Buffalo Bills owners Kim and Terry Pegra have received a lover contract from the state to raise money for the new stadium. Brett Karlsen / Getty Images
After the New York state legislators passed the deadline to approve the state budget, they finally reached an agreement. April 9, 2022,It contains US $ 850 million subsidy For Buffalo’s new stadium for NFL handprints.
As a sports economist Having studied stadium deals for over 20 years, I’m not exaggerating when I wrote that the New York State Legislature created one of the worst stadium deals in recent memory. Misplaced state and local governments Nationwide.
Post-study research The stadium shows that it is a terrible public investment. Taxpayers funding them rarely want to pay them. So why does the government subsidize them?
Return to the good old days
There were a lot of things I didn’t like about the Bills Stadium project. At $ 850 million, it ’s Largest taxpayer handout For new stadiums in US history, even before additional subsidies such as annual maintenance fees, property tax exemptions, and municipal interest tax exemptions are considered. Due to these factors, the total government price can be well over $ 1 billion.
Taxpayers make up more than 60% of the $ 1.4 billion price tag, It also goes against the trends of the last 10 years. Towards a low level of public funding for stadium construction.
State and local governments covered roughly on average Two-thirds of stadium construction costs During the first wave of the modern stadium boom that began in 1991.But during the Great Recession, government leaders found it Political disagreement To hand over hundreds of millions of dollars to the millionaire owner as they had fired teachers and firefighters.
Over the last decade, according to my ongoing research, public grants have averaged only one-third of construction costs.In fact, the latest Super Bowl Completely privately funded SoFi Stadium in Los Angeles.
Bill trading evokes the good old days.
Stadium subsidies are generally a terrible public policy, and this arrangement is no exception.
Bills and its owners, Terry and Kim Pegra, do not need a handout.Net worth is $ 5.8 billion and Terry Pegra NFL’s 9th Wealest Owner.. The NFL’s generous revenue-sharing structure even means playing in Bills, one of the league’s smallest markets. Earn over $ 300 million Operating profit since Pegras Buy a team for $ 1.4 billion Just 7 years ago.And since then, the value of the bill has been Another $ 900 million.. Pegras got enough investment in just seven years and was able to pay for the entire new stadium themselves.
But for team owners, the only thing that is better than the new stadium is the new stadium where someone else is paying. In fact, the new stadium could add to the value of the bill, well beyond the $ 350 million that Pegula contributes to the cost of building the stadium.
Stadium makes poor neighbors
Transactions funded by these taxpayers Often thrown As an investment in the local economy, but 20 years of academic research This topic is a definitive indication that stadiums and franchises have little or no impact on the local economy. The bill is no exception.
For one thing, most sports venue customers are metropolitan residents who would just spend money elsewhere in the local economy without a team. Second, stadiums often make poor neighbors. NFL venues, such as Bills’ current home, the Highmark Stadium, are huge facilities that are rarely used. Bills plays eight home games each year during the regular season. This creates little incentive to invest in the surrounding area.
And don’t expect the NFL Stadium to usually host many other events. Highmark Stadium has a total of 30 major concerts, three college football games and two big hockey games in its 50-year history, with the exception of the annual high school football game and some miscellaneous competitions. I have held a game of. And the Buffalo venue is not uncommon for a large outdoor stadium.
Himark Stadium sits alone as a concrete island in the sea of parking, rather than creating a dense area of houses, retail stores and restaurants.
The stadium project is very unpopular, according to one study 55% of New Yorkers disagree Only 22% agree with the plan.
So why is it included in the state budget?
For one thing, the stadium is a perfect example of the classic extraordinary interest problem. For a few enthusiastic fans of Buffalo, the new stadium may decide which candidate will vote. However, in other parts of the state, a slight increase in tax burden is unwelcome, but not so problematic as to force voters to change power.
The team is getting smarter too Minimize transparency, This is bad for public policy, but good for team owners.Bills Stadium’s proposal was added to the state budget and dropped on unsuspecting taxpayers Just a few days before the final vote It was scheduled in Congress. With such a short schedule, it was not possible for lawmakers to fully analyze the issue, and there was little time for public interest groups to mobilize against the handouts.
Pegula was essentially able to blackmail New York taxpayers Threaten relocation If they didn’t pay, the team.Buffalo 49th largest metropolitan area In the United States, at least half a dozen cities across the United States without the NFL franchise are richer and at least twice as populous as San Diego, St. Louis, Portland, and Austin. Potential franchise in London..
The current lease expired in 2023 and the team had already indicated that the 2022 season could have been the last season in Buffalo.
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The threat was a slap in the face of loyal Bills fans who have supported the team for over 60 years in sub-zero temperatures. Lake effect snow, 4 consecutive losses in the Super Bowl Since the 1990s, there have been more defeat seasons than win seasons.
The NFL has long had fewer teams than the number of cities that can favor the franchise. As long as owners are willing to take advantage of the threat of relocation, I don’t think fans in any city, and taxpayers in any state, are safe.
This article will be republished from conversation, A non-profit news site aimed at sharing ideas from academic experts. It was written by: Victor Mathison, College of the Holy Cross..
Victor Mathieson does not work, consult, own shares, or receive funds for any company or organization that benefits from this article.