New York State government has a special talent for doing bad things badly. In most cases, government subsidies of sports stadiums are gigantic wastes of money — but the $1 billion handout being prepared for the billionaire owners of the Buffalo Bills is a giant waste of money that has the stink of corruption on it.
New York governor Kathy Hochul is a Democrat from Buffalo who formerly served as a lobbyist (“vice president for governmental relations”) for M&T Bank, which has a major sponsorship relationship with the Bills. Governor Hochul is spearheading the handout project. It is also notable that Hochul’s husband, Bill, is the general counsel for Delaware North, the main operator of food concessions at the Bills’ current stadium. His firm stands to make many millions of dollars continuing its business in the new stadium.
Think of Governor Hochul as Andrew Cuomo, except that she means to put her hand up the taxpayers’ skirt.
But even ex-Governor Groper himself is disgusted by the apparent self-dealing at work: “Unfortunately, at the worst moment, Albany dysfunction is back with a vengeance,” Cuomo wrote. “Spouses, mega-donors, and even old roommates have direct financial interests that benefit elected officials.”
Too gross for Andrew Cuomo — that’s a standard of sorts, is it not?
It is important to note that the government handouts — $850 million up front ($600 million from the state and another $250 million from Erie County), plus ongoing expenses — represent a majority of the cost of the $1.4 billion stadium project. The team’s owners, Terry and Kim Pegula, will put in only $335 million, chump change for a couple with a net worth north of $7 billion, according to Bloomberg. They are rich even by the standards of NFL team owners, being the ninth-wealthiest proprietors in the league.
Maybe they can pay their own bills.
We are generally skeptical of government “investments” in the entertainment and hospitality businesses, but this is not a question about which we must rely on guesswork: We now have decades of data regarding public subsidies for sports stadiums and similar projects, and the findings are in nearly universal agreement: These are a pretty good deal for team owners and investors and a terrible deal for taxpayers. With very few exceptions, subsidized sports stadiums do not spur a great deal of secondary investment leading to the creation of new businesses, new jobs, and new tax revenue.
These projects almost always overpromise and underdeliver. That is why no private investor usually wants to touch them unless there is a gigantic subsidy attached.
In fact, Buffalo’s current stadium is associated with very little economic activity of any kind: The Bills play their eight home games there each season, and the venue otherwise goes mostly unused. As sports economist Victor Matheson of College of the Holy Cross reports, the Bills’ current stadium has hosted about 30 big concerts, three college football games, and two hockey games — over the past 50 years.
Professor Matheson, who has studied similar stadium deals, calls the Buffalo mess “one of the worst deals for taxpayers I’ve ever seen.”
“There were many things to dislike about the Bills stadium project,” Professor Matheson writes. “At $850 million, it is the largest taxpayer handout for a new stadium in U.S. history even before additional subsidies such as annual maintenance costs, property tax exemptions, and tax exemptions for municipal bond interest are considered.”
Governor Hochul insists that the taxpayer subsidy will — mirabile dictu! — pay for itself over the long term. We very much doubt that. In the short term, it will pay handsomely for a handful of people with personal and professional connections to the governor and her cronies in Albany.
We’re calling a penalty.