New York Governor Kathy Hochul is facing renewed criticism for committing state funds to a new stadium for the Buffalo Bills NFL team, the construction of which has boosted the Bills’ valuation by billions of dollars and contributed to a major payday for their owner, Terry Pegula, according to a report in the New York Post.
In 2022, Kathy Hochul negotiated a deal with the Bills that gave the team $850 million in state monies for the Highmark Stadium, which is slated to open in 2026, as Pegula – who bought the Bills in 2014 for $1.4 billion – was threatening to move the franchise to Austin, Texas. Critics at the time noted that the owner of the team was legally unable of carrying out that threat if the state made a good-faith effort for the team to stay, which could have been done through bonds rather than a gift of funding for the privately owned stadium.
According to The Post, the stadium deal worked out by Hochul with the team “played a significant role” in raising its estimated value by over two billion dollars this year. Pegula sold 10% stakes in the team to a private equity firm, Arctos Partners, and to a consortium of investors led by NBA legend Vince Carter, at a valuation of $5.8 billion earlier this month. New York state has no equity and will see no direct returns despite its pivotal role in setting up the Bills for their current financial success.
Governor Hochul has defended the deal she negotiated two years ago, with a spokesperson stating that “in 2013, the state agreed to a deal where nearly 75% of the Bills’ stadium renovation was funded by the taxpayers — today, this new stadium is being constructed with less than 30% in state funding, a figure that is substantially below other recent NFL stadium projects.” However, the two most recent football stadiums built in the United States – SoFi Stadium in Los Angeles and Allegiant Stadium in Las Vegas, both built in 2020 – received no public funding at all.
While Hochul’s deal with her hometown’s football team is not rare in the context of American sports, where owners like Pegula extract concessions from local governments on threat of departing to another city (which is unheard of in much of the rest of the world), the public funds committed to these projects are generally justified on the basis of economic benefits downstream. A Hochul spokesperson claims that the stadium project will inject $2.1 billion into the state’s economy and generate 10,000 jobs, but this projection is highly disputed by experts.
Roger Noll, a Stanford University professor and expert on the economics of sports, is on the record that “NFL stadiums do not generate significant local economic growth, and the incremental tax revenue is not sufficient to cover any significant financial contribution by the city,” because they are more seldom-used than other economic infrastructure. “By comparison, other billion dollar facilities – like a major shopping center or large manufacturing plant – will employ many more people and generate substantially more revenue and taxes.” Indeed, Highmark Stadium will not even have a roof, which will continue to leave the facility out of the running for hosting the Superbowl and its associated economic boost due to Buffalo’s blistering winters.
Terry Pegula’s net worth is estimated at around $7 billion.
