Buffalo Bills, New York State, Erie County reach 'ironclad' 30-year deal to build $1.4 billion stadium

As a Buffalo native, Kathy Hochul knows that feeling well. So as governor, she was determined to guarantee the team's long-term future in Western New York.

“Buffalo Bills fans have enough stress,” she said. “I did not want them to have to worry about the future of the team.”

With a tentative deal for a new stadium in Orchard Park announced Monday in partnership with the team's owners and Erie County, she put those worries to rest.

The Bills would get a new $1.4 billion home with New York State and Erie County footing $850 million of the upfront cost to build it, but also with a pact that includes a 30-year lease that Hochul called "ironclad" and that County Executive Mark Poloncarz said will keep the team in Buffalo for as long as he lives.

Under terms of the deal:

• The public will provide $850 million to fund construction, pending approval by New York and Erie County lawmakers, “which is far less than anyone had anticipated,” Hochul said, referring to frequent speculation that taxpayers could spend $1 billion or more, reflecting a percentage of costs in line with other recent small market stadium projects. Ongoing maintenance and capital costs will add nearly $13 million a year.

New York is slated to contribute $600 million and Erie County $250 million toward construction.

• The NFL will provide a $200 million loan to Bills owners Kim and Terry Pegula, following a vote of league owners at their annual meeting Monday at The Breakers resort in South Florida. Up to $150 million of the loan is forgivable, repaid through the visiting teams’ share of Bills ticket revenue over 25 years, according to the terms of the league’s “G-4” loan program, which helps fund stadium construction and renovations.

• Team owners Kim and Terry Pegula are contributing at least $350 million toward stadium construction, plus the $50 million they will have to reimburse the league. A portion of those funds will come from the sale of about 50,000 personal seat licenses to all season ticket holders, beginning around $1,000 apiece. The Pegulas also are “responsible for any escalation in costs” to construct the stadium, Hochul said, a detail the governor called “quite significant.”

On Twitter, the Pegulas called the deal "another step" in the process of building a new stadium in Orchard Park. They also said they were grateful for the commitment Hochul made.

"While there are more hurdles to clear before getting to the finish line, we feel our public-private partnership between New York State, Erie County, led by County Executive Mark Poloncarz, and the national Football League will get us there," they said.

Hochul, who was raised in Hamburg, said her “No. 1 focus has been keeping the Buffalo Bills at home” during talks with the Pegulas and Poloncarz that began in earnest shortly after she became governor in late August.

“This has been a long process, tough negotiations,” Hochul said.

The highest direct public contribution to the construction of a stadium, prior to the proposed Bills deal, was the $750 million invested in the $1.9 billion Allegiant Stadium in Nevada. It was built to lure the Raiders franchise from Oakland to Las Vegas.

Locking the Bills into Western New York was a top priority and an immutable instruction Hochul gave her staff.

“I said, ‘I want it ironclad that if we’re going to make this commitment, that they have to stay,’ ” said Hochul, who describes the 30-year lease as including a penalty that would require the team “to pay back the entire cost of the stadium” if it were to move.

Poloncarz, 54, said of the deal: "There's a very good chance I many not even outlive this upcoming lease that we're entering right now."

Public documents related to the terms of the deal were not immediately available.

The deadline for passage of the state budget is Friday.

Erie County legislators have said they may take up to 30 days to approve the deal.

Each year, under the terms of the agreement, the state is responsible for paying $6 million for capital improvements and $6.67 million for maintenance and repair.

The county's future contributions, meanwhile, would be limited to surcharge revenue – essentially a tax – on stadium users who buy tickets, concessions and other items sold at the new facility.

Ongoing public costs are not unusual. The state and county pay $14 million each year for capital improvement and operating expenses under the 2013 lease agreement in place at Highmark Stadium, the Bills’ home since 1973.

‘The most cost-effective location’

The new stadium will be built directly across the street on Abbott Road, adjacent to Erie Community College’s South Campus, in what Hochul called “the largest construction project in Western New York history.”

She said it will create 10,000 construction jobs, although a detailed breakdown of those projections was not available Monday morning.

The venue is expected to open in 2026, before the upper deck at the current stadium needs to be replaced, per an engineering study commissioned by the county and completed in early 2021. The report also cited structural issues with the ring wall where the lower seating bowl meets the field and the stadium’s aging water and electrical systems.

A separate engineering study commissioned by the state determined building a new stadium was more cost effective than renovating the existing venue, which is expected to be razed for parking space.

The location was selected over an area near downtown Buffalo because it’s far less expensive and faster to build in Orchard Park.

The state-commissioned study by the engineering firm AECOM determined that building a stadium downtown would cost at least another $350 million because of extra expenses related to complex land purchases and infrastructure improvements, along with required environmental reviews that could add another $100 million.

The Bills also cited internal research that indicated ticket-buying fans preferred the suburban location.

“We’ve spent years studying the various locations and we know unequivocally that Orchard Park is the most feasible, the most efficient, the most cost-effective location,” Ron Raccuia, the executive vice president of Pegula Sports and Entertainment and the team’s lead negotiator, said in October.

The Bills have hired Kansas City architecture firm Populous to design the stadium.

The new venue is expected to seat 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.

A dome was ruled out based on numerous factors, including little to no expected return on investment, but about 80% of the seats will be covered by a partial roof or overhang to protect fans from inclement weather.

The stadium is expected to have a grass field and larger footprint than the team’s current 70,000-seat venue – about 1.5 million square feet, compared to about 900,000 square feet – which will allow for larger seats and concourses, other enhanced amenities and will help streamline gameday operations, PSE officials have said.

‘I want it ironclad’

PSE spokesman Jim Wilkinson told The News in August that a full-scale renovation of Highmark Stadium would cost at least $1 billion, compared to $1.4 billion for a new stadium.

“That’s just not realistic,” he said.

That sentiment was reinforced in November, when the state released a report it commissioned from the engineering firm AECOM. The study calculated the costs of renovation to be $862 million, but noted, “Given the extensive renovations necessary to bring the stadium up to current standards, it is considered highly likely that a renovation will encounter challenges throughout the design and construction phases that will drive the estimated costs higher.”

The study also pointed out that a renovated stadium is likely to last 15 to 20 years, while a new facility should be good for three decades or more.

A financial impact analysis, first commissioned by PSE and later included in the state’s AECOM report, calculates the Bills are worth $27 million annually in taxes. That includes about $19.5 million in income tax – a number that will rise with the NFL’s salary cap – plus another $7 million in taxes on retail purchases, hotels, gas and rental cars, and the Bills’ lease payments to Erie County.

Simple math makes the case, in Hochul’s view.

“The cost of the stadium is paid back in the 22nd year because of the revenues we’re going to be driving,” she said. “That would not be there if the team is not there.”

News staff reporters Sandra Tan, Stephen T. Watson and Mike Petro contributed to this report.