‘Found Money’ for Bills May Mean Price Tag Less Than Raiders Dome
Nevada’s $750 million contribution to the Raiders NFL home field will cost it more than New York’s $1 billion gift to the Buffalo Bills, if current proposals go through.
Budget discussions in New York remain ongoing, but it appears likely elected officials will commit state taxpayers to more than $1 billion for a new NFL stadium in Buffalo: $600 million from New York State and $250 million from Erie County to build the new arena in Orchard Park. Another $280 million in future maintenance costs will be covered by the public, too. That upfront $1.13 billion price tag is the second largest proposed taxpayer stadium subsidy ever, just trailing $1.186 billion in taxpayer backing for the new Yankee Stadium, which open in 2009.
More from Sportico.com
NFL Now Largest U.S. Shareholder in Genius Sports as Warrants Vest
Sports Agent Expands With New Clientele: YouTubing Data Scientists
Exact sources of money for the stadium have yet to be hammered out by New York, but officials have been suggesting using “found money” as a way to make the deal more palatable to taxpayers. Erie County’s commissioner said in a press conference last week that the county will use last year’s budget surplus of $75 million toward its $250 million commitment. New York governor Kathy Hochul, meanwhile, indicated $418 million in casino revenue sharing that has been under a long-running dispute with the Seneca nation will go to cover most of the state’s portion. New York seized the Seneca money last week, as part of a legal dispute over how much the state is owed from the tribe’s slot machine revenue.
How $1 billion could cost less than $750 million, the commonly stated figure for what Nevada taxpayers kicked in for Allegiant Stadium, is a matter of financing. By using the existing funds totaling $493 million as claimed, New York would avoid directly issuing hundreds of millions of dollars worth of bonds to fund the Bills stadium construction.
In the case of the Raiders, the vast majority of its taxpayer subsidy was funded by bonds. Clark County sold $645 million in municipal bonds for Allegiant in 2018. Assuming the bonds are paid through their term in 2048, Clark County will pay an additional $709 million in interest on top of the $645 million, bringing the total public funding to $1.35 billion, according to information in the offering document of the stadium bonds.
New York, however, in the past has shown it’s more than willing to commit even more of its taxpayer money than Nevada. The city used its ability to issue municipal bonds to fund even pricier stadiums for baseball’s Yankees and Mets, each of which opened new ballparks in 2009.
New York originally issued two sets of tax-exempt bonds for Yankee Stadium: an original $925 million bond and a follow-on issue of $259 million to cover additional costs from design changes and legal challenges. New York refinanced the bonds at a lower interest rate in 2020. Even at the lower rate, the stadium will still cost New Yorkers $1.85 billion by 2050, according to financial details in the refunding bond prospectus. The Mets’ Citi Field will cost taxpayers $1.19 billion, including principal and net interest payments, according to debt service details in the bonds issued for the ballpark in Queens.
Still, the distinction of total costs between Buffalo and other stadium projects may be missing the point, according to Michael T. Leeds, an economist with a focus on sports business at Temple University.
“It seems to me these people do not have a notion of what an opportunity cost is,” said Leeds in a telephone call. “They say, ‘It’s found money, it’s free money, it’s not going to cost anybody anything.’ Well, that is assuming there is absolutely nothing better to do with the money, like it would just be sitting underneath a mattress otherwise.”
Arguments that local taxpayers don’t really pay for the bonds because they’re backed primarily by “tourist taxes” on rental cars and hotel rooms are another example of an economically false narrative. Every tax for a sports facility means there is less tax capacity to fund infrastructure, schools and other projects, according to Leeds.
“They best thing they can seem to do is build a stadium that’s going to sit empty 350 days a year,” Leeds said. “The return-on-investment is equal to a medium-sized department store. You don’t see people spending a billion dollars to build a department store.”
Best of Sportico.com
