Three months since construction began on their new stadium, the Buffalo Bills are already facing a potential cash crunch with the latest projections having the team on the hook for as much as $300 million in cost overruns, four people with direct knowledge or who were briefed on the financial details told The Associated Press this week.
What was initially estimated to cost $1.4 billion in March 2022, and increased to $1.54 billion months later, is now projected to have jumped to $1.65 billion and approaching $1.7 billion, the people told the AP on the condition of anonymity because the team has not disclosed those figures.
The rising price tag is notable because the Bills are contractually required to cover any overruns beyond the then-agreed to cost of $1.4 billion as part of the tentative deal the team reached with the state and Erie County 16 months ago.
Increased labor and material costs were cited for the increased price, with one person saying one line item has already come in at $75 million over budget. Another person said a delay in sending out bids also had an effect in upping the cost.
The Athletic first reported on the cost overruns last weekend, and cited unidentified individuals as projecting the stadium’s price tag potentially reaching $1.9 billion.
Newly appointed Bills COO John Roth called the projections premature and speculative at best.
“We don’t know enough yet to confirm this,” Roth told the AP on Wednesday, noting only a small percentage of the contracts and bids have been completed.
Roth took over three weeks ago after Ron Raccuia was abruptly fired.
Raccuia was involved in stadium negotiations and took on an even larger role over the final year after team co-owner Kim Pegula suffered a debilitating heart attack in June 2022. Raccuia was fired last month, with co-owner Terry Pegula taking over as team president and designating a three-person committee — headed by Roth — to oversee the Bills and the construction project.
A ballooning price tag would place a larger-than-expected burden on the Bills, who were initially committed to covering $550 million of the construction costs. Their share now stands to potentially match the taxpayer contribution of $850 million, with $650 million due from the state, and the remainder from Erie County.
The Bills agreed to cover the cost overruns in exchange for having full control over the stadium’s design and construction.
One of the people told the AP before negotiations began that overruns were expected based on the Bills’ projected cost of $1.4 billion. The Bills had initially pegged the cost of the stadium at about $1.5 billion before switching design firms.
The Bills are funding their share through the NFL’s G4 loan program. The rest of the money is being raised through a first-time seat licensing fee for season-ticket holders.
It’s unclear how the Bills would make up the difference, and what cost-cutting measures they can make to the design of a 60,000-plus seat facility being built across from their current home in Orchard Park, New York.
The rising projections come as the Pegulas, who also own the NHL’s Buffalo Sabres, are expected to soon approach the city to discuss long-needed renovations to the team’s downtown arena.
KeyBank Center has not had a major upgrade since it opened in 1996, and needs work to its roof, concourses and seating bowls.
The renovation needs are so significant the project would have to be spread out over several offseasons.
Pegula has a projected net worth of $6.7 billion and made his fortune through the natural gas industry by discovering and then selling off the drilling rights of tracts of gas-rich fields across the country.
Pegula, for example, helped fund his $1.4 billion purchase of the Bills in 2014 by selling the drilling rights on about 75,000 acres of land in Ohio and West Virginia for $1.75 billion.