Yesterday morning, with three days and change to go before the New York state budget had to be approved, Gov. Kathy Hochul unleashed her proposal for public spending on a new stadium for the Buffalo Bills.
Or, at least, she unleashed a press release about the proposal. The exact details remain a bit squirrelly, so let’s see how many of them we can suss out with the information available as of this morning:
- The total construction cost of the stadium will be $1.4 billion.
We’ve known that for more than seven months now. What else is new?
- The state of New York will put up $600 million and Erie County will put up $250 million. The rest will be covered by the Bills owners ($350 million) and the NFL ($200 million).
So that’s $850 million, which would be the largest cash subsidy for an NFL team in history, breaking the $750 million record set by the Las Vegas Raiders. Where will the state and county get that money?
- The state money will be “included in the state budget,” reports the Buffalo News, but it’s unclear how much will be up front and how much will be bonded and paid back over time. The county will spend $75 million out of this year’s budget, and bond out the other $175 million and pay it back later. No word yet on which particular tax streams might be devoted to the stadium, or if this all would come out of general funds.
The News also cites several other costs that the public would be on the hook for: $6 million a year from the state for 30 years for a Capital Improvement Fund (i.e., future upgrades), plus an unknown additional amount of money from the county; and $6.67 million a year in state money for 15 years toward a “maintenance and repair fund.” Without counting that undetermined county expense on future upgrades, that’s worth about another $160 million in present value, bringing the total public subsidy to $1.01 billion — pretty much exactly what Hochul and Erie County Executive Mark Poloncarz swore last week it was not.
(The News also mentions that the state would no longer be on the hook for operations costs of the new stadium, so that’s a plus, but without a dollar figure, it’s hard to know how much of one. It’s also unclear if there are any additional hidden costs: The state will own the stadium, so it will likely be exempt from property taxes; and no one has said yet who will pay for land acquisition, for example.)
Not to worry, though, because the governor’s office has assured New Yorkers that, as WHAM-TV reported it, “the economic and tax impacts generated from the team will support more than 100 percent of the public share of the new stadium cost.” This is, to use the technical economics term, meshuga: To pay off $1 billion in up-front public costs, plus interest payments, the Bills would have to generate something like $70 million in new tax revenues, for the next 30 years. Some additional money could come in from things like player income taxes and there will be some spending at things like concerts (though not a hell of a lot, since we’re talking about a non-domed stadium in Buffalo); on the flip side, many if not most fans will be coming from Western New York anyway, so a lot of that “tax impact” would stay put even if the Bills moved out of town.
But don’t take it from me: Take it from Hochul herself, who vowed that the stadium would pay for itself because it would generate $27 million in annual taxes:
“The cost of the stadium is paid back in the 22nd year because of the revenues we’re going to be driving,” she said. “That would not be there if the team is not there.”
That is, to put it mildly, not how money works. First off, paying $600 million over 22 years is not enough to pay off $600 million in up-front bond costs, any more than paying off $600,000 over the life of a mortgage is enough to pay for a $600,000 house. Secondly, the AECOM report that Hochul cited doesn’t actually say that a new stadium would generate an extra $27 million in state tax revenues; rather, it says that the current Bills stadium generates $27 million in state, county, and city tax revenues combined, and asserts that they would all go away if the Bills were to move — notwithstanding all the Sabres games and movies and whatnot that New Yorkers would spend more money on to fill those cold, football-less winters. So when you factor in all the state and county costs, New York taxpayers would be losing more than $40 million a year, even by Hochul’s own rosy accounting.
Ah, but they would also be gaining the continued presence of the Bills, whose current lease expires after next season, and who according to Sports Illustrated “could be out of Buffalo as soon as the 2023 season if an agreement isn’t reached on a new stadium.” (Never mind that there aren’t any other cities with state-of-the-art NFL stadiums ready to go, and none would be able to get one approved and built by then.) Looked at that way, this is a $1 billion public investment in getting the Bills to stick around for another 30 years — which comes to $33 million per year of added lease, this would shatter the Indiana Pacers‘ record of $24 million per year.
Looked at yet another way, Hochul has promised that the stadium project would create 10,000 jobs, which would come to a $100,000-per-job cost, which is not great by economic development standards. But most of those 10,000 jobs would be construction jobs, so not permanent; she provided no information on what the number of full-time-equivalent jobs would be, but if it’s even half that number, we’re already getting into some of the worst bang for your buck of any public development subsidies ever.
Though the whole package still needs to be signed off on by the state legislature and Erie County, most of the press coverage has presented it as a fait accompli: Hochul called it an “ironclad” deal, and though she seemed to mean the Bills’ commitment to a lease, that didn’t stop the Buffalo News from using it to describe the overall deal in its headline. The New York Times headline, meanwhile, was “Buffalo Bills Strike Deal for Taxpayer-Funded $1.4 Billion Stadium,” which prompted a memorable reply from state assemblymember Ron Kim:
I don’t recall reaching any fucking deal to give the 8th richest NFL owners $850 million of taxpayer $$ https://t.co/ZV1h6BfPVk
— Ron T. Kim (@rontkim) March 28, 2022
So, to recap: After months of indicating she would not give $1 billion to the Buffalo Bills’ billionaire owners for a new stadium, the governor of New York just proposed giving $1 billion to the Buffalo Bills’ billionaire owners for a new stadium — everything that the team owners and the NFL asked for, with no apparent haggling. She did this without consulting the state legislature that is supposed to approve state spending, and she did it four days before the state budget needs to be finalized.
What happens now could be pivotal in determining not just the future of the Bills and New York state budget priorities, but the future of stadium ultimatums in general. The legislature could rubber-stamp Hochul’s plan, or they could reject it, or they could say, “That’s nice, why don’t we consider putting it in next year’s budget so we can, you know, read it first before we vote on it?” Aside from Kim’s tweet, there’s been precious little response from the legislators who will decide Hochul’s plan’s fate; we’ll find out more over the next three days.
Ron T. Kim is my hero
I really enjoyed this piece since this whole situation basically played out exactly how predicted.
Does Gov. Hochul, and other politicians in her situation, not understand economics or is she just full of it and hoping the public buys it? Also, which of those circumstances is more troubling??? Thoughts I’ll try not to worry too much about until I’ve had my coffee.
Standard ‘take out the trash’ governing. Keep everything secret until the last minute (or after), then push it all on the leg while saying “you don’t have time to read it let alone think about what the impacts are and if you don’t vote yes we’ll all die”.
She is literally hoping this gets voted through without anyone reading it and has worked as hard as she can to make sure no-one can read it before voting on it.
As Neil suggests, the appropriate action here would be to table this issue for review for six months, then ask questions and then propose amendments as needed. Let’s see if the state assembly has the guts to do that or just carries the water for billionaires (again).
It should, of course, be illegal for anyone to submit a bill like this so late that it can’t even be properly read, let alone digested and reviewed. That it is not helps explain why we are where we are. The people don’t seem to want this. The state legislature may not even want it. (It’s even possible the Pegulas still don’t really care for the idea). But none of that matters because the NFL and Kathy Hochul (who, unlike Gerald Ford, was ‘kind of’ elected – as Cuomo’s running mate and not directly) have decided that this is what the taxpayers of the state and Erie county must do.
This is indeed a strange form of democracy we practice.
If there was a fan base I would hate to have oppose a stadium scam like this it would the Buffalo Bills fans. I would imagine they would tail gate public meetings, smash through whatever folding tables were laid out for the meetings, and cover those calling they hand over their tax dollars to billionaires in ketchup and mustard. Hopefully, it comes to that.
That’s got to be the ballsyist tweet I’ve ever seen from a politician.
Neil can I buy him some magnets? Can we make him some sort of honorary member?
I’m supposed to be on a Zoom press call with Kim and others at 11, I’ll ask what his fridge situation is like.
Trump called Kim Jung Un(a man with nuclear weapons), Little Rocket Man.
And with that? The Cincinnati Bengals are now on the clock…
https://twitter.com/BenFischerSBJ/status/1508844412402552834
Great we’re getting another round of new stadiums built.
Oh ffs
Here’s a link to this morning’s press conference, with state Sen. Liz Krueger, state assemblymember Ron Kim, economists Victor Matheson and Dennis Coates, Greg LeRoy of Good Jobs First, and me. You may have to download it rather than watching it on Dropbox’s site to see the whole thing, which is 52 minutes:
https://www.dropbox.com/s/hr87un9m1jwlz6i/Buffalo%20Bills%20Billionaire%20Boondoggle.mp4?dl=0
The Buffalo News Editorial looks like it came straight from the Bills PR team. I didn’t know the Bills’ role in recruiting talent to Buffalo, did you?
And those hard working western New Yorkers Hochul is doing this for? They now need to pay for PSLs before they get to buy tickets. The editorial says the PSLs are to help pay for the Pegulas’ share!
https://buffalonews.com/opinion/editorial/the-editorial-board-the-bills-are-staying-and-the-stadium-deal-is-good-for-all/article_658e2568-aeb9-11ec-8e02-03c663ebd9e6.html
“In the end, other and more logical choices FALL AWAY…”
“The Bills are forgoing hundreds of millions by staying instead of moving to a city THIRSTING for a team…”
“If Buffalo wants to keep the Bills, taxpayers will have to shoulder some of the costs. It’s the nature of the beast, given the interest of other, wealthier cities in purloining our team and the likely willingness of their governments to pony up…”
That Buffalo News editorial reads like some well read frat boy had a half hour to write a book review. Shameless.
It’s almost like their publisher is on the committee advising the Bills owners. Oh wait, he is!
My understanding is that newspapers want an NFL team in their market because advertisers like it. Correct?
What are “newspaper advertisers”?
The Buffalo News also reports the stadium will be an ESD development, under its ECSC subsidiary.
Maybe this is a good deal for the county as the new stadium is an albatross totally around the state’s neck. But it cost them $250 million to keep the Bills and unload the burden onto the state so maybe not.
This one is gonna open the floodgates. Municipal budgets in Charlotte, Nashville, and Kansas City about to get blown to smithereens.
Hey at least nobody wants to shill out money for MLb parks so there’s that
The Guardians just got $285 million, and the Orioles are in line to get $600 million…
Democracy in Action
The Founders predicted this pork
of limitless gub’mint at work.
As Mencken had noted,
the voters have voted.
Give it good, give it hard to New York.
Don’t make me institute a commenting ban on slant rhymes.
I live in a Buffalo suburb. However I am not from here originally. Western New Yorkers suffer an innate inferiority complex. We all know the weather works against it. We all know it was a once great heavy industry hub. We all know it is located in a state and region in perpetual population decline. For many people here the only thing they have to cling to possibly, though not certainly, excluding their families is the Bills.
They will spare no expense to keep them here despite their general dislike of billionaires, despite disagreeing with the stadium handouts to the Yanks and Mets 13 years ago.
In other words all logic goes out the window and as Hochul said, the Bills put Buffalo in the global map and that cannot be quantified. And I don’t agree with any of this foolishness especially from Democrat politicians that are always railing against Bezos and Musk and Walton family.