Victor Matheson called the Buffalo Bills’ $1.4 billion stadium deal with New York State and Erie County “one of the worst” in the history of professional sports venues – and people were paying attention.
Matheson, a sports economist at the College of the Holy Cross, wrote an opinion piece last month in the online publication The Conversation titled, “I’ve studied stadium financing for over two decades – and the new Bills stadium is one of the worst deals for taxpayers I’ve ever seen.”
He pointed out that the $850 million public subsidy for the construction of the stadium is the largest total dollar amount ever for such a project, noting that “the Bills deal evokes the bad old days” of localities paying for large percentages of stadiums being used by billionaires. He criticized the Bills and NFL for using the possibility of relocation as a way to “extort New York taxpayers,” and asserted that two decades of research on the financial impact of sports teams and stadiums demonstrate they “have little or no impact on local economies.”
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Matheson’s article was widely shared on social media and discussed in broadcast interviews and podcasts. The essence of the information on which he bases his arguments is broadly accepted as accurate: Gov. Kathy Hochul, who committed $600 million toward stadium construction from the state, has acknowledged the possibility of the Bills moving as a driving factor in negotiations. The same is true for Erie County Executive Mark Poloncarz, who negotiated a $250 million contribution from the county.
“I agree with the studies that are out there that building stadiums don’t generate a mass amount of economic development,” Poloncarz told The News in early April. But “the psychological blow would be huge,” he said, were the Bills to leave Western New York.
“We’re investing in the stadium for the quality of life in this community and to keep the Buffalo Bills here,” Poloncarz said, “because we don’t want them to be the San Antonio Bills. We don’t want them to be the San Diego Bills. And once we lose our football team, we’re never getting it back.”
This is where people looking at the same set of facts begin to diverge in their opinions. How much does Buffalo’s small-market status in the NFL matter when negotiating a stadium construction deal tethered to a 30-year lease?
The News explored the situation in a recent 90-minute interview with Matheson.
Here are excerpts of the conversation, which have been edited for clarity and brevity:
Q: Ten NFL stadiums have been built since 1998 in which the public has shouldered a larger share of the construction costs than the 60.7% the public is paying for the Bills’ new stadium. How is this one of the worst deals?
Matheson: Obviously, there are some subjective ideas about what you think is a good deal or a bad deal, and those are totally legitimate ideas. This is how I put it: Let’s imagine you’ve got two teenage kids and they want mom and dad to buy them a car. One comes up and says “Hey, I’ve got this used Toyota Corolla. It’s $20,000. Mom and Dad, I want you to pay $18,000 of it, and I’ll come up with the other $2,000.”
Child number two says, “I want a Tesla. It’s $75,000. But don’t worry, Mom and Dad, I’m not going to expect you to pay the whole thing. I only want you to pay $50,000.”
Which is the worst deal for you as a parent?
I don’t think either of those has an obvious answer, but you can make a contender for either of those cases. I don’t think it’s unreasonable to say the kid who’s asking for $50,000 for the Tesla is the one who’s most out of line, even though they’re willing to put in a third of the money themselves.
Q: In your article, you cite the trend of fewer public funds going toward NFL stadium construction projects over the last decade but did not mention that those stadiums are all in big markets. Since 2009, those include Los Angeles, Las Vegas, Atlanta, Minneapolis, San Francisco, New York and Dallas. Looking at the last 25 years, our analysis shows that in big markets, the public tends to pay for about one-third of the construction costs. In small markets, it’s about 73%. Is it fair to compare the Bills stadium deal to the stadium deals in those far larger markets?
Matheson: You make a good point. One of the issues, obviously, is when you’re Los Angeles, you can say, “Look, the NFL needs us more than we need the NFL.”
We have seen smaller places not offer up as much money. There really isn’t anywhere as small as Buffalo (No. 53 media market) in terms of NFL franchises other than Green Bay (No. 69) – but you can see Minneapolis (No. 14), that was more like 50%. We saw St. Louis (No. 23) was not willing to offer more than about $400 million, so about half the amount of subsidy. Obviously, they lost their team there. San Diego (No. 27) said, “We’re not going to pay at all, and we’re going to be just fine without an NFL team.”
It is clearly the case that we have some examples of small cities giving huge amounts of money, 15 years ago and longer. We haven’t had a lot of the small cities in the last decade or so trying to put money into new stadiums. And the owners do have leverage. It’s a much more credible threat for the Bills’ owners to say, “Hey, we’re going to move out of Buffalo,” than it is the owners of Dallas or the owners of the Giants saying they’re going to move out of these huge markets instead.
Q: You also said the $850 million in public money is not from Western New York but all over the state. But the $250 million from Erie County is clearly local money. And $418 million of the state’s $600 million contribution is coming from Seneca casino revenue in Western New York. Granted, the state could do whatever it wanted with those funds. But isn’t that also local money?
Matheson: I don’t have an argument with that. Most of these small casinos are generating primarily local dollars. It’s local gamblers who go there and spend their own local money, which means that it is a little bit more local money than state income tax, which comes from people all over the state. And to that extent, saying, “Hey, we’re bringing in this money and let’s reinvest it into the Western New York area,” that’s great. And I think that’s a totally reasonable thing for New York to do.
The question is: How should you be investing that into the Western New York area? You could put this into schools, highways, libraries, health care, you can cut property taxes. Of course, there are a thousand ways to spend $400 million of casino money. The stadium is probably in the very bottom of benefits to the area.
Q: What should a Bills stadium deal look like?
Matheson: A Bills stadium deal in an ideal world would be like any other business deal. If you’re a businessperson, build your own factory, build your own restaurant. If you want to build yourself a new house, we shouldn’t expect someone else to build it for you.
I wouldn’t have been terribly upset if a new Bills stadium deal included a privately financed stadium, but with some significant public investments in infrastructure so people can get to the stadium. That’s certainly reasonable. But that’s not at all what we have here. Right? What we have here is the public being expected to pay 60% of the costs and huge amounts of extended tax breaks and maintenance costs for the Bills’ own stadium for the foreseeable future.
Q: Gov. Kathy Hochul said the Bills are worth about $27 million in annual taxes to New York State and that the stadium is paid off in about 22 years. About $19.5 million each year comes from players’ income taxes and the rest from hotel taxes, fuel taxes, rental cars, etc. You’ve disputed the veracity of those smaller revenue sources and argued that if the Bills were to leave Western New York, much of the money attributed to the team’s economic impact would continue to circulate in the local economy. But the money used to pay players’ salaries largely comes from the NFL’s massive TV deals and league revenue sharing, not ticket sales or money from the local economy. So if the Bills were to move, wouldn’t the approximately $19.5 million the players pay the state in annual income taxes disappear with them?
Matheson: That’s actually one of the first really good arguments that has been made here. There is inflow of money, very specifically, from television deals, that comes into Buffalo that then gets spent on players. At least a portion of that gets taxed, so it sticks in the local economy. Certainly a comprehensive analysis might take that into account.
But then again, let’s look at the counterpiece here. Basically, the Bills and the governor are saying, “Hey, we should be counting all of that income tax as a gain for the state. And therefore, we should be willing to spend any of the income tax being gained on that stadium.” If we were to apply that to every business, that would basically mean that no one in the state ever contributes to the state; they just contribute money back to building the factory they work in and building the store that they work in.
If we apply that to the state as a whole, goodbye health care, goodbye roads, goodbye education, goodbye sanitation, goodbye transportation, goodbye all of the things that we expect government to provide for us. Because basically, you’re giving a group of extremely wealthy athletes a complete pass saying, ‘“Don’t worry about contributing to the public good, in terms of paying your fair share of the state’s taxes. We’ll just put that back into the stadium that you play in, which thereby will increase revenues for the league and thereby increase your salaries again.”
No other workers get that.
Q: This ties back into the idea that the Bills are a unique property, right? There are only 32 NFL teams. So there’s a limited number. We’re not talking about a factory or a bakery, or any other unlimited businesses that could potentially be built. And so, as you put it, they have the ability to hold the government hostage, in a sense, because they can leave and they’re not replaceable?
Matheson: That’s exactly right. They are extremely effective at leveraging their monopoly that they’ve created for themselves to extract as much money as they possibly can out of local fans and local taxpayers.
Q: The $600 million coming from New York to build this stadium and keep the Bills in place for 30-plus years represents 0.27% of the state’s $220 billion annual budget. What do you think about how much discussion we are having as a society over a tiny fraction of one year’s budget?
Matheson: It shows one of the ways we’re kind of crazy about sports. I have colleagues here in my department who study what I would call “important things,” like genocide, like macroeconomics. We’ve got a $20 trillion economy and they don’t go on podcasts. I write something about this and it gets viewed half a million times on The Conversation and on Yahoo Sports, right? This is definitely a sexier topic. And it gets a lot more discussion than we should be thinking about.
The entire spectator sports industry in the entire United States, all put together, is roughly the same size as Johnson & Johnson, a drug company. Right? The NFL is roughly the same size as Sherwin-Williams paint. Right? You guys would not be interviewing me if I was an expert on retail paint stores. It’s just not very exciting. But somehow we talk about this in terms of sports and everyone’s interested.
You’re right, $850 million isn’t that much. That being said, zero isn’t that much either. And that’s how much maybe the billionaire owners here actually deserve.