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Bills, NFL could help financially on stadium; League has program to ease public burden

The last time the Buffalo Bills worked out a new lease deal for Ralph Wilson Stadium, in 1998, New York State was on the hook for the whole $63 million in renovations.

The Bills paid none of it.

This time around, the Bills are asking for stadium renovations costing between $200 million and $220 million, according to Erie County Executive Mark C. Poloncarz.

But now the Bills -- along with the National Football League -- are being asked to provide tens of millions of dollars for the improvements.

Times have changed in the NFL.

Long gone are the days when the public sector was expected to carry most, if not all, of the load for a new stadium or massive renovation project, as New York State did in helping fund a new 15-year lease in 1998.

Having an NFL team pay a sizable amount for stadium renovations is far from unprecedented.

In both Kansas City and Green Bay, other "small markets," the team and the NFL combined to pay for at least one-third of the renovations.

Nobody's saying whether the Bills are willing to pay that high a share. Those close to the negotiations have put a gag order on the specific dollar amounts discussed, so the only people who know the details aren't saying.

The silver lining for the Bills, though, is that any share above $25 million the team pays toward a large stadium renovation project could be matched by the NFL.

It's part of the an NFL loan program called G-4. The loans are a vehicle for the NFL to help finance either the construction of new stadiums, or the renovation projects at existing ones, such as The Ralph.

The program is designed to help stabilize franchises seeking to build or renovate stadiums. Under it, the league can match, up to a certain point, a contribution a team makes to the project.

Those close to the current lease negotiations among the Bills, Erie County and New York State say that the G-4 funding is considered key to helping pay for the renovations needed in any new lease agreement. The Bills' current stadium lease runs out July 31, 2013.

Here's how the program would work:

Let's say that state, county and Bills negotiators agree to $200 million in stadium improvements. Under the G-4 program, if the Bills agreed to pay $25 million of that total -- that's hypothetical -- the NFL could match that amount with another $25 million.

Such a scenario would leave the remaining $150 million to be paid for by the public sector.

Similarly, if the Bills paid $40 million, the NFL could match it, leaving $120 million for the public sector.

The combined team and league contribution to the renovation project would have to be at least $50 million to be eligible for a G-4 loan, NFL spokesman Brian McCarthy said.

Those involved in current lease negotiations have studied both the Green Bay and Kansas City examples, meaning that the Bills and the NFL may be asked to pay a similar share of the renovation total.

It's not known how deeply the Bills would be willing to dig into their own pockets to fund the renovation.

The Green Bay Packers and the NFL combined to pay 43 percent of the $295 million renovation of Lambeau Field in 2003, while the Kansas City Chiefs and the league contributed one-third of the $375 million renovation of Arrowhead Stadium in 2010, according to John Vrooman, a sports economist at Vanderbilt University.

Asked to hazard a guess about what could happen in Buffalo, Vrooman cited the Kansas City case, where the team and league combined to pay one-third.

"The Chiefs' split was more like what will probably happen for the Bills," he said.

Bills officials repeatedly have said they won't comment on any details of lease negotiations, but they told The Buffalo News in April that a renovation would include structural and infrastructure improvements to bring the stadium up to modern standards and a total renovation of the exterior gates to create communal areas for fans to gather around the stadium.

Others who closely track the business side of the NFL say that it could be difficult for Erie County to extract much private funding from the Bills and the NFL.

"It's a great concept, but in reality, what the Bills are asking for is not a stretch, a couple of hundred million," said Marc Ganis, president of the Chicago-based consulting firm SportsCorp Ltd.

Ganis said the NFL loan programs never were intended to replace public funding for stadium renovation. Instead, they were meant to help teams in large markets that couldn't get the type of public assistance that small-market teams such as Buffalo have received because of their limited ability to generate revenue.

"Look at what's going on around the country in football stadiums," Ganis added. "The Bills are not asking for what they otherwise could ask for. I think everybody recognizes that."

The G-4 loans serve as an incentive to push teams into building or renovating their stadiums.

Bills owner Ralph C. Wilson Jr. knows that if his team contributes $25 million, then his fellow owners, in effect, would chip in another $25 million.

That's because the G-4 "loan" is repaid through revenue shared by all of the league's teams. It's paid back by the visiting team's share, or VTS, of "club seat premium" receipts.

"Those VTS funds otherwise go to the VTS pool, which is shared by all clubs," NFL spokesman Brian McCarthy said.

So the other 31 NFL teams, in effect, would help pay for the local renovations.

"The G-4 loan program is unique in that the repayment to the league is basically secured by the league's own revenue," Vrooman said.

That also means, of course, that the Bills have helped subsidize stadium construction and renovations in other cities.

"They've been paying for the other teams, so it's not like this is free money for the Bills," Ganis said. "The program has been supporting other teams, and the Bills have been paying into it, and they've never received any money from the program directly."

Whatever the final price tag of the stadium renovation sought by the Bills, it likely won't be the only cost of the new lease. The last time a deal was struck, Erie County picked up the cost of annual upgrades, stadium maintenance and game-day expenses -- costs that likely will be part of any new deal.

That could push the total price tag, depending on the length of the lease, up in the neighborhood of $300 million.

That's a lofty total, for sure, for an existing stadium, but by NFL standards, it's quite modest.

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Paying to renovate The Ralph

The NFL would share some of the costs under a new financing program

>What is G-4?

It's the new National Football League financing program, to help pay for new stadiums and renovation projects.

>How would it work in Buffalo's case?

If the Bills contribute a certain negotiated amount to renovations, the NFL then Mcould contribute a matching amount, up to $100 million.

Together, the team and NFL contributions make up the private share of the renovation cost. The rest would be publicly financed.

>Would this be a loan or a grant?

In effect, it's both. The G-4 "loan" from the league is paid back out of an NFL pool of money, from the Visiting Team's Share of premium-seat receipts.

So the other 31 NFL teams would share in funding Buffalo's renovations, just as the Bills have helped pay for other teams' projects.