Bills exec: New stadium wouldn’t help us, because Buffalo fans can’t afford pricey seats

Buffalo Bills president Russ Brandon gave a long interview to the Buffalo News yesterday in which he gave a good explanation of team owner Terry Pegula’s puzzling reticence to demand a new stadium like Roger Goodell and the rest of the league would like him to do. In short: A new stadium with luxury suites and all that wouldn’t help them much, because Buffalo.

“We have not met and discussed anything relative to all the noise,” Bills managing partner and President Russ Brandon said of the New Stadium Working Group, formed two years ago, that includes state and local political leaders. “We have not met since April (2014), right after (previous team owner) Ralph (Wilson) passed away, on a new stadium.

“We’re going to take a very slow, quantitative, objective view on what makes sense.”…

“We have made the model work on the Bills side, based on how we have built the business from a volume standpoint,” Brandon said. “So you have a lot of tickets in the building, general-admission seats in the building, 6,800 club seats, a lot of suites and price points have been fairly manageable, amongst the lowest in the league. As we go through market-condition studies and different things that you do when you look at things, like we’ve done previously with renovations, and as you update that information, you have to look and see what makes sense.

“The key is to realize that we are not LA. We are not Atlanta. We’re not Minneapolis. People say, ‘Oh, we’re very similar to Minneapolis.’ They have 28 Fortune 500 companies in that community. We have zero. We have to be a regional operation. We know that. That’s proven.

“But with a new stadium comes new economics. And with new economics comes a public-private partnership, (personal seat licenses), a lot of infrastructure cost. So we have to look at it in a very macro view and make sure that, as a community and as an organization, that there’s a partnership that exists that makes sense.”

There’s a lot to unpack there, but this is the first time I can recall a pro sports team owner arguing, Hey, our fans don’t have enough money to buy all the high-priced seats that a new stadium would give us, so what’s the point? Trying to make money on volume rather than by focusing on extracting as much money as possible from deep-pocketed fans goes against the sports tide in the post-Reagan economy, but it’s not hard to believe that Buffalo might still be a different world in this regard. (Though it’s also possible that Brandon and Pegula are just waiting for “a partnership that makes sense,” aka an appetite for more public money that would make a new stadium worth their while.)

The real question now is why Goodell keeps beating the new-stadium drum when the Bills owners don’t want him to. Is it because he thinks the league would somehow make more money even if the Bills owners are convinced they wouldn’t? Because having Buffalo in an old stadium hurts the argument of other team owners that they can’t possibly survive in their 20-year-old place? Because it doesn’t look shiny enough on TV? Because he’s just so used to playing bad cop that he can’t get out of character? All of the above? Your guess is as good as mine.

Vegas says it’ll cut public Raiders stadium cost to $500m, would actually be $950m, math is dead

The Southern Nevada Tourism Infrastructure Committee met yesterday to discuss Sheldon Adelson’s proposed $1.4 billion Vegas stadium for the Oakland Raiders as promised, and it … suggested cutting $250 million from the public subsidies? Maybe?

On Thursday, [committee chair Steve] Hill announced a new proposal for funding that reduces the tax money used from $750 million to $500 million and raises the cut for the Las Vegas Sands and Majestic Realty from $650 million to $900 million.

“I’ll tell you point blank we’re disappointed by what we saw today,” said Marc Badian, Raiders president.

Or maybe not?

The panel, along with representatives from the Raiders, developer Majestic Realty Co. and Adelson’s Las Vegas Sands Corp., heard again that the project won’t cost the public more than $750 million.

Thankfully, the committee has uploaded the actual proposal to their website, so we can check it out and try to figure out WTF is going on. The public funding in the “alternative” plan, as you can see, is actually listed as $550 million in stadium bonds, which would be covered by hotel taxes. (In Adelson’s plan, the hotel tax would pay for $750 million worth of bonds.) There would also be $7 million a year for operations and capital improvements, plus $3.5 million a year to repay UNLV for lost events revenue at their current stadium, for a present value of about another $150 million.

Then there is the tax increment financing portion, wherein sales, ticket, and business taxes on the stadium and practice facility would be kicked back to Adelson and Raiders owner Mark Davis, amounting to … it doesn’t actually say how much this would be, but I previously estimated it at around $250 million. So we’re at $950 million in public cost — or  $800 million if you don’t include the future operations and other expenses, though you really should — which either way is a whole lot more than $500 million.

In essence what the committee has proposed is to say to Adelson’s crew: Dudes, you’re getting almost a billion dollars, let the tax increment money be part of that instead of asking for it on top. This is enough to make the private partners “disappointed” (they were hoping to have their subsidies and eat them too), but not enough to stop this from being the most expensive public NFL subsidy in history. It would be pretty sweet, though, if the Vegas Raiders deal fell apart because a billionaire and an NFL owner turned up their nose at a mere $950 million subsidy, because they couldn’t be bothered to stoop down and pick it up.

SD councilman proposes “Fan-Lord” owners as Chargers stadium solution, is probably trolling us

Speaking of announcements that weren’t all they were cracked up to be, San Diego city councilmember Carl DeMaio declared yesterday that he has a plan to raise $1.4 billion or more to build a Chargers stadium with no public money required. And how would that work, exactly?

Private developers, the Chargers, and individual fans would all receive ownership shares in the facility based on their initial investment levels. Instead of Personal Seat Licenses, fans can invest in Fan-Lord Ownership Shares in the facility.

He’s trolling us, right? The idea that you can somehow raise $1.4 billion in private capital by dividing up ownership of a stadium pie that is going to be worth way, way less than $1.4 billion in future revenues is amusing enough, but Fan-Lord Ownership Shares? That isn’t even good Game of Thrones fanfic, let alone an NFL stadium finance plan.

You can read the Powerpoint of DeMaio’s proposal here, but the main idea seems to be to turn regular PSLs into these super-PSLs that would include a share of stadium revenues, of which there won’t be any because all stadium revenues are going to be rolled into a laundry list of rounded-off payments, none large enough that they seem totally unreasonable, but at the same time none actually justified by any included market analysis:

Screen Shot 2016-06-24 at 9.30.02 AMLook, I think everyone would be thrilled if it turned out that the Chargers owners could raise private capital from fans and investors (and fan-investors, which I guess is what “Fan-Lords” would be) to pay for a new stadium and still have money left over to increase their profits over what they’re getting at their current stadium. All evidence, though, is that the numbers don’t come close to adding up to do that. If DeMaio’s plan turns out to be a proof of concept that a Chargers stadium is a money-loser and what the Spanos family wants isn’t so much a new stadium as the subsidies that come with one, that will be a useful addition to the public discourse, sure. But don’t be shocked when this turns out to have all the financial sense of a plan developed by underpants gnomes.

Bills owner: Fine, I’ll think about demanding new stadium, get off my case

Man, Buffalo Bills owner Terry Pegula really doesn’t want to talk about building a new stadium, no matter how many times NFL commissioner Roger Goodell encourages him to, does he? Pegula was asked about it again yesterday on WGR radio, and here’s the sum total of his responses, as reported by ESPN:

“We’ll look into that,” Pegula told WGR 550. “We’re a different market than [Los Angeles], right?”…

“I think they think we need a new stadium, that’s where they’re coming from,” Pegula said Wednesday of the owners’ comments. “You listen to that and you make your own judgment. Our stadium is one of the older venues in the league, if not the oldest.”…

“We’re not going to make any hasty decisions,” Pegula stressed Wednesday. “We’re evaluating.”

That’s a whole lot of “we’ll get to it when we get to it.” Either Pegula has an admirable distaste for demanding new stadiums for no better reason than because he can (yes, Ralph Wilson Stadium is among the oldest in the NFL, but it just got more than $200 million in renovations, funded by New York state taxpayers), or he’s just biding his time and waiting for the right moment to ask for new-stadium cash. Either way, it’s really unusual behavior for a pro sports team owner, and we should probably cherish it while it lasts.

Tax kickbacks could increase public cost of Vegas Raiders stadium to $1B

The Las Vegas Review-Journal reports that the Southern Nevada Tourism Infrastructure Committee will meet again this week to finalize more details of a proposed NFL stadium that could host a relocated Oakland Raiders, and as befits a paper owned by the billionaire hoping to build the stadium, it totally buries the lede:

The committee has all but settled funding sources for stadium construction, [committee chair Steve] Hill said: an increase in the hotel room tax and a special tax district that includes the stadium and a football practice facility that would be used by the Raiders.

Hill explained that the tax district, as envisioned by the committee, would redirect revenue from sales taxes on goods sold on stadium grounds; the live-entertainment tax on tickets for stadium events; and the modified business tax on the payrolls of those employed at the stadium, including professional football players. Hill said the primary reason for imposing a special tax district on the practice facility is to capture payroll tax revenue from the Raiders.

That’s a whole lot of new specifics on how the previously floated tax increment financing district would work; let’s break it down:

  • “Sales taxes on goods sold on stadium grounds” is a potentially huge amount of money, especially if the stadium and practice facility includes any restaurants or other amenities open on non-game days. It’s tough to break out local stadium sales from Forbes’ figures, but if we guesstimate them at $100 million a year for the Raiders, plus a fraction of that for non-NFL events, at an 8.15% sales tax rate, that’s … how about we call it $10 million a year, for a present value of about $150 million.
  • The live entertainment tax is another 9% on ticket sales, which would normally go into state coffers. If it’s instead kicked back to the stadium builders, and we guesstimate $50 million in annual ticket sales, that’s another $4.5 million a year, for a present value of $70 million.
  • The modified business tax is 1.475% on wages, so if NFL team payroll is around $150 million (non-players add a trivial amount), that’s another $2.2 million a year, for a present value of $34 million.

Add all that to the $750 million in cash (from hotel-tax revenues) that Sheldon Adelson, Mark Davis, and their partners are asking for, and taxpayers would be putting up an even billion dollars toward a $1.4 billion stadium for the benefit of one billionaire and the most disliked owner in the NFL — who, in turn, after league money and naming rights were rolled in, would be on the hook for somewhere around bupkis. That would seem to be the headline to me, but I guess that’s why I don’t work at the Review-Journal.

Falcons stadium now to cost $1.6 billion, and it’s not finished yet

Both Atlanta Falcons officials and Atlanta Mayor Kasim Reed have started referring to the team’s new stadium opening in 2017 as a $1.6 billion facility, which probably means it now costs $1.6 billion, though there’s been no official announcement. That’s up from $1.5 billion in April, which is up from $1 billion in late 2013, which was already a pretty crazy amount of money to spend to build a new stadium to replace a 20-something-year-old one next door.

Now, Falcons owner Arthur Blank recently revealed that the amount of public money for the stadium is now “almost $700 million,” up from almost $600 million at last accounting, probably because projections of the hotel-motel tax that will go into the stadium’s “waterfall fund” for future maintenance and operations have risen. Still, that’s a hefty sum for Blank to pay, on top of a hefty sum that Atlanta citizens will be paying (yes, they’re paying it even if comes from a tourist tax, since once the city collected the tax money it’s the city’s to spend however it likes). It seems inconceivable that this will end up paying off for anyone, but apparently this is what Jerry Jones and the taxpayers of Arlington have wrought.

Goodell yammers some more about how Bills “ultimately” need new stadium (if they’re not paying for it)

Speaking of Roger Goodell throwing his weight around, the NFL commissioner has started speaking out again on how he really really wants a new stadium in Buffalo, and the Bills owners had better start demanding one if they know what’s good for them:

“Stadiums are important, just to making sure that the team can continue to compete, not only throughout the NFL but also compete in this environment. Because we’ve got great facilities here now and the Bills have to stay up with that.”…

“That’s up to [Bills owner] Terry [Pegula] and the community to really get focused on — What does it take? What is the right location?” he said. “Those are the difficult decisions that have to be made locally. We’ll support it any way we can. But ultimately, those decisions are made here.”…

“I think every team in the league continues to look at, whether it’s a new stadium or a renovation or renovations to their stadium — they just completed a renovation here — but ultimately, long term, you have to look down that road. What’s the right thing for the franchise and the community?”

This isn’t anything new, really — Goodell has been spouting “need new stadium!” soundbites since before Pegula even bought the team — and the guy was asked the question at a charity golf event, of all things, so it’s not surprising that he fell back on league boilerplate. Still, it’s a clear sign that the league isn’t eager to let talk of a new Bills stadium drop, even if Pegula and his wife Kim have been downplaying new-stadium talk since purchasing the team a couple of years back. (Or passing the buck to Goodell to rattle the stadium saber, however you prefer to view it.)

Why does the NFL care, if the Pegulas don’t? WGRZ-TV in Buffalo asserts that “the league and other owners would make millions and millions of dollars in additional revenue if the Bills were to build a fancy stadium, because every home game the Bills play makes money for the other 31 franchises.” But then, if those “millions and millions of dollars” (is that more than just millions of dollars?) had to go to pay for stadium construction, neither the Pegulas nor the NFL would make money on the deal. So really the message here, such that there is one other than “leave me alone and let me play my round of golf,” is “the NFL would love it if somebody else bought the Bills a new stadium, because we like free stuff as much as the next guy.” Stop the presses.

Raiders stadium in Oakland will work great if Davis pays somehow, please refrain from holding breath

Oakland Mayor Libby Schaaf has issued a statement in response to Matier & Ross’s San Francisco Chronicle column yesterday about two former NFL players seeking to invest in a new Raiders stadium:

Today’s San Francisco Chronicle contains inaccurate information I need to clarify. On May 23, I proactively contacted NFL Commissioner Roger Goodell to update him generally on what we’ve felt have been productive conversations with Raiders’ negotiator Larry MacNeil.

Having learned from what I believe was a past mistake of awarding an exclusive negotiating agreement to a developer not approved by the Raiders, I wanted to assure the Commissioner of my commitment to keeping the Raiders and NFL at the center of our efforts.

I did express to the Commissioner my interest in continuing discussions with the Ronnie Lott/Rodney Peete group and asked how the Commissioner would view my taking more meetings with them.

The Commissioner encouraged me to explore all avenues for partnership that might result in a successful project for Oakland, the Raiders and the NFL, assuming we not give away any rights without clear Raiders’ support. That is my intention in resuming discussions with them.

I continue to believe the Raiders can develop a new stadium in Oakland that is responsible to the team, its fans, the NFL and the taxpayers of Oakland. Oakland has worked hard to contribute the entitlements, development opportunities and infrastructure funding to our shared vision of a stadium-centered development at the Oakland Coliseum. I’m committed to continuing to work hard to realize this vision.

That’s a lot of words to say, “Hey, Roger Goodell didn’t tell me to meet with Lott and Peete, I told him that I was meeting with him.” Which, fine, spin, whatever, but it doesn’t actually say much about whether the Lott/Peete plan, which seems to involve putting cash into a stadium proposal in exchange for equity in the team, has any legs. That bit about “assuming we not give away any rights without clear Raiders’ support” seems to indicate that Lott and Peete haven’t actually talked to Raiders owner Mark Davis about their plan, and since Davis is the one who’d be actually giving something up — he’d have to hand over more than a quarter of the team stock to get $400 million in stadium funds — he’s the one who matters here. (As I’ve noted before, if Davis wanted to build an Oakland stadium by selling off a chunk of his team, he wouldn’t necessarily need Lott and Peete to do it.)

For now, I’m filing this under “due diligence” by Schaaf and Lott and Peete and even Goodell, while Davis awaits word on whether Las Vegas will gift him and his billionaire development partner who wants to buy the presidency with around a billion dollars in public subsidies in order to play there. Hey, there’s another benefit to Goodell of endorsing the Lott/Peete plan: Not only does it make him look good for encouraging African-American ownership and for trying to keep the Raiders in Oakland, it helps one of his team owners leverage more money out of Vegas by making it look like there’s a viable alternative! These sports barons, they see all the angles, don’t they?

Two ex-NFL players want to “invest” in Oakland Raiders stadium, here we go again

It’s hard to get all the details thanks to the San Francisco Chronicle’s new overly aggressive paywall, but former NFL players Ronnie Lott and Rodney Peete are trying to spearhead an attempt to get a group of African-American “investors” to help build a new Raiders stadium in Oakland, and NFL commissioner Roger Goodell thinks this is a great idea:

In recent weeks, ex-49er Lott and Peete, both of whom played briefly for the Raiders, have met with team executives and Oakland officials to brief them on their proposal to be master developers of the 120-acre Coliseum site.

(A bit more aggregated here, for those paywalled.)

The problem with the idea of bringing in private investors to bail out the $400-million-ish gap in Raiders stadium funding in Oakland is the same as when developer Floyd Kephart tried it: For it to be an “investment,” there has to be revenue to repay the money the private investors put up, and there wouldn’t be — at least, not any money that Raiders owner Mark Davis wouldn’t already be counting on for his own share. It’s not surprising that Goodell is nodding approvingly toward this Lott/Peete proposal given that it checks off two of the league’s favorite lip-service boxes (racial integration at the executive level, and keeping teams in their current markets), but unless somebody here has figured out how to generate money out of thin air, I wouldn’t get too excited about it.

Davis, meanwhile, is keeping his eyes on the prize:

“The $750 million is the bottom line on that,” Davis said at the Silverton [in Las Vegas on Friday]. “Then whatever (extra) private money is needed we will come up with it. If they can come up with the public money of that nature, then we will make sure we get a stadium built here that everybody will be proud of; it’ll be world class.”

I’ve said it before, I’ll say it again: Unless you have some plan that involves moving to a huge market and reaping unprecedented new revenues from PSLs or development rights or something (see: Los Angeles Rams), you’d be crazy to try to make money off a new stadium while paying for it yourself. If even Mark Davis understands this, hopefully news reporters can wrap their brain around it as well.

UPDATE: I’ve finally found the non-paywalled version of the Matier & Ross story (thanks, commenter John Wyatt!), and here’s the key bit:

One source involved in the talks tells us the Raiders may be willing to work with the Lott group, assuming it can come up with the other $400 million needed to fill out the stadium financing.

“The Lott group’s first and foremost interest is owning a portion of the team and keeping it in Oakland,” said the source, who wasn’t authorized to speak on the record.

So Davis wants Lott’s group to come up with $400 million, and Lott’s group wants in exchange to get a share of a franchise that is currently worth $1.4 billion … I guess maybe it’s possible, but it doesn’t sound like Davis wants to sell part of the team to raise the $400 million, but rather wants someone to just give him $400 million. (Or better, $750 million.) Worth watching, but mostly in the same way that perpetual motion machines are.