, said he did not anticipate a problem with either the state or the NFL approvals.
“The NFL knows what’s going on,” Tobe said before the County Legislature’s vote. “No one expects that there will be a problem with the business terms. We believe, should the Legislature approve this today, then all the parties have signed on to the business terms. What we then have to do is make the legal documents reflect this.”