Dan Miner: The stadium game gets trickier and costlier

[Tim M]

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In April 2012, National Football League Commissioner Roger Goodell scheduled an emergency trip to the Minnesota state capital in Saint Paul.

 

Goodell’s mission was to convince state lawmakers to subsidize the construction of a new football facility, according to the New York Times.

 

Without the state’s subsidy, Goodell said the Vikings would be at risk of moving to another market.

 

The $975 million stadium deal eventually gained the necessary approvals — all it took was six years of political brinkmanship, regional flashpoint controversies and about $500 million of taxpayer subsidies.

 

Welcome to the future?

 

The Buffalo Bills fate in Western New York will require a major stadium project, either a new build like the Vikings or a retrofit like the recent project in Kansas City. The latter would likely be cheaper, but only in a relative sense, and modernize the Bills current digs in Orchard Park.

 

Ralph Wilson Stadium — which is currently undergoing a $130 million renovation — is considered structurally outdated to handle the technological requirements and revenue-producing capacity of a modern NFL facility.

 

Those options will be subject to deep analysis, debate and speculation over the course of the Bills’ current 10-year lease at Erie County-owned Ralph Wilson Stadium. The lease ties the Bills to Buffalo via expensive relocation penalties, though the penalty drops substantially for a brief period in year seven.

 

It also establishes a New Stadium Working Group, with representatives appointed by the Bills, Erie County and New York state, to spearhead the discussion.

 

The options will also be considered by any new ownership group that wants the Bills to stay in the region.

 

What form will the conversation take?

 

Business First analyzed two recent stadium projects that are relevant to the Buffalo market.

 

New build in Minneapolis:

 

Zygmunt Wilf took over as majority owner of the Minnesota Vikings in 2005 as part of a $600 million acquisition. He immediately pledged to keep the Vikings local and began publicly considering a replacement for the aging Metrodome.

 

Ground was finally broken in December 2013 for the new stadium, which will be built on the same site as the current Metrodome after that structure is demolished.

 

But the project is an example the deep strain a new NFL stadium can put on a region, especially in a place like Minneapolis-St. Paul, considered a mid-range market. Still, with 3.28 million people, the Minneapolis-St. Paul is about three times bigger than Buffalo-Niagara.

 

The eventual funding breakdown includes $150 million from the city of Minneapolis, funded by city’s hospitality tax, a measure which passed the city council by a 7-6 vote, according to the Vikings website and local news sources.

 

The state of Minnesota is financing $348 million of the cost, which received final approval from the state Senate in 2012. The Star-Tribune said the measure passed after “a decade of turmoil” and “an overnight session in which bare-knuckled bargaining sessions went on past midnight and final approval came at 4 a.m.”

 

And of course, there was the trip from Goodell and other NFL execs.

 

The Vikings are on the hook for $477 million, about 49 percent of the stadium cost. But that share is being subsidized by at least $100 million from Personal Seat Licenses, a one-time fee for the right to buy season tickets. Wilf once pledged to avoid PSLs, and the issue became another of the many controversies during the process.

 

The new stadium is expected to open in 2016, but the legacy of its planning process promises to linger for years.

 

Assorted efforts are still seeking to stop its construction, and the project is expected to be a significant issue in Gov. Mark Dayton’s re-election bid this year.

 

The Vikings estimated value increased from $796 million in 2011 to $1.01 billion in 2013, according to Forbes, largely on the back of the stadium deal.

 

 

Retrofit in Kansas City:

 

In many ways, the Chiefs are a comparable organization to the Bills.

 

They serve a relatively small region, with 2.04 million, about twice that of Buffalo-Niagara. And they count on a regionalization strategy that attracts fans and wealth from areas outside their immediate region.

 

In 2010, a three-year, $375 million renovation to Arrowhead Station was completed. The Chiefs venerable home saw its square footage increase by 40 percent, with wider concourses, more space for fans outside the stadium bowl, new seating levels and suites, a VIP club level and a host of other improved amenities such as more restrooms and concessions.

 

The Chiefs ended up contributing $50 million to the deal, while taxpayers were tabbed for the remaining $250 million, according to the Kansas City Business Journal.

 

Subsequent issues have come up — including lagging government revenue during the recession and contractor lawsuits – but the deal has been generally regarded as a success in the NFL and is being used as a template for a smaller scale project in Charlotte, home of the Carolina Panthers.

 

Though the Chiefs are considered a financially viable franchise, their tickets remain among the least expensive in the league. They do not charge “personal seat licenses.”

 

 

A number of projects in NFL megamarkets have been built recently or are underway, but they generally take on a different character.

 

The $1.6 billion New Jersey home the New York Jets and Giants, for instance, didn’t utilize a cent of public money. But the cost was split between two teams, makes wide use of PSLs in the wealthy and dense New York City region and is famously papered with the names of corporate sponsors to which the Bills would never have access.

 

The smaller the market, the more taxpayers are usually on the hook for such projects, said Marc Ganis, a Chicago-based sports consultant with close ties to NFL management.

 

“It’s an inverse proportion,” Ganis said. “The politicians have to be ready to step up and spend taxpayer dollars for something many would criticize them for if the Bills are to stay in Buffalo for generations to come.”

 

Asked about recent precedents for the Buffalo project, Bills President and CEO Russ Brandon said it’s hard to predict the details. He echoed NFL experts when he said that the more regional stakeholders working together on the project, the more fruitful the process will be.

 

“It’s really hard to understand or to know how our situation will unfold,” he said. “It’s difficult to handicap.”

 

Link: http://www.bizjournals.com/buffalo/blog/morning_roundup/2014/03/the-stadium-game-gets-trickier-and-costlier.html?page=all