Bills on a hook over ballooning new home costs

Article posted by Coliseum, August 16^th, 2023

Image: Buffalo Bills, Populous, Gilbane, and Turner

Three months since construction began on their new stadium, the National Football League (NFL) team Buffalo Bills are already facing a potential cash crunch with the latest projections having the team on the hook for as much as $300 million in cost overruns, four people with direct knowledge or who were briefed on the financial details revealed recently.

‘AP’ stated that what was initially estimated to cost $1.4 billion in March 2022, and increased to $1.54 billion months later, is now projected to have jumped to $1.65 billion and approaching $1.7 billion, the people said on condition of anonymity because the team has not disclosed those figures.

The Buffalo Bills are a professional American football team based in the Buffalo-Niagara Falls metropolitan area. The Bills compete in the National Football League (NFL) as a member club of the league’s American Football Conference East division. The team plays its home games at the Highmark Stadium in Orchard Park, New York (US).

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The 71,608-capacity Highmark Stadium is a stadium in Orchard Park, New York (US), in the Southtowns of the Buffalo metropolitan area. The stadium opened in 1973 as the Rich Stadium and is the home venue of the Buffalo Bills of the National Football League (NFL).

The 62,000-capacity venue of the Bills is being built adjacent to the Erie Community College’s South campus across the street from the Highmark Stadium, which would be demolished. The stadium has been designed by the celebrated design studio Populous, who has previously designed 12 other active NFL stadiums, with which the new Orchard Park stadium will share numerous design elements and features.

‘AP’ further stated that the rising price tag is notable because the Bills are contractually required to cover any overruns beyond the then-agreed to cost of $1.4 billion as part of the tentative deal the team reached with the State and the Erie County 16 months ago.

Increased labor and material costs were cited for the increased price, with one person saying one line item has already come in at $75 million over budget. Another person said a delay in sending out bids also had an effect in upping the cost.

Reliable sources stated that the stadium’s price tag has potentially reaching $1.9 billion.

The newly appointed Bills Chief Operating Officer (COO) John Roth called the projections premature and speculative at best – “We don’t know enough yet to confirm this”, noting only a small percentage of the contracts and bids have been completed.

Roth took over three weeks ago after Ron Raccuia was abruptly fired.

Raccuia was involved in stadium negotiations and took on an even larger role over the final year after the team Co-Owner Kim Pegula suffered a debilitating heart attack in June 2022. Raccuia was fired last month, with the Co-Owner Terry Pegula taking over as the team President and designating a three-person committee – headed by Roth – to oversee the Bills and the construction project.

A ballooning price tag would place a larger-than-expected burden on the Bills, who were initially committed to covering $550 million of the construction costs. Their share now stands to potentially match the taxpayer contribution of $850 million, with $650 million due from the State, and the remainder from the Erie County.

The Bills agreed to cover the cost overruns in exchange for having full control over the stadium’s design and construction.

Sources further revealed that overruns were expected based on the Bills’ projected cost of $1.4 billion. The Bills had initially pegged the cost of the stadium at about $1.5 billion before switching design firms.

The Bills are funding their share through the NFL’s G4 loan program. The rest of the money is being raised through a first-time seat licensing fee for the season-ticket holders.

It’s unclear how the Bills would make up the difference, and what cost-cutting measures they can make to the design of a 60,000-plus seat facility being built across from their current home in Orchard Park, New York.

The rising projections come as the Pegulas, who also own the National Hockey League’s (NHL’s) Buffalo Sabres, are expected to soon approach the City to discuss the long-needed renovations to the team’s downtown arena – the 19,200-capacity KeyBank Center in Buffalo, New York.

The KeyBank Center has not had a major upgrade since it opened in 1996, and needs work to its roof, concourses and the seating bowls.

The renovation needs are so significant that the project would have to be spread out over several offseasons.

Pegula has a projected net worth of $6.7 billion and made his fortune through the natural gas industry by discovering and then selling off the drilling rights of tracts of gas-rich fields across the United States.

Pegula, for example, helped fund his $1.4 billion purchase of the Bills in 2014 by selling the drilling rights on about 75,000 acres of land in Ohio and West Virginia for $1.75 billion.

New York (US)-based the National Football League (NFL) is a professional American football league that consists of 32 teams, divided equally between the American Football Conference and the National Football Conference.

The NFL G-4 program allows the NFL teams to receive assistance for stadium projects. The funding from the program is considered a loan and is repaid from the visiting team’s share of certain seating. A team applying for the loan is required to put up matching dollars.

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