One way Ralph could keep the team in Buffalo

[BillnutinHouston]

Let's say Ralph WILL sell the team to the highest bidder upon his death, as some have speculated. Is it out of the question that he could do this and STILL lock up the Bills in Buffalo before he goes? Just for discussion purposes, I say yes.

 

What is the one HUGE chip Ralph has in his possession at this stage of the game? It's in his sole and exclusive right to execute a new stadium lease on behalf of the team.

 

Ralph will be entering into new lease negotiations with the County - maybe they've already started. Let's say he says to the County, let's establish a fee for the team breaking the lease, in the event that the franchise relocates. How does, say, $300 million sound?

 

My theory is, if Ralph agrees to a lease-breaking fee that essentially makes future relocation of the franchise cost prohibitive to a new owner, has he not accomplished long term stability of the franchise in WNY from beyond the grave? Doesn't a new owner have to abide by all the terms and conditions of the lease agreement that Ralph signs?

 

It is true that this plan would make SOME investor groups think twice about entering the bidding (if they happen to not like WNY or have their hearts set on locating in a particular city like LA), but I submit that this arrangement would still generally allow market forces (supply and demand) to dictate the team's sale price, meaning a pretty penny for the Wilson estate. This would allow Ralph to ensure a nice sale price, all the while locking up the Bills in WNY for the foreseeable future.

 

Tell me where my plan is flawed - for example, does the league have jurisdiction over the terms of a stadium lease and therefore the ability to shoot down constructs like this? Etc.

Edited October 12, 2011 by BillnutinHouston

[May Day 10]

that doesnt really allow for maxing out to the highest bidder. In fact, if the team is locked in WNY, it would likely eliminate competition.

 

Also, if there is a buyout of $300 Million, that price may devalue the team and come off the sale price.

[BuffaloBill]

Remember there are two (or three or four depending on how you want to look at it) parties to the stadium lease. The primary parties in the lease agreement are the county and the Bills (other parties may be the State and the NFL). The county (probably alsong with the state) will have to pony up fairly significant money to get the deal done. It will also be interesting to see if the NFL fronts any funds towards stadium improvements.

[Albany,n.y.]

Why not just make it an iron clad lease with no escape clause at any price?

[Mr. WEO]

Let's say Ralph WILL sell the team to the highest bidder upon his death, as some have speculated. Is it out of the question that he could do this and STILL lock up the Bills in Buffalo before he goes? Just for discussion purposes, I say yes.

 

What is the one HUGE chip Ralph has in his possession at this stage of the game? It's in his sole and exclusive right to execute a new stadium lease on behalf of the team.

 

Ralph will be entering into new lease negotiations with the County - maybe they've already started. Let's say he says to the County, let's establish a fee for the team breaking the lease, in the event that the franchise relocates. How does, say, $300 million sound?

 

My theory is, if Ralph agrees to a lease-breaking fee that essentially makes future relocation of the franchise cost prohibitive to a new owner, has he not accomplished long term stability of the franchise in WNY from beyond the grave? Doesn't a new owner have to abide by all the terms and conditions of the lease agreement that Ralph signs?

 

It is true that this plan would make SOME investor groups think twice about entering the bidding (if they happen to not like WNY or have their hearts set on locating in a particular city like LA), but I submit that this arrangement would still generally allow market forces (supply and demand) to dictate the team's sale price, meaning a pretty penny for the Wilson estate. This would allow Ralph to ensure a nice sale price, all the while locking up the Bills in WNY for the foreseeable future.

 

Tell me where my plan is flawed - for example, does the league have jurisdiction over the terms of a stadium lease and therefore the ability to shoot down constructs like this? Etc.

Conisdering the last buyout started at 20 million and was down yearly to 2 million currently, good luck with that.

 

Anyway, there are 2 obvious flaws. First, it would be far cheaper for a new buyer (if he was to move the team) to just pay the rent every year of the lease than to pay a ridiculous penalty. Second, the new owner would immediately want to re-negotiate those lease terms that he didn't agree to or sign and of course the county would roll right over, as they always do.

[rpcolosi]

becuase a wealthy owner can still buy the team, keep in WNY for 10 years, and then bounce. This doesnt work, though the County will still put a lease-breaking clause in there as it is standard. The likely scenario is that his wife assumes control and she, not the estate, sells it to whom she desires. This circumvents the need for an estate to be involved at all with the sale.

[dollars 2 donuts]

that doesnt really allow for maxing out to the highest bidder. In fact, if the team is locked in WNY, it would likely eliminate competition.

 

Also, if there is a buyout of $300 Million, that price may devalue the team and come off the sale price.

 

 

This.

 

It is the equivalent of putting Bills fans on his shoulders only to turn around and kick his family hard in the privates...so to speak.

Edited October 12, 2011 by dollars 2 donuts

[SRQ_BillsFan]

Ralph could easily put in his will that the team needs to be sold to the highest bidder that would keep the team in Buffalo as his 1st option with a minimum price, if not meet all then sold to the highest bidder a where.

 

No lease needed.

[georoc01]

My understanding was that the Bills wanted to negotiate a new 10 year lease but Erie County isn't interested.

[LabattBlue]

My understanding was that the Bills wanted to negotiate a new 10 year lease but Erie County isn't interested.

Negotiations haven't even started, so I don't know how this can be the case.

[tennesseeboy]

okay okay..I'm a homer but I think there is a strong case to be made for keeping the team in Buffalo. We have Western New York and Canada and cover a pretty major market. LA? two teams have failed there and there is no reason to presume the pro team would be successful. I'm not seeing any for sure market that would warrant giving up fifty years of building a loyal base. I suppose a lot of it will involve commitments regarding the stadium, rebuilt or new...but I am optimistic that Buffalo will in the final analysis be the best market for this team.

[BillnutinHouston]

that doesnt really allow for maxing out to the highest bidder. In fact, if the team is locked in WNY, it would likely eliminate competition.

 

Also, if there is a buyout of $300 Million, that price may devalue the team and come off the sale price.

 

Agree it would limit competition somewhat. How much, nobody really knows. There is nobody who can speculate how many different prospective ownership groups will come out of the woodwork.

 

Conisdering the last buyout started at 20 million and was down yearly to 2 million currently, good luck with that.

 

Anyway, there are 2 obvious flaws. First, it would be far cheaper for a new buyer (if he was to move the team) to just pay the rent every year of the lease than to pay a ridiculous penalty. Second, the new owner would immediately want to re-negotiate those lease terms that he didn't agree to or sign and of course the county would roll right over, as they always do.

 

Exactly who would object to a high excape fee? Only the NFL, as far as I can tell. The County would love that high fee, and Ralph won't care.

 

Why would the County "roll over", if the lease contract has the team locked in? As for the new owner, he willingly accepts those terms when buying the team.

 

becuase a wealthy owner can still buy the team, keep in WNY for 10 years, and then bounce. This doesnt work, though the County will still put a lease-breaking clause in there as it is standard.

 

If you're hoping for a permanent fix, good luck finding it.

 

Ralph could easily put in his will that the team needs to be sold to the highest bidder that would keep the team in Buffalo as his 1st option with a minimum price, if not meet all then sold to the highest bidder a where.

 

No lease needed.

 

Maybe, but how would a prospective owner certify with legal sufficiency that they'll keep the team in Buffalo as long as they own the team?

 

okay okay..I'm a homer but I think there is a strong case to be made for keeping the team in Buffalo. We have Western New York and Canada and cover a pretty major market. LA? two teams have failed there and there is no reason to presume the pro team would be successful. I'm not seeing any for sure market that would warrant giving up fifty years of building a loyal base. I suppose a lot of it will involve commitments regarding the stadium, rebuilt or new...but I am optimistic that Buffalo will in the final analysis be the best market for this team.

 

Agree that Buffalo is a nice market - profitable, but that's primarily because it has no stadium-related debt. However, in a "highest bidder" scenario, there's a strong possibility that the top bidder has complete faith in his market's ability to support a team. And if his own personal fortunes are tied to THAT particular market/real estate development (like a Roski, etc.), then as good as Buffalo is, it might not be enough.

 

My angle on this thread was to postulate what Ralph COULD do within his power to assure the team stays in WNY.

Edited October 12, 2011 by BillnutinHouston

[Thoner7]

Ralph should sell Kelly 0.000000000000000000000000000000001% of the team for $1. As a minority owner, Jim would get NO control over anything, and must agree to forfiet his share of the team in the event the team is sold to anyone but Jim Kelly. What Jim's small stake in the team would grant him as part of the deal would be a right of first refusal when the team does go up for sale.

 

Doing this would not discourage other groups from putting in an offer, it would only eliminate Jim and his group of investors from bidding on the team(there is no reason to bid against yourself). This would keep the price of the team high as well. This is the most logical way to give Ralph exactly what he wants and give Jim the best possible chance to buy the team and keep them here.

[wnyBacker]

Way to many what-Ifs

[ICanSleepWhenI'mDead]

. . . Let's say he says to the County, let's establish a fee for the team breaking the lease, in the event that the franchise relocates. How does, say, $300 million sound?

 

My theory is, if Ralph agrees to a lease-breaking fee that essentially makes future relocation of the franchise cost prohibitive to a new owner, has he not accomplished long term stability of the franchise in WNY from beyond the grave? Doesn't a new owner have to abide by all the terms and conditions of the lease agreement that Ralph signs?

 

* * * *

 

Tell me where my plan is flawed - for example, does the league have jurisdiction over the terms of a stadium lease and therefore the ability to shoot down constructs like this? Etc.

When parties to a commercial lease agree in advance to a fee that the tenant must pay if the tenant later breaches the lease, the term for that fee is "liquidated damages." But that's just a fancy legal phrase for exactly the type of fee you suggest.

 

http://www.legalmatch.com/law-library/article/commercial-lease-early-termination-lawyers.html

 

Remedies for Early Termination of a Lease

 

If a commercial lease is terminated before the end of the lease term, the non breaching party may seek damages for the breach. Such damages are often very difficult to measure and the parties to the lease often stipulate to liquidated damages which are a flat sum of money. The lease may also contain an acceleration clause where all other obligations under the entire term of the lease become due upon the other parties breach. Many leases also provide that in a dispute the winning party will be awarded attorney's fees.

 

Unfortunately for us, for reasons beyond the scope of this post, courts place certain limits on the amount of "liquidated damages" that can be enforced later, even if all parties to the lease voluntarily agree to a large dollar figure during negotiations. The amount of liquidated damages that can be enforced isn't a pre-set number - - it depends on what a court determines would have been a reasonable estimate of actual future damages, based on what the negotiating parties knew at the time the deal was struck.

 

http://www.legalmatch.com/law-library/article/liquidated-damages-lawyer.html

 

Enforcement of Liquidated Damages Clauses

 

Courts will often enforce liquidated damages clauses if the damages for breach of the contract will be difficult to estimate. However, a court will not enforce a liquidated damages clause if the clause is unfair or awards an excessive amount of money. Likewise, a court will not award liquidated damages if the contract is based on fraud or mistake. If a court determines that such a clause is unenforceable, the clause is void, and the non-breaching party may sue for other contract remedies.

 

So if Ralph wants to use a liquidated damages clause to make it more likely that a future team owner will keep the team in Buffalo for the full duration of the new lease, the tricky part is picking the dollar figure. Pick a number too low, and the new owner might simply break the lease anyway and pay the pre-determined fee. Pick a number too high, and the courts might decide the liquidated damages clause is void, and refuse to enforce it at all.

 

All of this assumes that Ralph would be willing to sacrifice some portion of the future sales price of the team in order to make it more likely that the Bills would stay in Buffalo for the duration of the lease after he's gone. People have different opinions about how likely that is.

[Mr. WEO]

 

 

 

Exactly who would object to a high excape fee? Only the NFL, as far as I can tell. The County would love that high fee, and Ralph won't care.

 

Why would the County "roll over", if the lease contract has the team locked in? As for the new owner, he willingly accepts those terms when buying the team.

 

 

 

 

 

 

The next owner may not be bound by that contract. He will of course want to renegotiate---as a contingency for purchase, perhaps. No owner is going to eat such a bad deal as that. What if he wanted to build a new stadium?

[tennesseeboy]

some billionare might buy the team and make a bad decision about moving it. In a recession building a fan base might be rather difficult. There are precedents of moves that have not worked, and I'm not hearing of any truly viable market. Certainly LA isn't going to be viable and that's the one we're hearing the most.

[Billsrhody]

Everything I've read recently on the new stadium plans in LA cite the Chargers as being the most likely new "LA Team".

 

Somewhat comforting?

[bowery4]

Read some of the stuff in the transcript that Goodell has on BB.com. It infers that the lease is being negotiated already. It also talks about how older stadiums can be of use in today's NFL i.e. GreenBay's (I would also offer up Arrowhead as an example since it is the same age (more or less) as the Ralph and designed by the same firm originally.

I really get from the whole thing that RW has a plan and must have a damn good reason for not making it common knowledge to all of us (or maybe he just likes to keep his private business, private) . But mostly I get that the NFL wants us (the Buffalo Bills) to stay a part of it no matter what. I am not really worried about this and really think the posts about it every week or so (and sometimes more) just are a lot of droning on about things we have no control over and actually little to worry about. If I am wrong and they move sometime in the near future, I will quit the board anyway.

[PromoTheRobot]

 

Agree that Buffalo is a nice market - profitable, but that's primarily because it has no stadium-related debt. However, in a "highest bidder" scenario, there's a strong possibility that the top bidder has complete faith in his market's ability to support a team. And if his own personal fortunes are tied to THAT particular market/real estate development (like a Roski, etc.), then as good as Buffalo is, it might not be enough.

 

My angle on this thread was to postulate what Ralph COULD do within his power to assure the team stays in WNY.

Buffalo is not the economic basket case the media paints it as. It has over 9 million people within a 2-hours drive. It has the potential of being the de facto Toronto franchise without having to locate an NFL team outside the country. If the Bills are contenders they can sell out every game. Plus the NFL does seem to value history and tradition, and the Bills in Buffalo are steeped in both.

 

PTR

Edited October 12, 2011 by PromoTheRobot

[BillnutinHouston]

Buffalo is not the economic basket case the media paints it as. It has over 9 million people within a 2-hours drive. It has the potential of being the de facto Toronto franchise without having to locate an NFL team outside the country. If the Bills are contenders they can sell out every game. PTR

 

Correct, but the fact is that the Bills do not currently command, relative to the rest of the league, even mid-tier prices on seats, premium seats or private suites. The same is most likely true for advertising revenue as well. Whatever the reasons (and I believe they are valid) the Bills have made a very carefuly calculation in setting their prices, and that is directly related to the economic strength of the market they're in.

 

When parties to a commercial lease agree in advance to a fee that the tenant must pay if the tenant later breaches the lease, the term for that fee is "liquidated damages." But that's just a fancy legal phrase for exactly the type of fee you suggest.

 

http://www.legalmatch.com/law-library/article/commercial-lease-early-termination-lawyers.html

 

 

 

Unfortunately for us, for reasons beyond the scope of this post, courts place certain limits on the amount of "liquidated damages" that can be enforced later, even if all parties to the lease voluntarily agree to a large dollar figure during negotiations. The amount of liquidated damages that can be enforced isn't a pre-set number - - it depends on what a court determines would have been a reasonable estimate of actual future damages, based on what the negotiating parties knew at the time the deal was struck.

 

http://www.legalmatch.com/law-library/article/liquidated-damages-lawyer.html

 

 

 

So if Ralph wants to use a liquidated damages clause to make it more likely that a future team owner will keep the team in Buffalo for the full duration of the new lease, the tricky part is picking the dollar figure. Pick a number too low, and the new owner might simply break the lease anyway and pay the pre-determined fee. Pick a number too high, and the courts might decide the liquidated damages clause is void, and refuse to enforce it at all.

 

All of this assumes that Ralph would be willing to sacrifice some portion of the future sales price of the team in order to make it more likely that the Bills would stay in Buffalo for the duration of the lease after he's gone. People have different opinions about how likely that is.

 

Great post, thanks.

Edited October 12, 2011 by BillnutinHouston

[May Day 10]

There was an article on yahoo yesterday and in it, they stated 'numerous owners' would prefer the team in Toronto

 

 

http://sports.yahoo.com/nfl/news?slug=ms-silver_al_davis_raiders_relocation_la_stadium101011

 

The Bills will likely be sold upon the passing of 92-year-old owner Ralph Wilson, but numerous owners prefer that a buyer would choose to relocate the franchise to nearby Toronto, the fourth-largest market in North America. A move to L.A. is viewed as a secondary option.

[BRAWNDO]

Buffalo is not the economic basket case the media paints it as. It has over 9 million people within a 2-hours drive. It has the potential of being the de facto Toronto franchise without having to locate an NFL team outside the country. If the Bills are contenders they can sell out every game. Plus the NFL does seem to value history and tradition, and the Bills in Buffalo are steeped in both.

 

PTR

I think the NFL will probably want a few more regular season games in Toronto.

[bowery4]

There was an article on yahoo yesterday and in it, they stated 'numerous owners' would prefer the team in Toronto

 

 

http://sports.yahoo.com/nfl/news?slug=ms-silver_al_davis_raiders_relocation_la_stadium101011

 

Mike Silver is a dick. I stopped reading his crap years ago. That said if that is true and they did move move because the greedy bastards want a better market Eff em. The Bills will no longer be a part of my life. Dead to me.

[ICanSleepWhenI'mDead]

The next owner may not be bound by that contract. He will of course want to renegotiate---as a contingency for purchase, perhaps. No owner is going to eat such a bad deal as that. What if he wanted to build a new stadium?

Ralph Wilson is not individually a party to the existing stadium lease - - Buffalo Bills, Inc. (a New York corporation) is. That corporation, which owns the team, will continue to be obligated to comply with the terms of the lease even if Ralph dies tomorrow. Corporations continue to exist, even after the individual who owns the shares of that corporation dies. It won't be any different if Ralph dies after the new lease is signed.

 

You do, however, have a valid point about the possibility of renegotiation. If Ralph dies, and somebody else becomes the controlling shareholder of Buffalo Bills, Inc., that new controlling shareholder might very well seek to have Buffalo Bills, Inc. renegotiate the lease terms. Whether a renegotiation actually happened, however, would depend on whether all the parties to the lease were willing to make a new agreement.

 

The County and State might display more backbone in enforcing their legal lease rights if they knew in advance that a new agreement would make the team more likely to move. They gave away one home game to Toronto, when they had the legal right to complain about it, because they apparently believed the Toronto game would make it MORE likely that the Bills would remain in Buffalo long term.

[JohnC]

There is a very difficult issue for the county or whatever governmental jurisdictions are involved regarding the stadium. A lot of money has to be invested into upgrading the stadium in order to bring it up to date. The Kansas City Chiefs is the best model that the Bills and the western NY region should use. The franchise and localities jointly spent a lot of money thoroughly refurbishing the facility. The problem the localities have in spending money for a major stadium upgrade is that at this time they don't have a committment to keep the team in the region when there is an ownership change. As it stands it is doubtful that a very elderly owner is going to make a long term financial committment to refurbishing the stadium. So the upgrades can't be committed to until an owner (new owner) is willing to do so.

 

Will the current owner make the arrangements prior to his passing to keep the team in the region? I'm not confident that he will make that committment because it reduces his estate's option to get the best price for the franchise. It comes down to what will the owner do. My guess is that the owner has already made his estate plans that maximize the best return he can get for the team regardless where it is located.

Edited October 12, 2011 by JohnC

[Malazan]

It's simple enough. The NFL would not allow that lease.

[BillnutinHouston]

Esmonde article

 

Donn Esmonde's column this morning quotes Andrew Zimbalist, who Esmonde says is "among America’s foremost authorities on the business of sports."

 

Zimbalist says, “Wilson can sign a lease tomorrow and say the franchise is committed to spending the next 10 or 20 years in Buffalo, and any new owner would be bound to that,” said Zimbalist. “But I don’t think he’d do that, because the team is worth more somewhere else.”

 

Interesting that Zimbalist refers to the concept I brought up by posting this thread (where the terms of the next lease WILL survive Ralph). So theoretically it sounds like my concept could work. Now the question is, WOULD Ralph actually do this?

 

I do also think its interesting that Ralph seems to be in more of a hurry to lock in the new lease than does the County (if media reports are to be believed.)

[Mr. WEO]

Esmonde article

 

Donn Esmonde's column this morning quotes Andrew Zimbalist, who Esmonde says is "among America’s foremost authorities on the business of sports."

 

Zimbalist says, “Wilson can sign a lease tomorrow and say the franchise is committed to spending the next 10 or 20 years in Buffalo, and any new owner would be bound to that,” said Zimbalist. “But I don’t think he’d do that, because the team is worth more somewhere else.”

 

Interesting that Zimbalist refers to the concept I brought up by posting this thread (where the terms of the next lease WILL survive Ralph). So theoretically it sounds like my concept could work. Now the question is, WOULD Ralph actually do this?

 

I do also think its interesting that Ralph seems to be in more of a hurry to lock in the new lease than does the County (if media reports are to be believed.)

Isn't the new lease contingent upon significant upgrades to the stadium by the county? And what if the new owner simply re-incorporates the Bills as a new entity?

 

Regardless, the new owner could walk away and force the county to sue him. Any settlement would never include 300 million dollars. Also, as your quote implies, such a poison pill would negatively affect the value of the team--and that is why Ralph would never ask for such a penalty in the lease.

Edited October 16, 2011 by Mr. WEO

[Red_Tory]

Ok, so first of all dont shoot the messenger. Am 37 and a lifelong Bills fan. Ive Seen the bad, then the great, then the absolutely horrible. Dont want to see the Bills leave WNY, no way.

 

However, need to clear up a couple of points that I keep seeing made on here that make some assumptions that arent correct in the case for the Bills staying in WNY.

 

1) I have seen it posted that the Bills somehow "have Canadian football fans" - this just is no longer accurate. There are more NFL fans here than ever before, but for a number of reasons not least of which has been the Bills awful performance for the last decade, and just that its now so much easier for fans in any region of North America to follow the team of their choice. So the Bills actually dont have that going for them, cannot assumme the TO and Canadian markets belong to the Bills anymore. NFL execs see the numbers and correctly feel a home team here would see the tap turn on even more, ie the Toronto Blue Jays in MLB.

 

2) "Rogers Centre not up to NFL standards" - while this is certainly true, its also true that basically for the first time in the history of pro sports, stadium size and facilities matter the least they ever have from the standpoint of a franchise's bottom line. So the argument that TO ownership group would need a new stadium just doesnt hold water. If the NFL sees the books and business plan that shows the added $$$ the league stands to earn, I guarantee you know one cares if the stadiums capacity is 55,000 or 70,000. And contrary to comments on here all the time, the owners also wont care if the fans that show up tend to be quiet, sit on their hands and arent as knowledgable about football as most NFL fans from traditional markets - because the money they bring to the table is worth every bit as much.

 

3) "Bills leaving Buffalo would leave a black mark on the NFL" - this just in: none of the people involved in making these decisions care because they know long term there will be no lasting negative consequences, and theres just too much money at stake here. MLB strike in '94 left a black mark on the game, and now MLB revenue is at an all time high. Cleveland was devasted when the Browns left, but what happend? NFL kept selling out and when they had a chance to acquire a new team for Cleveland locals literally jumped at the chance. As long as the money keeps rolling in no one cares about fans and effect on a community etc etc. Sucks, but its true.

 

I just dont think the size and dollars of the Toronto and Canadian market can be understated in this debate. Profit for the owners is the only thing that matters.

 

I want to see the Bills stay in Buffalo - if the Bills move to Toronto I cant guarantee I would still cheer for them. I would just feel awful about the loss to Buffalo area fans, and I can assure you most of the locals here I root for the Bills with would feel the same. If the team were to move to LA, no question I would divorce myself from the organization.

 

Work with the Rogers folks, try and make the best of the Bills in Toronto series and realize while its not ideal that working with TO is your absolute best bet of keeping our beloved Bills where they belong. Look at the chance to visit TO once or twice a year as a great opportunity to see a city you dont live in, visit with Bills fans from a different background that share your passion for the Bills - when you think about it, to a lesser scale this is exactly what Bills fans in WNY ask of the 15-20% of fans at each game in Orchard Park that travel over the border from Canada.

 

Just the view from the cheap seats, Cheers,

 

Chris

[I hate the Bills !]

I wish people who think they are in the know, but really aren't would just take their med's and be happy the Bills are 4-1 rather than try to raise an issue in which they clearly have no knowledge.