The title of the crime drama "Buffalo '66 in 1966" is straightforward, referring to the story of the protagonist who bet on the Buffalo Bills to win the AFL championship in 1966 with a loan shark, and the Result was a fiasco for the Beale team, and the protagonist as a die-hard fan naturally lost all his wealth, which also led to his later poverty and frustration. The film was produced in 1998 and hides the pity and ridicule of the lonely team by New York State fans on the eve of the millennium.
To this day, half a century later, the Beals have not won the Super Bowl. According to Forbes' 2021 rankings, the Buffalo Bills are the lowest-valued of the 32 NFL teams overall — $2.27 billion (the average valuation for NFL teams is $3.5 billion). Despite the paradox of history, the only NFL team that is truly based in New York State will welcome their new home stadium worth $1.4 billion in 2026.
On March 28, US time, New York Governor Kathy Hochuer announced the construction plan of a new stadium worth 1.4 billion Beale. According to the plan, the New York state government will bear a budget of $600 million, the Buffalo Bills will bear $250 million in Erie County, where the Buffalo Bills are located, the Buffalo Bills will come up with $350 million, and the NFL will provide a loan of $200 million. That said, New York State taxpayers will pay $850 million for the new arena, while the owners of the football team and the league itself will only have to pay $550 million to harvest a new stadium. In addition, the $1.13 billion in follow-up repairs to the new stadium in New York State and Erie County have also stirred the nerves of the population. The stone stirred up thousands of waves, and the public bluntly indignantly blamed the New York state government for arbitrarily investing taxpayers' money in private commercial projects.
▲ Buffalo Bills current owners Pegula and his wife.
A native of Buffalo, New York, Hochul is a big fan of the Buffalo Bills. After former Gov. Andrew Cuomo resigned after being accused of sexual harassment, she became the first female governor in New York State history. At the time of the construction plan disclosure, Hochuer said that through the largest construction project ever built in the western part of New York State, the Beals will lease the state-owned arena for the next 30 years to ensure the team continues to hold on to Buffalo. At the same time, the new project will create at least 10,000 construction jobs in New York State, benefiting local people. In addition, the Beals bring $27 million a year in tax revenue to the government, which can be returned to the Government of New York State and Erie County in the 22nd year of the team's lease contract. She said bluntly that this fiscal allocation can ensure the rights and interests of taxpayers in the long-term plan.
Although the governor of New York defended the construction plan, it could not stop the public outcry. A sports management professor at the University of Michigan believes that the $850 million to build stadiums to stimulate the economy is futile, a figure that only stimulates popular sentiment. At the end of the day, the taxpayer's $850 million will become a commercial asset for the NFL. Nora Agar, a sports management professor at the University of San Francisco, also tweeted that the authorities open up more space for discussion, exchange, and questioning, especially as the new York state government's intention to invest taxpayers' money in commercial projects is justified.
Economist Richard McGoire has railed against the idea that politicians such as Khotsul have long been commonplace in supporting the construction of stadiums to stimulate the local economy. He believes that sports is only one of the ways consumers spend entertainment money, and the construction of sports venues has no obvious effect on the promotion of the regional economy. If people don't watch rugby, they spend that budget on other entertainment, such as watching movies, going to concerts, etc. With buffalo's poverty rate as high as 28.8 percent in 2019, the $850 million needed to help the NFL build a venue seems to have a better place to go.
However, as far as the Buffalo Bills' new stadium construction plan is concerned, there is no need to discuss the topic of "whether the new stadium can lead to the economic revitalization of the precinct" - according to the announced plan, the address of the new stadium is in the parking lot directly opposite the Birries' existing Heymark Arena, across the street, almost to the original site.
Professional leagues and teams also have chips in their hands, and if the government doesn't fund new or renovated stadiums, they can also find new city financiers willing to do so, especially where there are no top professional teams. How much will the city lose once the team leaves? Behind this is the economic game.
So the core question is whether the local government should pay for professional sports venues? If you buy it, how much is the right amount?
Economic scale and financial subsidies
Since 1998, a total of 21 new stadiums have been introduced by 32 teams in the NFL. Buffalo News analyzed the financing of these 21 NFL venues and summarized a major feature of stadium financing - the size of the local market is inversely proportional to financial subsidies. In general, the smaller the local market, the greater the financial subsidy for the construction budget of the stadium.
The bountiful State of California has provided a total of $100 million in tax breaks for the Los Angeles Rams to build the SoFi Stadium, which not only hosted the 2022 Super Bowl but will also host the opening ceremony of the 2028 Los Angeles Olympics. In the bill for building the stadium, the California government's investment is zero. Santa Clara County, also in California, paid 9 percent of the budget for the 49ers to build Levi's Stadium ($1.6 billion). The City of Atlanta paid 14 percent for the Mercedes-Benz Stadium built by the Falcons of Atlanta ($1.5 billion in total costs). When we look to Nevada, Minnesota, and Indiana, we find that these less economically underdeveloped states pay 38 percent, 45 percent, and 86 percent of their budgets for stadium construction, respectively, for team retention.
From this perspective, Buffalo, which has a poverty rate of 28.8% and is also one of the "Rust Belt" cities in the United States, seems to have a reason to pay high fees for the stadium. But in recent years, the team's naming rights, the invention of personal seat licenses (PSL) and the rental fees of luxury boxes have allowed teams to have more independent income, not to mention potential tax breaks, free commercial land, etc., which can also become a means for the local government to retain and subsidize the Beal team. However, because the Berries had not publicly called out to move out of Buffalo, the $850 million in venue investment, combined with the subsequent high cost of stadium maintenance, would make the bill seem uneconomical: For the first 15 years of the lease, New York State and Erie County would pay $12.67 million a year to maintain and repair the venue; in the last 15 years of the lease, that number would drop to $6 million.
Newly built or renovated
Regarding the site selection of the project, the old town of Buffalo City Center was included in the discussion. In the wake of the uproar, the New York state government's plan showed a scientifically rigorous "inaction" — the New York state government planned to build a new stadium in the same place, in the large parking lot across the street from the existing Buffalo Bills home Heymark Arena.
For the scientific selection of the new stadium, the New York State government is not without effort. The New York state government appointed AECOM, a construction consulting firm, to demonstrate the site selection. The AECOM report pointed out that if the stadium is built in the center of Buffalo, it will face problems such as commercial and residential demolition, re-planning of the city's highways, and surrounding hotel entertainment facilities. These problems are not only tricky and long-term solutions, but more seriously, they will lead to further increases in the $1.4 billion budget. With a new stadium in the parking lot opposite Heymark Stadium, these problems will be solved.
The arena ultimately decided to stand still.
The Beales stadium was faced with two options: "new" and "renovated", and AECOM calculated that building a new stadium was much more cost-effective than renovating an old one. Haymark Stadium is now over half a hundred years old, and the aging hydropower system and facilities can make major renovations difficult and bizarre. After major repairs, the old Hymac Stadium can live for 15 to 20 years. However, the construction of a new stadium will be available for at least 30 years, which is undoubtedly good news for local residents. It is worth mentioning that Buffalo is one of the most racially segregated areas in the United States, and 94.7% of the residents of the Orchard Park area where the stadium is located are white.
The economic impact of the venue
Khochur highlighted the role of the new stadium in boosting Buffalo's local economy. The impact of sports venues on the local economy can be considered from the aspects of ticketing and venue operating income, new jobs, tax revenues, and tourism promotion.
Currently, the Buffalo Bills' new stadium design does not have a dome, which also limits the versatility of the stadium itself. In other words, the operating income of the new stadium cannot be as rich as that of the Chase Center in San Francisco. The latter generates more revenue by hosting concerts, large talk shows, renting out venues, etc. According to Khotsur, the most remarkable thing about the construction was the 10,000 new jobs. But most of these positions are construction-related, and when the project is completed in 2026, how will the 10,000 staff go? Khochur has no answer.
Amid the controversy, the Washington Post revealed an interesting piece of information. Hochull's husband, Bill Hochuer, is senior vice president and general counsel for food supply company Delaware North, the Buffalo Bills' main food franchisee since 1992. Assuming the food supplier is able to continue to sign a concession with the Buffalo Bills, Delaware North and its employees could benefit from a 30-year long-term lease at the new stadium. Although Khotsul signed a memorandum of moral avoidance against this group relationship last year, it is inevitable that it will face questions and criticism. The impact of the new stadium on Buffalo's economy is unclear, but the economic impact of the contract on the governor's husband's company is expected to be very optimistic.
Public opinion is boiling, and economists are helping to calculate the input-output ratio. Because the $1.4 billion new stadium is not only the largest construction fortification in The Western New York State since 1998; the $850 million in government subsidies is also the largest taxpayer expenditure in the history of new venues in the NFL, even $100 million more than the $1.9 billion Allegiant Stadium in Las Vegas.
The time is ripe
But the Buffalo Bills may have simply pushed the boat and put forward the need for a new stadium at the right time.
Populous is an architectural design firm focused on sports venues. Since the fourth quarter of 2021, company executives have pointed to the surge in demand for renovations and new stadiums, which has put the design consultancy in a busy season.
The epidemic has accelerated fans' expectations for sports experience, and sports clubs have planned to upgrade their old venues, based on the upgrade of fan experience brought about by technological upgrades, making team owners more urgent. Some arenas consider introducing round tables, small rooms and more advanced seating for gatherings. In addition, people's needs for new experiences in live sports will also be considered by the new venue design.
From the fourth quarter of 2021, Populous received a wide range of design needs at the university level, professional level and large sports complex. At present, 17 cities in the United States are competing for 10 seats in 10 cities hosting the 2026 Football World Cup, and the competition for the venue of the competition has spawned the local government's planning needs for sports venues. According to SBJ, in North America by 2022, the total cost of reopening or building new sports facilities will reach $5.8 billion.
MlS's two new courses are particularly eye-catching: a $345 million course in Nashville is scheduled to open in April, and another $457 million in downtown Santa Luis will also be trial-operated in 2022. In the next four years, a total of $863 million stadiums will be completed, which is six times the annual average of the past decade.
In 2022, the construction cost of sports stadiums will account for a large proportion of the construction of university stadiums, with a total cost of 2.8 billion US dollars.
It is worth mentioning that in the three major leagues of the United States, the NFL, MLB and NBA, 51% of the current stadiums were built before 2000, and only 18% of the venues were newly built within a decade. That is to say, a new wave of post-construction renovations of stadiums is coming, and the demand for fan experience coupled with technological upgrades will make this trend more significant, and the controversy over new sports stadiums is destined to increase.
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