The Buffalo Bills would be willing to sign a restrictive lease tying the team to Western New York if they get a satisfactory agreement with New York State and Erie County, team sources tell The News.
Serious negotiations on extending the current lease, which runs through July 2013, have not yet begun. The Bills want significant upgrades to Ralph Wilson Stadium, paid for by New York State and Erie County, in order to sign an extension.
The current lease, signed in 1997, cost the state roughly $120 million. It's safe to say the Bills are likely to seek considerably more this time.
How can the state and county be protected if Bills owner Ralph C. Wilson, who just turned 93, does not survive the length of the lease and the team is sold?
An obvious solution is for the inclusion of a repayment protection clause, stipulating the state and county would be repaid the full amount of their investment if the team moved during the term of the lease. The Bills view this sort of clause as reasonable, The News' sources say, presuming the stadium upgrades are acceptable to the team.
Such a clause would make the next lease much more restrictive than the current lease. The Bills could have gotten out of the current lease for $20 million starting in 2004, with the exit cost decreasing each year.
Coupled with the reality that anyone trying to move the Bills would have to pay a relocation fee to the NFL -- and that amount is at the discretion of the league's owners -- it would add a very substantial cost to anyone seeking to move the team.
Too prohibitive for any sale to a buyer from another city?
It's impossible to say. But it would give a hometown advantage to a buyer seeking to keep the team here.
Wilson declined to comment on what kind of protection the state and county would get for their investment or discuss other terms of a lease.
"We haven't gotten anywhere near that," Wilson said. "I'm not going to [discuss terms]."
Wilson reiterated the importance of structural and other improvements to the stadium, which opened in 1973.
"We want the state and the county to put some substantial money in to fixing this stadium up," he said. "It's crumbling right now. But we don't want a Taj Mahal. We just want a nice, clean place to watch a football game. So we want something that's a little different than what some other teams want. We just want a decent football stadium, and we'll take care of that when we talk to the state and the county."
The administration of Gov. Andrew M. Cuomo declined to answer questions about the situation involving the Bills, including if the governor would commit state funds to retain the team or if state officials have had any discussions with the team or local officials about the matter.
"The governor's office is committed to keeping the Buffalo Bills the Buffalo Bills," said Joshua Vlasto, a Cuomo spokesman.
>Yankees got state help
The state has been generous with other professional sports teams from New York City, however.
The state was a major player in the construction of the new Yankee Stadium in the Bronx.
The cost of that project, to state and New York City taxpayers, totaled more than $3.5 billion, according to then-Assemblyman Richard Brodsky, a Westchester County Democrat who headed the Assembly's corporations, authorities and commissions committee.
That $3.5 billion included tax breaks, interest on public bonds, direct cash grants of more than $600 million, parking facilities and a new railroad station at the stadium, the report said.
In a 2008 report on the financing deal for the stadium, Brodsky accused government officials and the Yankees of inflating threats to leave New York as the basis for a government infusion of cash grants and tax breaks for the project.
In Western New York, the Bills have hired an architectural firm to study the stadium's infrastructure, and the results of that study are expected to form the basis of the Bills' proposal in lease talks.
"We'll work something out, and if the state doesn't like it, they don't have to take it," Wilson said.
As all parties move closer to negotiations, the question of who controls the team in the event of Wilson's death becomes a bigger issue.
It's expected the team will be placed in a trust as a way to manage the business while Wilson's estate is being settled, sources close to the team say. That's a common occurrence. Settling the estate of a person with significant wealth is complex and could take a couple of years. There needs to be a structure in place to operate the team in the interim before it is sold.
Again, Wilson said he would not discuss the trust subject or how it might affect a new lease.
"Listen, I hate to go out on a limb and say this or that, because it always comes back to hit you in the face," he said. "So I'm not going to speculate on what's going to happen. I don't like to speculate on anything.
"We're trying to make this franchise, with Buffalo and Toronto and Rochester and Syracuse, into one of the best franchises in the country," he said.
>Special trust likely
Nevertheless, estate planning experts say a trust that makes particular sense in Wilson's case is called a Qualified Terminable Interest Property Trust, known as a QTIP.
A QTIP is a trust that enables the grantor to provide for a surviving spouse and also to maintain control of how the trust's assets are distributed whenever the trust eventually is dissolved. And, most importantly, no estate tax has to be paid with a QTIP in place.
"When you have a spouse who is not the mother or father of the children, many times the individual wants to provide for the spouse, but they want the family assets to go to their children," said Peter Grogan, a certified financial planner and a senior vice president at Harold C. Brown & Co. "We face this a lot of times with a family business and only one of the family members is going to continue the business but you have to be fair to the other heirs."
If a QTIP were applied to the Bills, Wilson's wife, Mary, would be entitled to the income from the annual profits from the team. The trust would own the team, and Wilson's management team could continue to run the team. Upon dissolution of the trust, the assets could go wherever Wilson dictated. Wilson has two daughters. A third daughter is deceased.
Potentially uncertain economic conditions are another benefit to having a trust in place.
>Bills' value to state
A QTIP trust can remain in place for the lifetime of the surviving spouse. That's not expected to be case with Wilson's estate. A trust is a bridge to a sale.
Exactly how long of a bridge?
Meanwhile, Wilson is focused on making the state appreciate the value of the Bills in the community.
"We pay the state a lot of money," Wilson said, referring to tax and other revenue the team generates. "We pay more proportionally than other teams. You take the Jets. They play in the New York metropolitan area. They have the New York name, and they train in Jersey.
"A few years ago, we signed a guy and paid him a lot of money, and he lived in Florida," Wilson said. "And there was a very large bonus attached to the contract, and he wanted us to say the contract was signed in Florida so that he would not have to pay taxes to the state of New York. We held out and I said, 'No, this fellow is going to play in New York, he's going to pay New York.' We had a long hard fight on it. He wanted to sign in Florida. He wound up signing in New York."
News Staff Reporter Tom Precious contributed to this report.