Bills staying in Buffalo - The Economics 101

[JohnC]

Good Post. A lot of people don't seem to get the fact that higher ticket prices do not mean more profit. Jerry Jones & many other owners have a HUGE NUT to crack paying off what they owe. Those fancy new stadiums cost PLENTY & will take a long time to be paid off.

 

A new owner could keep the team in Buffalo with only the cost of the team to pay off. The stadium is paid for & could be updated much cheaper than building a new one. I am sure the State & county would pay for renovations with a new long term lease, & ANYONE that wants a new stadium to be built in Buffalo should think again. Season ticket holders in particular should beware of a new stadium.

 

In Tampa when the new stadium was built, people that had seats on the 50 yd line 10 rows up were moved to the 20 yd line 40 rows up. On top of that they were forced to pay a seat license of a about $1500 & the cost per ticket went up about 150%. ALL of the PRIME seats were held for Corporations, people that had season tickets for YEARS could not get a crack at them.

 

Fbillsfan#1, The Kansas City Chiefs are having their stadium, which is very similar to the Ralph, overhauled through a three year renovation project. The Chiefs are paying about a third of the costs and the other two thirds are covered by the local authorities.

 

Of course that can't happen while Ralph is the owner because he refuses to contribute a nickel for an upgrade of the facilities. In fact, if you want to see Ralph howl just mention the possibility of a new stadium. He won't go for it because he isn't willing to pay an increase in rent after the completion of the project. In addition, he knows at his age he wouldn't get much usage of a renovated stadium, so why bother.

 

Nothing is going to change until Ralph leaves the scene. The situation right now suits him perfectly. He is making money and the franchise is appreciating. There is no incentive for him to do anything dramatic in alterating how things are done. The status quo is working for him very well.

[JohnC]

Why is the rogers center not an option? Its MUCH better that the crap hole the Vikes play in.. Also... LA has a much bigger TV market + corporate sponsors which Buffalo has very little of. We cant even sell the naming rights of Rich Stadium... err Ralph Wilson Stadium.. let alone sell boxes to companies trying to impress clients... I bet sky box sales in Dallas exceeds tickst sales in Buffalo..

 

Jerry Jones was crazy rich from things other than football. RW isnt.. His wealth is going to be realized once he passes on and this team is sold. I doubt very much that ralph has allot in his personal bank account which is why he seems cheap...

 

The naming rights to the stadium are not sold for the simple reason that Ralph Wilson controls the stadium and he won't allow it. His peculiar reasoning is that he just doesn't like stadiums named after products. It doesn't bother him that the stadium is named after a buffoon.

[Bflojohn]

The global market argument here, IMO, holds no water because the product would not sell oversees. The hoopla would wear off quickly, and the mere notion of running this venture from a scheduling standpoint is absured. The sheer quality of play would suffer terribly, not to mention injury concerns from fatigue, and jet lag alone would cause athletes too much stress overall, especially for the next scheduled game. Additionally, expansion of the current schedule of games would be pushed to 18 undoubtedly. I'm completely skeptical when this analysis crops up, and soccer would strangle this brand of American Football, without question! The occasional game played in London or Mexico City could garner revenue as a curiosity, but I find it hard to believe that, going forward, this will work. I think I am persuaded by the idea that the overwhelming cost of relocation and the league approval side of the equation make me hopeful that Buffalo Bills football will remain viable for the foreseeable future.

[LGB]

Fbillsfan#1, The Kansas City Chiefs are having their stadium, which is very similar to the Ralph, overhauled through a three year renovation project. The Chiefs are paying about a third of the costs and the other two thirds are covered by the local authorities.

 

Of course that can't happen while Ralph is the owner because he refuses to contribute a nickel for an upgrade of the facilities. In fact, if you want to see Ralph howl just mention the possibility of a new stadium. He won't go for it because he isn't willing to pay an increase in rent after the completion of the project. In addition, he knows at his age he wouldn't get much usage of a renovated stadium, so why bother.

 

Nothing is going to change until Ralph leaves the scene. The situation right now suits him perfectly. He is making money and the franchise is appreciating. There is no incentive for him to do anything dramatic in alterating how things are done. The status quo is working for him very well.

The Bills lease will be up in just a couple of years and any new lease deal will likely require some taxpayer-funded renovations. Will WNY be willing to come up with two thirds of the cost? If not, will the new owner(s) look elsewhere for state/local money or low interest loans? Taxpayer money won’t likely come from cash strapped LA. The Vikings are in the same boat stadium-wise and it could be that the Jags might soon play in Orlando.

[CodeMonkey]

The global market argument here, IMO, holds no water because the product would not sell oversees.

There is no doubt that you are right. American football will never be popular outside of North America. It is too slow of a game. For proof you only need to look at the NFL Europe experiment. I travel to Europe a lot for business and you may occasionally find someone over there who went to a game out of curiosity, but they always ask what it is about the game that captivates Americans. I have no answer other than tradition. Our parent(s) watched and we got used to the game and now we watch. They view it as watching paint dry ... 5-15 seconds of action followed by 40 seconds of talking about the next play. American football will certainly never compete with football (soccer) outside of the USA. Relocation out of the USA in my opinion will not be viable.

[gobillsinytown]

The "elephant in the room" as far as the subject of relocation goes is this: The economy. Any team wanting to relocate at this point faces a major hurdle, in that the capital funding markets are still moving very slowly. Even with a

so-called "sure bet" like the NFL, investors are going to be very hesitant to lend capital at the moment. Obviously the Jags are a perfect example of the NFL not necessarily being a "sure bet". And with the cost of new stadiums now at

800 million to 1 billion dollars and all the other associated fees to enter the NFL owners club, I would be suprised if we see any relocating of teams any time soon. At least until the overall economy makes some sort of significant improvement, which in my opinion is 1 to 2 years out.

 

I'm also starting to wonder if Ralph has been more affected by this recession than most other owners. Aren't most of Ralph's businesses related to construction? The construction industry has been one of the hardest hit sectors since the recession began. I wonder if that's the real reason Ralph is so focused on the costs of running the team....maybe he's using the team's profits to pump up his other businesses? D

[rstencel]

the rogers center is not an option for a full nfl season. another facility needs to be built.

LA has no current stadium equipped for a franchise, either. another facility needs to be built.

the cost, then, of relocating a team to either city doubles, unless taxpayers are willing to share the load on building a stadium.

 

jw

 

Doubt it is going to be the Bills, but LA does have a buyer with stadium plans in place, and most of the work done, including permits and all of the buyouts in place to build a brand new 800 million dollar stadium. The group that has this in place according to SI, it is a group headed by billionaire Ed Rouski, and he would require majority ownership in a team before building the stadium however.

 

Timing would have to be right in the sale of the Bills, and no local group would have to come forward to put a big enough bid in to please the Estate Attorneys, but if timings right, Stadium doesn't look like a big issue for LA market anymore.

[rpcolosi]

1.) its jerry jones, not jimmy

2.) you are assuming the bills market can't support higher ticket prices (we can probably get an average of $75-100/ticket, even higher with a winning product - don't believe me, look at the highest priced tickets for a single sabres game. it is MORE than doable)

3.) you are only comparing us to the largest markets, as opposed to markets more in our niche - ie minnesota, jacksonville, oakland, new orleans, etc. we will never be a boston or dallas in terms of revenue, thanks for the common sense.

4.) revenue sharing is only partially built on ticket sales. luxury boxes obviously play a role and we will always be behind in that. however, merchandise sales are huge. the importance of a winning product is none more noticeable than this. in addition to allowing for better prices in marketing it also allows for higher merchandise sales which boost the franchises revenue. again, don't think this is possible, simply look at the sabres who had the highest jersey sales in the NHL when they switched logos.

 

my point is not that you are wrong, but that you are taking data and drawing one conclusion off of it. of course if the NFL was made up of all Dallas, NE, Washington and NY teams we'd be effed. fortunately it is not. Will we ever be a top market? no. but we can be a financially sound lower tier market - and thats just fine with me.

[GrudginglyPessimistic]

There is no doubt that you are right. American football will never be popular outside of North America. It is too slow of a game. For proof you only need to look at the NFL Europe experiment. I travel to Europe a lot for business and you may occasionally find someone over there who went to a game out of curiosity, but they always ask what it is about the game that captivates Americans. I have no answer other than tradition. Our parent(s) watched and we got used to the game and now we watch. They view it as watching paint dry ... 5-15 seconds of action followed by 40 seconds of talking about the next play. American football will certainly never compete with football (soccer) outside of the USA. Relocation out of the USA in my opinion will not be viable.

The amusing thing about this post is the description of American football as like watching paint dry is exactly the same phrase I have heard American football fans use to describe what watching soccer (or world football) is like.

 

There was a great Simpson's episode which was built around world football coming to the US and a contrast presented for laughter of two announcers (the US announcer droning on describing one pass and then another and then another and the foreign announcer with great excitement describing one pass and then another and then another).

 

When it comes down to it watching virtually any sport is like watching paint dry (I went to a fight and a hockey game broke out, baseball which I love is the ultimate paint drying experience compared to either American or world football).

 

Ultimately the sport comes down to the rivalry and the tradition embodied in the game really cam make it a marketable product.

 

The actual factors which may determine how well American football can be expanded overseas probably has more to do with how other countries view America during and after the Barack Obama episode than the nuts and bolts of the particular game.

 

Again NFL owners will want to go where the money is. The money is going global and so too will the NFL regardless of whether the author of this note, Homer Simpson, or whoever finds a particular game to be like watching paint dry.

 

Ironically, this is one of the better hopes for the Bills staying in Buffalo. The market is not going to be found in the particular stadium or municipality, the market and the money are eyeballs to get the networks to ship real money to the team owners. The team owners are not the individuals of the bygoing and bygone era of the Halases or the Wilsons. This type of owner is dead or dying.

 

What will happen in the future for the Bills is going to be determined by the wishes of 70% or so of the owners who have an absolute veto or who is in fact a QUALIFIED highest bidder for Mr. Ralph's estate.

[Kipers Hair]

I will keep it short and not so sweet.

 

Dallas Cowboys - Seating capacity 112,000 (including standing area) at an average ticket price of $160 (Wow!).

This works out to $17,920,000 per game just in ticket sales.

 

Buffalo Bills - Seating capacity 73,967 at an average ticket price of $51

This works out to $3,772,317 per game just in ticket sales.

 

We will ignore luxury box income, concession, and parking income (which all favor Dallas VERY heavily) for the sake of simplicity. But you get the point.

 

So, because we are in the era of profit sharing in the NFL, Jimmy Jones in particular, but most NFL owners get boned in a major way when playing the Bills. The Cheatriats, with the second highest per ticket price in the NFL, have to suffer with this every year.

 

So, if the NFL owners had a choice to say, leave the Bills in a small, semi-destitute market like Buffalo and keep the price structure the same. Or have them go somewhere that the ticket prices could double (along with the parking etc.). What do you think they would do? What would you do if you were in their shoes?

 

That has been true for quite some time. But now it is about to get even more interesting. No salary cap. So Jimmy Jones and the other big market owners can throw gobs of cash at the top players to stack their teams. Think Steinbrenner but for football. What are the small market teams going to do? You got it, bend over.

 

I have no crystal ball and I certainly am not a NFL owner and do not claim to have any inside information. And of course I could be all wrong. But looking at it from a business/economic viewpoint, this is how the numbers add up for me.

 

As with the "True fans only" thread, please serious responses only. No reason for "real" fans to tell me I suck for bringing this up. I already know how you feel about the whole Bills Moving subject.

 

Thanks.

You can't ignore what you are aksing to ignore as it has a lot of worth. Also - a franchise in WNY is worth say $700MM - the same franchise in LA is with at least another $200MM to the owner...you can't ignore this as it's all the owners money....

[PromoTheRobot]

When Ralph passes, the Bills will change. I have a hunch that the NFL does not want to totally abandon a good drawing market. Mostly for the PR hit; they don't wasnt the black eye they got from Baltimore and Cleveland again. That's why I'm betting the Bills move to Toronto with 3-4 games still played at RWS. The NFL will try to maintain a connection to Buffalo and WNY.

 

PTR

[weehawk]

Who says a new stadium is needed? San Antonio has one rarein to go and the NFL Commish has already said that SA is on the NFLs radar.

 

The team will likely move eventually. I simply dont see anyone buying them for a billion and then keeping them in Buffalo for their current average of $35 a ticket. If they do somehow stay, ticket prices will skyrocket and then we'll see what happens. None of this solves the problem of filling all of those luxury seats with high-paying corporations. My guess is that they barter a fair amount of those seats away now in return for various goods and services. A new owner is going to need CASH in order to service the debt that they will assume to buy the team.

 

When it happens, you can thank the State of NY for losing the team. Utterly corrupt politicians and unions have destroyed the state's job base along with any potential for future growth.

 

 

 

There is also the economic cost of buying a team for close to $1b, building a stadium for close to $1b, and paying a relocation fee on top of that. There's not many people who have that kind of money. Is there really a market out there that will re-coup the $1b+ over just keeping the Bills in Buffalo?

[FIVE]

sigh...

 

The Bills aren't moving! they were 12th in operating profit last year!! Christ folks. Look before the NFL owners would ok a move (and YES they have to vote and approve the move) you must have a new owner that will have to try and get more out of a market that sells out consistently when fielding a crappy team!

 

You cannot tell me a new owner brings in a great GM, HC, Staff etc that this fan base wouldn't pay 10-15.00 more per ticket. You bet your ass they would. We haven't sold naming rights either. So until several of those options are explored, no way they let the team move.

 

Next, Where to? The Bills are NOT going to friggin LA. Where in this Economy are you going to find a City that will foot the bill for an 800 million to a billion dollar stadium?

 

Look this team is going no where for a long time IF they are allowed to move at all. If anything I can see the NFL allowing 2-4 teams to fold up tent and go back to 28 teams, before anymore moves are made.

 

I love your optimism. The bills aren't going anywhere.