By Tim O’Shei
BUFFALO, New York (The Buffalo News) — Everything, everybody and every business has its place.
That includes the Buffalo Bills.
For me, reporting on the negotiations for a new stadium over the last several months has crystallized Western New York’s place in the National Football League: It is important. It is respected.
“While it is a small market,” Dallas Cowboys owner Jerry Jones told my colleague Jason Wolf, “it’s tremendously visible.”
But when you look at the numbers, and when you recognize that the Bills receive far more from the NFL’s revenue-sharing program than they contribute, this becomes clear: It is not vital.
Whether you agree or disagree with the reality that New York State and Erie County will contribute the bulk of the funding required to build a projected $1.4 billion stadium in Orchard Park, remember that.
“The best thing that Buffalo has going for them about having an NFL team in the future is that they have one today,” sports consultant Marc Ganis, who has worked with the majority of NFL teams, told me in the fall. “I can’t emphasize strongly enough: Don’t lose what you’ve got, because Buffalo would not be thought of as a relocation market down the road.”
Dominating a small market is not enough
The Bills are one of the NFL’s best teams both on the field and on television. According to Sports Business Journal, the Bills’ local television ratings of 47.16 was No. 1 in the league during the 2021 season.
That’s largely attributable to the excitement generated by quarterback Josh Allen’s arm and the team’s first-place divisional finish. It’s also a byproduct of operating in a smaller media market. Buffalo, which is 53rd in Nielsen’s market rankings, is second smallest in the NFL, behind only Green Bay, which is 69th.
When you’re that small, it’s easier to dominate your local market rankings. That point is borne out by this year’s Super Bowl teams. The Cincinnati Bengals had a 28.85 local household ranking in their market, which is 36th in the league. The Los Angeles Rams, meanwhile, had a 10.52 – a comparatively low number, but unsurprising considering that their city is second-largest in the country and has another NFL team, the Chargers.
Big ticket sales don’t equate to big revenue
This reaffirms what people in Western New York already know: The Bills have a loyal and dedicated fan base. That’s true, too, in ticket sales, regardless of how the team performs. Between 2015-19, when the Bills had a 40-40 record and two playoff berths, they sold 89% of Highmark’s seating capacity. In 2021, the team sold 60,000 season tickets – their entire allotment.
Despite that success, the Bills are one of the NFL’s lowest-performing teams in terms of revenue generation.
Ron Raccuia, executive vice president of Pegula Sports and Entertainment, which oversees team owners Terry and Kim Pegula’s holdings, told me in October that “the Bills consistently rank in the bottom quartile in the NFL in terms of revenue generation.”
That means the Bills are among the bottom eight of the NFL’s 32 clubs, and it’s likely because the Buffalo market lacks the corporate base to sell pricier tickets and sponsorships.
Put another way: The Bills are hot on TV, but comparatively lukewarm as a cash-generating entity. They’ve built a business model that works, but it would likely be more lucrative in a bigger city.
The Bills exist in Buffalo because of NFL revenue sharing
The NFL, meanwhile, is a money machine, with annual revenues of $12 billion in 2020 and $16 billion in 2019. The league’s revenue-sharing program delivered $309.2 million to each team last year, including the Bills.
Let’s compare that to the revenues generated by the Bills’ healthy ticket sales: According to internal PSE documents released by the state in late 2021, the Bills averaged a net ticket revenue of about $5.2 million per game from 2015-19. That averaged to a $51.7 million per season – a healthy number, but only about one-sixth of what the league’s revenue-sharing delivered.
The revenue-sharing program, along with the NFL’s salary capthat prevents mega-market cities from outspending their comparatively smaller competitors, make it possible for the Bills to play in Buffalo.
“Without those two, the Buffalo Bills could not field a competitive franchise,” Ganis told me.
That, in part, may explain why Gov. Kathy Hochul has been agreeable to at least two of the team’s key negotiating points: Placing a new stadium in Orchard Park and making it an open-air facility.
“I know that they are a very valuable asset,” Hochul told The News’ editorial board last month. “For them to be in a market as small as Buffalo is rather extraordinary, and I don’t take that for granted. That’s why I have to work out a deal that is beneficial to them, knowing that there is other competition out there. I’m aware of that, and it is something that I lie awake and think about sometimes.”
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