The National Football League will help finance a new stadium for the Buffalo Bills.
“The bottom line on it is we have to get a new stadium in Buffalo,” Goodell, a Jamestown native, said. “The governor has recognized that. It has to be a public private partnership. … She has shown great leadership in bringing the parties together … but there’s a lot to negotiate here.”
Team owners Kim and Terry Pegula can apply for a loan from the league to help cover construction costs, up to $150 million of which could be repaid by the league’s other 31 franchises, through the visiting team’s share of Bills ticket revenue.
In order to receive this maximum benefit, the Pegulas must commit at least $200 million of their own equity to the project, a portion of which can come from selling personal seat licenses to season ticket holders. That means at least $350 million of the stadium costs could be privately funded.
These amounts are established by the league’s “G-4” loan program, which helps fund stadium construction and renovation projects.
The league’s G-4 funding “is a critical component to our stadium deal,” Pegula Sports & Entertainment executive vice president Ron Raccuia told The Buffalo News, “as well as every other stadium deal that’s been done throughout the NFL.”
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The revenue-sharing program, along with the NFL’s salary capthat prevents mega-market cities from outspending their comparatively smaller competitors, make it possible for the Bills to play in Buffalo.
New York State, Erie County and PSE, the Bills’ parent company, expect to announce this month an agreement to finance construction of a $1.4 billion open-air stadium on Abbott Road in Orchard Park, across the street from Highmark Stadium, which will be razed for parking as part of the project.
The Bills envision the new stadium seating between 60,000 and 62,000 fans, with room for up to 5,000 more spectators on a standing-room-only party deck, a capacity in line with historic attendance figures. Approximately 80% of the seats will be covered by a partial roof or overhang. The stadium could open as early as 2026.
The Bills hope an agreement is announced in time for NFL owners to vote on the proposal at the next league meeting, from March 27-30 in Palm Beach, Fla.
Gov. Kathy Hochul on Friday described negotiations as “very positive” during a visit to Buffalo and told reporters she expects a deal will be reached in time to include in the state budget, which is due April 1.
“There are issues to work through,” Hochul said, “but I feel very confident that they’ll be resolved in time to have conversations during the budget process.”
“To keep it open air is part of the Buffalo bravado,” Gov. Kathy Hochul said in January, “which people love to showcase.”
Though no agreement is final and details of the monthslong negotiation remain elusive, the public is likely to contribute more than $1 billion, or around 73% of the construction costs, which is consistent with stadium deals in smaller markets across the NFL. A Buffalo News analysis of the of the 21 NFL stadiums built in the last two decades found that in the nine smallest cities, public funding covered 73% of the costs. In the 12 larger markets, public funding paid for one-third of the construction.
The bulk of the public funding is expected to come from the state, and the remainder from the county, which will own the stadium and act as its landlord, mirroring the arrangement in place for half a century.
The Pegulas and NFL, through the G-4 program, are expected to pick up the remainder of the costs.
Private funding
The NFL’s G-4 program, in place since 2011, and its predecessor, G-3, which was established in 1999, are named after the sections where they appear in the league’s Collective Bargaining Agreement with the NFL Players’ Association, last ratified in 2020.
Hochul essentially confirmed that the negotiations are on track, and that she has nothing to announce – yet.
“It’s become pretty much a standard component of the financing structure of every stadium deal,” Pittsburgh Steelers owner Art Rooney II, a member and former chairman of the league’s stadium committee, told The News.
The details of the G-4 program are complicated, and every agreement is unique, based on the project.
Here are the basics:
• The Pegulas are eligible to apply for up to a $200 million loan from the league to help cover construction costs.
• The first $150 million of the NFL’s loan is repaid over 25 years through the visiting team’s share of Bills ticket revenue, NFL spokesman Brian McCarthy confirmed in an email exchange with The News. This amounts to approximately 33% of home ticket sales.
• The next $50 million would be repaid by the Pegulas over 15 years at an interest rate that’s competitive with the market, McCarthy confirmed.
• In order to qualify for the maximum assistance from the NFL, the Pegulas must secure public funding and commit at least $200 million of their own equity toward the project.
The Pegulas intend to raise a portion of their share of the stadium costs by selling PSLs to season ticket holders, a standard component of most stadium deals, The News reported in September.
The Bills plan to sell approximately 50,000 season tickets, all of which will require an initial one-time purchase of a PSL to help fund construction of the new venue. The most affordable PSLs are expected to cost around $1,000 apiece, which would raise a minimum of $50 million. The sale of PSLs will likely account for less than half of the Pegulas’ contribution.
Because the NFL’s $150 million contribution is reimbursed through ticket sales and a chunk of the Pegulas’ contribution will come from PSLs, much of the private costs for stadium construction are ultimately borne by football fans.
A small trove of documents released by the state gives insight into both the negotiating strategies and potential plans for a new Bills stadium.
“You can make a similar argument that it is these very fans that are paying the salaries of the players and the front office,” David Carter, a professor of sports business at the University of Southern California and the founder of the consulting firm Sports Business Group, wrote in an email to The News.
“In fact, the fans are willingly paying – directly or indirectly – for most of the sports business infrastructure. Without them, no stadium workers would be needed, no advertising agencies would be retained to help sponsors sell fans products and services through the league’s media partners, and so on. In short, the costs associated with sports are borne by the consumers – the fans, one way or another.”
Erie County Executive Mark Poloncarz said it no longer makes financial sense to try and renovate the Bills' current Highmark Stadium.
Next steps
The Bills plan to update the NFL’s joint stadium-finance committee about their plans and negotiations for public funding this Wednesday in Palm Beach.
A deal could be announced in advance of that committee meeting, but it isn’t required.
The more pressing deadline looms at the end of the month, when NFL owners are expected to vote on an agreement at the next league meeting.
At least 3/4 of the league’s owners – 24 of 32 – must vote in favor of the proposal.
“If the committees approve it, it’s a foregone conclusion,” said sports consultant Marc Ganis, who has worked with the majority of NFL teams.
Hochul has said that the state’s share of stadium financing costs will be included in the final annual budget, which must be approved by the Assembly and Senate by April 1.
The expense was not included in the initial $216.3 billion budget she proposed in mid-January.
“We’ll be able to find the resources in the budget,” Hochul said Friday. “There’s unrestricted money, there’s money for economic development, there’s money for infrastructure. So there are various sources. We’ll be able to identify what is needed to ensure that the Buffalo Bills stay here in Western New York.”
Erie County will also fund a portion of the construction costs and must agree to a deal.
County legislators have said they will take up to 30 days to review any proposal.
“I think the idea is we’re going to get a deal done that’s right for all, that benefits the community, that ensures the Buffalo Bills are the Buffalo Bills,” Erie County Executive Mark Poloncarz said in January.
The Bills have one season remaining on their 10-year lease at Highmark Stadium, which expires in July 2023. The Pegulas refuse to sign an extension until a deal is reached to build a new stadium.
Once the state, county and PSE come to an agreement, produce a term sheet or memorandum of understanding and vote to finance construction of a new stadium, the parties will draw up longform agreements.
These include a lease for the new venue, a lease extension at Highmark Stadium and a community benefits agreement, which require another round of approvals.
The process could take several months to complete. Conceptual drawings could be released in April.
The new stadium would have a grass field and far larger footprint than the team’s current 70,000-seat venue – approximately 1.5 million square feet, compared to about 900,000 square feet – which will allow for larger seats and concourses, other enhanced amenities and help streamline gameday operations, PSE officials said.
The upper deck of Highmark Stadium, which opened as Rich Stadium in 1973, was reinforced in 2018. But the most recent engineering study, completed by DiDonato Associates on behalf of Erie County in early 2021, recommends replacing it in five to seven years.
State, county and team officials agree another renovation is not cost effective and Highmark’s deteriorating condition creates urgency to build a new stadium.
“We’re moving forward every day as if the project is happening,” Raccuia said. “The Pegulas are putting a lot of money at risk by starting a project without having a deal in place, because we want to meet that 2026 opening for the new stadium.”
Tim O'Shei
Enterprise Reporter
I've been a journalist and author since age 16 and write about social and political issues, popular culture, sports, business and anything - and anybody - that is interesting.
