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Bills' buyout fee could pass $50 million

The Buffalo Bills, as part of the negotiations for a new lease at Ralph Wilson Stadium, may be asked to guarantee tens of millions of dollars to buy out the lease if the team were to leave Buffalo before the next agreement expires.

And that figure could climb well above $50 million, possibly as high as $100 million, observers of the lease negotiations say.

As representatives for Buffalo Bills, New York State and Erie County attempt to revive stalled talks for a new lease, that buyout issue hovers over the delicate negotiations: How much of a commitment – in guaranteed years or hefty buyout figures – are the Bills willing to make to keep the team in Western New York?

The flip side of that question, of course, is: How much of a commitment will the state and county need before committing taxpayer dollars to stadium renovations and annual maintenance and upgrades?

State, county and local officials, along with Bills fans everywhere, would love to see some sort of ironclad agreement tying the team to its Orchard Park home for multiple years.

But that's not how business is done in the National Football League these days. In fact, what's considered the most ironclad guarantee, in Jacksonville, allows the Jaguars to buy out their lease by paying off what they still would owe – estimated to be more than $100 million – or showing that they are losing money.

"I would think the Bills, if they didn't stay in Buffalo, would have to make the taxpayers reasonably whole," said one close observer of the negotiations.

When pressed to come up with a lease-buyout figure, this observer gave an estimate of $50 million to $75 million.

That number makes sense.

Fifteen years ago, a lease hammered out in July 1997 called for the state to provide $63.2 million in renovations to the stadium. That lease called for the Bills to pay back anywhere from $3 million to $30 million, depending on the year, if the team were sold and moved.

This time, the state will be asked to provide two to three times as much money toward improvements. So the buyout figure could rise proportionately, to well over $50 million if the team left early.

Former County Executive Dennis T. Gorski, who was involved in the negotiations with the Bills 15 years ago, agreed that the buyout figure might be two to three times the previous amount.

"I'm not privy to the negotiations, but as an outsider, I would think it would be in direct proportion to the amount of capital contributions by the state," he said.
How would the $50 million-to-$75 million figure make the state and county "reasonably whole"?

Because part of the state and county investment in stadium improvements and annual maintenance would be offset by tax revenue generated by the team before it left. That would include sales tax and payroll tax payments to the state and local governments. So the earlier the Bills leave, the more the team would have to pay to buy out the lease.

"You've got to have at least a number that keeps the taxpayers whole," said former County Executive Chris Collins, who studied the numbers behind the lease before he left office. "That's not an unfair transaction."

Collins estimates that the payroll taxes and sales tax generated by the Bills playing in Orchard Park are roughly $30 million a year – a direct benefit the state and county would receive from their investment in the county-owned stadium.

Given that amount, he believes it would be reasonable for the state to require the Bills to pay back the public investment minus the amount the state and county receive in taxes each year. The result would be a sliding scale with a hefty buyout clause in the early years that would diminish in the final years of the lease.

"This is really a financial business transaction," Collins said. "And while the emotions run high, I'm not sure that the negotiators on the side of the county and the state should back off making sure that the taxpayers are protected."

Fans would love to see another 15-year lease at Ralph Wilson Stadium, but sources have said the Bills are likely to insist on a shorter lease agreement, probably 10 years.

Those sitting at the negotiating table have been extremely tight-lipped about what's being said there. But there are public clues about what's happening.

With three parties at the negotiating table – the Bills, New York State and Erie County – common sense would suggest that the Bills would be on one side, with the two government groups on the other. But public comments from some of the principals nearly two weeks ago hinted at some friction between the local parties and the Cuomo administration in Albany.

The Bills' frustration over the lack of three-party negotiations for almost the last three months clearly was a shot across the bow of the Cuomo administration, even though Bills Chief Executive Officer Russ Brandon did not specifically point the finger at the state for the slow pace of lease talks.

The state, meanwhile, responded with a shot of its own.

"The only party that has not said they are committed to keeping the Bills in Buffalo is the Bills," said Josh Vlasto, a Cuomo spokesman, 11 days ago.

The stalled negotiations may force the three sides to hammer out an interim one-year lease extension. County Executive Mark C. Poloncarz told reporters that it's not likely that a long-term lease can be finalized in time to start major stadium renovations after the current NFL season, as he had hoped. The Bills are seeking somewhere between $200 million and $220 million in stadium improvements spread out over three years.

"It's a complicated three-party agreement," Poloncarz said almost two weeks ago. "And you've got to have everybody on the same page, and I'll say this: We're not on the same page with everything with the Buffalo Bills at this point, just like the state's not on the same page with the Buffalo Bills or Erie County. We're getting there."

It's not clear how much progress the county and state officials made when they met Friday in New York City. After those talks, Lt. Gov. Robert Duffy and Deputy County Executive Richard Tobe released a statement saying the state and county "are lockstep in their commitment to keeping the Bills in Buffalo."

Recent developments in the Bills' lease negotiations also underscore the impression that the Bills and New York State are on a far different wavelength than they were when the lease was negotiated 15 years ago.

Back then, the Bills were chummy with Gov. George Pataki, and county officials had an ongoing dialogue with the team for years before negotiations started. The lease deal was announced July 31, 1997, exactly one year before the old lease expired.

This time, the expiration is less than a year away.

It all adds up to a nerve-wracking situation for Bills fans with just 10 months remaining on the Bills' 15-year lease.