Under lease, court could bar any new owner from moving Buffalo Bills - The Buffalo News

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Under lease, court could bar any new owner from moving Buffalo Bills

The new owner of the Buffalo Bills may be facing something far worse than a $400 million penalty if the owner wants to move the team to another market.

A new owner may end up paying hundreds of millions in additional legal damages. And there’s even a remote possibility of jail.

Far-fetched as that may seem, legal experts say the provisions of the Bills’ 10-year lease on Ralph Wilson Stadium and an accompanying non-relocation agreement are so tough that a new owner who wants to move the team would likely be in for a rough encounter with the law.

That’s because in those legal documents, the Bills’ founder and owner – Ralph C. Wilson Jr., who died March 25 – agreed that the county or the state could go to court to get an injunction barring the team’s move.

If the Bills’ new owner violated such an injunction, the owner could be charged with civil or criminal contempt of court.

A civil contempt charge and hundreds of millions of additional penalty dollars would be most likely, said former U.S. attorney and State Attorney General Dennis C. Vacco, who reviewed the non-relocation language at the request of The Buffalo News.

And in the highly unlikely circumstance that a new Bills owner were charged with criminal contempt after moving the team, the penalty would be even worse.

“It’s possible imprisonment,” said Deputy Erie County Executive Richard M. Tobe, the county’s point man in last year’s stadium lease negotiations.

Largely overlooked until now, the lease’s call for an injunction to prevent the team’s move is actually Buffalo’s first line of defense, an important part of what experts call the most ironclad stadium lease they have ever seen.

“I’ve been in this business a long time, and I keep referring to this as an incredible gift that Ralph Wilson gave to the people of Western New York,” said Marc Ganis of SportsCorp Ltd., a Chicago sports consulting firm with strong connections to the NFL. “The community will understand its value more and more as time goes on.”

And it all came to be because county officials and Gov. Andrew M. Cuomo insisted on strong provisions keeping the team in Buffalo, and because Wilson and his negotiators did not resist.

“Gov. Cuomo’s priority is to keep the Bills in Buffalo,” said Howard B. Glaser, director of state operations and senior policy adviser to the governor. “The ironclad guarantees in the final agreement reflect that, as well as shows the team’s commitment to Western New York. With this in place, both sides continue to work together and are focused on building a long-term future for the team and the region.”

Escape clause remains

With the Wilson family now contemplating a relatively quick sale of the team, the 10-year lease that the team signed last year does include one significant provision that could let the Bills flee to Los Angeles or some other market. A clause in the agreement allows the Bills to terminate the lease – and escape all its provisions tying the team to Buffalo – after its seventh year for a mere $28.4 million penalty.

But that escape clause applies only in the year 2020, meaning that any new team owner who wants to move the Bills would face almost insurmountable obstacles in every other year of the decade-long lease.

The Bills declined to comment for this story, but the team acknowledged the strength of the lease in a March 2013 statement that highlighted the importance of possible court action to prevent the team’s move.

“The three parties have agreed in principle to signing a binding contract that not only allows the public entities to get a court injunction preventing the Bills from moving before their lease term ends (specific performance), but further provides that if a court for any reason doesn’t issue such an injunction, the Bills must pay the public entities $400 million (liquidated damages),” the team said.

Much attention has been paid to that $400 million penalty, but in reality, it’s only a fallback protection for public officials aiming to keep the Bills in Buffalo.

More immediately, the non-relocation agreement specifically calls on the county or the state to seek an injunction in state or federal court in Buffalo to prevent the team from moving.

Judge could block a move

“This puts even more teeth into the lease,” said Vacco. “Kudos to the governor and the county officials who negotiated this deal. This is a very significant legal protection” against the Bills moving.

Given that the Bills agreed to that language allowing the county and the state to go to court to block a Bills move, Vacco predicted that any Western New York judge would be sure to grant such an injunction to keep the team in town.

Tobe explained how it would work.

“A court tells them: ‘You can’t breach the contract; you have to stay.’ So they would have to stay, and we would not seek a financial penalty,” he said.

But what if the new Bills owner just ignored the court order?

Legal experts say that’s highly unlikely to happen, given the potentially dire consequences.

The lease in written in such a way that the NFL would likely be implicated in the legal action if the Bills tried to move – which is why the league probably would fight any Bills owner who was trying to violate a court order, Vacco said.

In addition, ignoring the injunction would likely lead to civil contempt-of-court charges and another huge penalty on top of the $400 million called for in the lease.

“I’d say the contempt penalty is at least $400 million,” said Vacco, who downplayed the possibility of criminal contempt charges against the new owner that would result jail time, while conceding it’s theoretically possible.

Tobe emphasized that the lease prohibits the team from negotiating a move, entertaining offers to move or engaging a third party to arrange a move. Under normal legal circumstances, a party claiming a broken contract cannot sue until the breach has taken place – but the county and state sought and received the Bills’ approval to act before the violation occurs.

“Even commencing negotiations in contemplation of leaving – that would be a breach,” Tobe said.

Avoiding Baltimore scenario

The bottom line, then, is that public officials involved in the lease negotiations believe that the stringent non-relocation terms would prevent a repeat of the Baltimore Colts’ midnight escape to Indianapolis in 1983.

“We were aware of Baltimore and were doing everything we could to prevent relocating and to be given legal rights to act,” said Tobe, adding that the Bills lease “completely prevents” such a move.

But what if, for some unknown reason, a court refuses to issue the injunction keeping the team in Buffalo?

Then the team could leave – but only after paying $400 million in damages.

“The Bills agree that’s what the community would suffer,” Tobe explained. “The team is so important to the community that the damages are substantial. That’s what we most wanted.”

Not only are the damages substantial, they could be just too much for any new Bills owner to pay.

Tobe noted that the $400 million penalty is almost half as much as what the Bills are expected to sell for – meaning that, in essence, any owner wanting to move the team would have to pay a premium of nearly 50 percent, compared with any owner wanting to keep the team in Buffalo.

What’s more, the non-relocation agreement calls for that $400 million to be paid in a lump sum within 30 days of the team’s even seeking offers or beginning negotiations for a move. Sources said aides to the governor insisted on such a short deadline in hopes of making it impossible for an owner who wants to move the team to assemble the funds to pay the penalty on time.

Given that the NFL would also likely charge a relocation fee of some undetermined size, when you total it all up, the lease “creates a multi-billion-dollar cost to relocation,” Tobe said.

Stadium upgrade needed

The lease agreement reached by the team, county and state now looms as especially important in the days following the owner’s death. Speculation continues to swirl around the Bills’ future in Western New York as a trust charged with running the team will be obligated by fiduciary responsibility to accept the highest bid.

Sources have said that billionaires such as Donald J. Trump, Jeffrey E. Gundlach, Terry Pegula and B. Thomas Golisano could be potential bidders for the Bills. But it’s also possible that bidders without local ties – such as rock star Jon Bon Jovi, who has been linked to a group that would move the team to Toronto – will be involved.

But any non-local bidders would have to contend with Wilson’s wish to keep the team in Buffalo.

In his last and possibly most significant expression of faith in Buffalo as an NFL town, Wilson and his negotiators never used as leverage a threat to move to another city, according to those involved in the talks.

To be sure, Wilson got something for his team in the negotiation: $130 million in stadium improvements that are already under way.

Yet by agreeing to a lease that in effect bars the team from moving for several years, he gave the community time to deal with the fact that even with those upgrades, Ralph Wilson Stadium remains outdated by modern NFL standards. A New Stadium Working Group has been assembled to confront that reality, knowing all the while that the lease does allow the Bills to leave town relatively painlessly in 2020.

“That puts some burden on, especially the political leadership, to have to perform on the task force,” said Ganis, who served as a consultant during the departures of both the Rams and Raiders from Los Angeles.

Still, a key member of the New Stadium Working Group – Sen. Charles. E. Schumer, D-N.Y. – said the lease has bought the community the time it needs to build a strong future for the Bills in Buffalo.

“The lease has many, many safeguards that make it hard for the Bills to move over the next 10 years,” Schumer said. “This gives us the time to explore and evaluate all potential options for keeping the Bills in Western New York, so that we can present whomever the next owner is with viable and well-thought-out plans to keep the Bills here well beyond the next 10 years.”

email: jzremski@buffnews.com, rmccarthy@buffnews.com and mgaughan@buffnews.com

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