U.S. Senator Charles Schumer Announces His Plan to Keep the Bills in Buffalo

August 8, 2012 Updated Aug 8, 2012 at 2:43 PM EDT

By WKBW News

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August 8, 2012 Updated Aug 8, 2012 at 2:43 PM EDT

BUFFALO, NY (WKBW/Release) --Today, U.S. Senator Charles E. Schumer stood in front of Ralph Wilson Stadium to launch an effort to urge the NFL to alter its G-4 loan program in a way that allows the Bills to access up to $25 million for much-needed stadium upgrades. If successful, the loan will help ensure that the Buffalo Bills remain a long-term fixture of Western New York. Currently, the Bills and Erie County, which owns the stadium, and the Cuomo administration are working to finalize a new lease agreement for the stadium – with Erie County officials led by County Executive Mark Poloncarz and New York State officials appointed by Governor Andrew Cuomo.

“I will do everything in my power to keep the Bills right here in Buffalo. Because of the their unique situation, the bottom line is that the NFL’s loan program to upgrade stadiums, as structured, is practically useless for the Bills. Making some basic, common sense changes to this key NFL loan program is something that can generate significant resources for much-needed stadium renovations, and could do so in a way that provides significant incentive for any future owner to keep the team in western New York,” said Schumer.

The parties have acknowledged that terms of the new lease agreement will likely require significant investment in Ralph Wilson Stadium, on the part of all parties, to bring the facility up to date. It has also been widely publicized that the NFL has a stadium loan financing program known as G-4 designed to aid in these efforts. However, certain details of the G-4 program substantially reduce its benefits to the renovation of Ralph Wilson Stadium. In the past the NFL has been open to adjusting its programs to accommodate the unique circumstances and needs of small market teams like the Bills and Schumer is urging that again be the case with G-4.

Currently, G-4 provides the opportunity for teams to receive matching dollars on favorable terms from a league loan pool for investments the teams make in the renovation of their stadiums. However, to prevent abuse, that program requires all loans to be paid back in full to the NFL upon the sale of a football team. The Bills could likely be sold during the life of such a loan, which could be as long as 18 to 20 years, making this program disadvantageous if not completely useless for the Buffalo Bills, which could be sold before the loan term expires. While this rule is an important mechanism to protect the NFL from a new owner that could take advantage of the loan and liquidate the team for a quick profit, Schumer is calling on the NFL to make the real benefits of this program available to loyal team owners that have been principal owners for at least twenty years.

Schumer’s plan would make the real benefits of this stadium redevelopment funding available to the Bills, and will help to ensure that the taxpayers are not put at a disadvantage as compared to those of other communities where the long term ownership of the franchise is more stable.

Therefore, Schumer asked the Commissioner of the National Football League (NFL) to consider a recommendation that the league amend its G4 Loan Program so that franchises like the Bills can achieve the intended benefits.

In addition, Schumer is calling on the NFL to preserve and protect the “due on relocation” rule that is part of the same G4 Loan Program, as it serves as a critical protection for western New York fans and taxpayers alike that would be harmed by a new owner moving the team to a larger and more profitable market. By preserving this clause in the rule, any new owner would be penalized for moving the Buffalo Bills from Ralph Wilson Stadium during the life of the NFL loan. Schumer highlighted in his letter to NFL Commissioner Goodell that this key piece of the loan program must remain, as the team plays a vital role in the western New York economy and identity, and the rule would reward the Buffalo community for a half-century of support.

“Enabling the Bills can take advantage of the league’s loan program to pay its share for the needed renovation of Ralph Wilson Stadium is a game-changing play that can help secure the team’s continued success in Buffalo for decades to come,” said Schumer. “That’s why I am urging NFL Commissioner Goodell to consider an amendment to the ‘due on sale’ clause in the G4 Loan Program so the Bills can access the program and put the resources to use in the stadium renovation effort.”

Schumer noted that, specifically, a team, like the Bills whose ownership could change hands after at least 20 years under one owner would not have to pay back such a loan upon sale. The amendment would exempt a team from the “due on sale” requirement if the owner has held the team for at least 20 years.

“Additionally, I have asked the Commissioner to keep an ironclad hold on the G4 loan Program’s provision that requires a team to pay back the loan if a new owner relocates to a different city, which essentially penalizes any future Bills owner from taking the team from its loyal fan base here in Western New York during the life of the loan. This plan is a touchdown for the community’s football fans and taxpayers alike, and will hopefully usher in a significant NFL loan for the renovation of the Ralph Wilson Stadium, and help ensure that the Bills are in Buffalo to stay,” said Schumer.

Schumer highlighted that this program not only makes the NFL’s League-Level Loan Program advantageous to the Bills, but it would mean that less taxpayer funding will be needed to renovate the stadium. Currently, the Bills are crafting a lease with the county and state officials that requires an estimated $220 million in stadium improvements. In order to help off-set the cost of the upgrades, Schumer highlighted that it’s critical for the Bills to be able to take advantage of the G-4 loan program. However, as the rules stand, this stadium renovations program provides little to no incentives to do so. Without an amendment to NFL’s loan program to exclude teams who are being sold by a principal owner that has owned the team for at least twenty years, taxpayers could carry a higher portion of the bill for a new stadium than may be the case in other communities. In addition, Schumer noted that this amendment already exists in the NFL’s Revenue Sharing Program. With negotiations moving forward, Schumer called on the NFL to move ahead with this rule change as swiftly as possible.

The NFL’s G-4 program aims to fund a portion of the stadium development costs for clubs currently pursuing new or renovated facilities. The program offers a matching loan for any investment a team makes in their stadium as long as that investment is above $25 million. Under the current rules the loan pays out over the construction period and then when construction is completed the loan begins to amortize. Teams are then able to use the visiting team share (VTS) of club seat revenue, which would otherwise go directly to the revenue sharing pool, to pay back the balance of the loan over 15 years. Currently the program has a clause that says if the Team is sold during the life of the loan then the entire balance of the loan is due on sale. Given the likelihood that the team will be sold at some point during construction or before the loan is repaid, Schumer is seeking an amendment to this rule. Under Schumer’s amendment as long as the new owner keeps the team in Buffalo they can continue to use the VTS revenue to pay back the loan, however, if the new owner were to move the team they would then have to pay back the loan in a lump sum and return to giving their annual VTS revenue to the leagues revenue sharing pool. Schumer pointed out in his letter to Commissioner Goodell, that such an amendment would still protect the G-4 program and that the NFL has precedence for making similar amendments, including a nearly identical clause in their revenue sharing language.

Schumer has a long history of working with the NFL to help strengthen the Buffalo Bills. As soon as Commissioner Goodell began his tenure in 2006, Schumer met with him to secure his commitment to preserve small market teams like the bills. Additionally, Schumer formed a coalition among his colleagues in the U.S. Senate who represent small market teams to work together and lobby the NFL to protect these teams. Schumer believes that NFL teams are a key economic engine in places like western New York, Green Bay, and Pittsburgh and are also vital to the collective regional culture. The presence of a national league team is a large factor when it comes to decisions of businesses to bring their operations, other tourist attractions and economic development opportunities to a region.

A copy of Senator Schumer’s letter to NFL Commissioner Goodell appears below:

Dear Commissioner Goodell:

I write today to ask you to consider amending the League-Level G4 Loan Program in a way that will make it possible for the Buffalo Bills to take advantage of the programs benefits without harming the league or the other teams in the program. As you know, I have been a longtime supporter of the Buffalo Bills and have continually advocated for initiatives that will help keep them in Buffalo. I am also aware that you have been a staunch advocate for the Bills and I know that you remain committed to continuing to ensure their viability in western New York. As the Bills work with local officials to finalize a new lease agreement for Ralph Wilson Stadium the opportunity for you to once again demonstrate your commitment to the success of the Bills in Buffalo has presented itself.

As you may know, the terms of the new lease agreement are still being negotiated but it is likely that they will require a significant investment in Ralph Wilson Stadium on the part of the team, and the local taxpayers. The G4 Loan Program is designed to help teams and communities offset that investment by providing loans for stadium upgrades that are then repaid through visiting team ticket revenue over a number of years. This program could be of tremendous benefit to the Buffalo Bills and local taxpayers because it would match any stadium investment the Bills make between $25M and the total costs of renovations. However, one clause in the loan program could prevent the Bills from taking advantage of this program and would then put further financial burdens on both the team and taxpayers.

The current program requires that the loan be repaid in full upon the sale of the team. This clause is a reasonable way for the league to protect itself from someone buying a team for a short period of time, taking advantage of the loan, and then liquidating the team and turning a profit. However, in the case of the Bills, the team could be likely to be sold at some point during the life of the loan but not for the purpose of a quick profit. By requiring the loan be due on sale we make it disadvantageous for the Bills ownership to utilize the program. However, a simple amendment like the one that already exists in the League’s Revenue Sharing Program would allow for the team to take advantage of the program and would also help keep the Bills in Buffalo for the long term. The ‘due on sale’ clause of the G4 Loan Program should be amended to include the same exception that the revenue sharing qualifier includes: it does not apply for teams who are being sold by a principal owner that has owned the team for at least twenty years. Another option would be to amend the G4 Loan Program due on sale clause to not apply in a situation where the sale of the team results from the estate sale of the principal owner. Either of these exceptions would still protect the program from those looking to turn a quick profit while allowing teams like the Bills to take advantage of the programs benefits.

Furthermore, the G4 Loan Program has a ‘due on relocation’ clause that I would ask you not to amend. By amending the due on sale clause and making it possible for the current Bills ownership to access the program while also protecting the due on relocation clause it could create an additional financial penalty to any new owner who tried to move the team during the life of the loan. That new owner could then be confident that as long as they keep the team in Buffalo they could continue to use visiting team ticket revenue to pay down the balance of the loan but should they decide to move the team they would need to pay off the balance of the loan using their own funds right away.

By making this change you can help offset the burden on local taxpayers and the team, you can help Ralph Wilson Stadium get the upgrades it needs, and perhaps most importantly you can help ensure that there will be yet another reason to keep the Bills in Buffalo even after they are sold. Thank you so much for your consideration and continued support of the Buffalo Bills.