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Status quo won't pay the Bills

Still seething over the Buffalo Bills' desire to play a regular-season game in Toronto? Still think moving one date out of Buffalo amounts to nothing but sheer greed on the part of Bills owner Ralph Wilson?

For those maintaining that opinion -- and you've made it known there are a bunch of you out there -- consider the snowballing trend on the pro sports scene.

As just reported in Sports Business Journal, Madison Square Garden is constructing six new VIP boxes five rows off the arena floor good for all 300 or so Garden events. Price tag: $800,000. Status: sold out.

In addition, eight premium seating areas, called The Lofts, will put box owners 15 rows above the floor. Price tag: $300,000. Estimated annual revenue generated by the new MSG boxes: $5 million.

Prime midfield boxes in the new stadium being built for the New York Jets and Giants, scheduled to open in 2010, already have sold at $1 million apiece. Dallas Cowboys owner Jerry Jones is hauling in $1 million each for the prime boxes in the new stadium he's putting up in Arlington, Texas.

Affluence rules more than ever in pro sports. Companies with the financial wherewithal think nothing of shelling out megabucks to impress clients with the ultimate pro sports experience. Franchises cater to the desires of the elite with increasing frequency. Like it or not, the average fan has lost relevance, particularly in the major markets. There are bigger revenue streams to fish.

The high cost of private boxes in New York and Dallas portends greater financial burden for the Bills. Revenue increases drive up the NFL salary cap, further taxing the ability of smaller markets to compete for players. Sales garnered from premium seating are exempt from the per-game formula for sharing ticket revenue. Instead, franchises such as Buffalo's receive a cut through a league-wide revenue-sharing plan that, while lessening the financial hardship on smaller-market teams, nonetheless maintains the structure of major-market superiority.

The Bills are already reluctant participants with the NFL salary cap at $112 million. Their business model is based on actual dollars paid per season instead of the salary cap machinations employed by large-market teams. If there's a $10 million bonus due the Bills, count it all against the cap even though the actual cap hit is amortized. The salary cap is projected to increase to $116 million next season. It won't be long before it climbs above $120 million. The disparity between large- and smaller-market clubs is destined to widen.

There's limited recourse. The Bills have sold 156 of their 160 private suites. They're creating new premium seating next season by relocating the press box, which will provide a bump in revenue only if those prime locales can be sold. And even if buyers can be found, they won't be paying anywhere close to New York or Dallas prices. The cost of a Bills box ranges from $25,000 to $100,000. Do the math and it becomes readily apparent why Wilson vociferously attacked the league's initial revenue-sharing plan despite an inexplicable lack of support from similarly affected owners.

So how do the Bills strive to remain financially competitive? Reaching out to new markets becomes the logical first step. Maybe they can increase suite revenues for a day playing a game in Toronto. Maybe they can lure a few companies in Canada's expansive metropolis to invest in boxes here. Maybe they can expand their Canadian ticket base.

If they wanted to solve these problems the easy way, they'd just pick up the franchise and move.


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