ORCHARD PARK, N.Y. (WIVB) – When Buffalo Bills founder Ralph Wilson was in declining health a decade ago, the threat of a new owner moving the team loomed large in the minds of fans. The franchise now seems secure in the hands of Terry and Kim Pegula, but there’s no guarantee those fears won’t resurface during the course of the team’s new 30-year lease that was finalized last week.

The three-way agreement between Erie County, New York state and the Bills to build a new stadium does, however, contain a Non-Relocation Agreement strong enough for Erie County Executive Mark Poloncarz to proclaim, “the Bills will be the Buffalo Bills through 2055.”

An examination of the 28-page document reveals a two-pronged approach aimed at ensuring the Bills remain in their new Orchard Park facility through the life of the lease. Step 1 is legal hurdles: The document contains numerous provisions detailing actions the Bills agree not to take, such as attempting “to relocate, transfer or otherwise move the team.” Step 2 involves financial penalties, which could exceed $1 billion should an owner slip through Step 1 in a hypothetical quest to move the team.

The complete Non-Relocation Agreement can be viewed below, followed by analysis. Erie County made 19 documents relating to the Bills lease public; those can be accessed at this link.

Legal hurdles in the Bills’ Non-Relocation Agreement

The Bills agreed to many stipulations in exchange for receiving $850 million in public funds for the construction of their new stadium.

Some are fairly innocuous: The Bills must, for example, maintain the franchise as a participating NFL team and remain in good standing with NFL rules and regulations. Section 3b (on page 9 in the above document) lists more specific actions relative to relocation, such as that the Bills cannot sell the team to anyone who intends to move the franchise.

The agreement directly states that the Bills shall not:

• (i) apply to the NFL for, or otherwise seek, approval to allow the Team to play any Games during the Non-Relocation Term anywhere other than the Stadium;
• (ii) relocate, transfer or otherwise move the Team (or attempt to relocate, transfer or otherwise move the Team…) to a location other than the Stadium;
• (iii) sell, assign or otherwise transfer the Team to any Person who, to the Bills’ knowledge, has an intention to relocate, transfer or otherwise move the Team during the Non-Relocation Term to a location other than the Stadium;
• (iv) (A) entertain any offer or proposal to relocate the Team to a location other than the Stadium, (B) solicit an offer or proposal from any Person to enter into discussions regarding moving the Team to a location other than the Stadium, (C) enter into negotiations or agreements with third parties concerning the relocation of the Team to a location other than the Stadium, or (D) otherwise attempt to cause the playing of Games at a location other than the Stadium.

The Bills do, however, have the ability to explore relocation during the last five years of the lease (starting in 2050), so long as the relocation would not take place until after the conclusion of the agreement.

Disputes go to a Western New York judge

The natural follow-up question is: What happens if a Bills owner engages in relocation discussions anyway?

Section 5 of the Non-Relocation Agreement (page 10) addresses enforcement and damages, while Section 9g (page 16) outlines jurisdiction and venue. Together, the agreement states that a Buffalo-area judge can intervene to force the team to honor the contract.

Specifically, Section 5a states the parties agree “that equitable relief by way of a decree of specific performance or an injunction (such as a prohibitory injunction barring the Bills from relocating or playing the Games in a facility other than the Stadium or a mandatory injunction requiring the Bills to play the Games at the Stadium) is the only appropriate remedy for the enforcement of this Agreement…”

This essentially means a judge can make them do it. But it wouldn’t be just any judge: The parties agree in Section 9 that any proceeding arising from the agreement “shall be litigated only in the Supreme Court of the State of New York, Erie County, New York or the United States District Court for the Western District of New York.” The parties also agree to waive any claim that using a Western New York judge is improper.

Should an owner seeking to move the Bills get through or around the legal challenges, the final hurdle is financial.

Financial penalties in the Bills’ Non-Relocation Agreement

Before discussing the financial penalties, ponder for a minute what would have to happen before this step actually played out. An owner seeking to move the Bills would have already negotiated a deal in the shadows and gotten through an ugly and highly publicized legal process, drawing the scorn of millions in the process, while knowing all along what the financial penalty will be.

This step, then, appears to be as much about recouping taxpayer money should the team hypothetically leave town as it is about deterring an ultra-wealthy owner or ownership group from carrying out a nefarious plan to relocate the team.

Section 5b (page 11) lists five separate categories of public funds that would need to be repaid in the event “equitable relief is not granted by a court of competent jurisdiction for any reason, or is otherwise unavailable.”

• (i) the contribution from New York state, currently expected to be $600 million.
• (ii) the “cash contribution” portion of Erie County’s $250 million responsibility, $100 million.
• (iii) the rest of the county’s $250 million initial contribution, which we’ll call $150 million but would actually be higher due to bond interest.
• (iv) state contributions to the Maintenance and Repair Fund, currently expected to be $6.67 million per year for 15 years, or just over $100 million in total.
• (v) any amounts contributed by the state or county to the Capital Improvement Fund, which is currently expected to be $6 million per year, and could increase by up to 2.2% per year, for 30 years. The exact number is incalculable at the moment, but would be at least $90 million through 15 years or at least $180 million over the life of the deal.

These penalties total, at minimum, more than $1 billion at their peak, and would need to be paid in a lump sum not more than 30 days after defaulting on the agreement. Additionally, the agreement states the team could be on the hook for the demolition of the new stadium should the team leave town.

The penalty, however, decreases over the second half of the deal. Starting in the 15th year of the lease, the penalty drops by 6.25% per year, decreasing to 0% — $0 — in Year 30.

Adding together all of the rounded minimum penalties listed above, and decreasing them according to the chart listed on page 12 of the agreement, gives us the following graph of the financial penalty by year. (The numbers are approximate, but the shape of the graph would hold.)

The bottom line

The Buffalo Bills, Erie County and New York state signed off on a Non-Relocation Agreement as part of a 30-year lease to play Bills games in a new Orchard Park facility.

An owner who sought to cause the team to play games at any location other than the new stadium more than once per year would be in violation of the agreement, and a court could order them to honor their end of the bargain, which all parties agree is “the only appropriate remedy for the enforcement of this Agreement.” The team also agrees to incur obligation to ensure the stadium is playable.

Should an owner seeking to move the team get a Buffalo-area judge to rule in its favor, or somehow otherwise evade the legal process, the contract spells out financial penalties that could reach 10 figures.

There is no reason to fear losing the Bills under the current ownership. While no professional sports franchise is ever truly immune from a rogue ownership candidate with devious intentions and billions on hand, the Non-Relocation Agreement appears to put Buffalo in strong position to fend off relocation threats during the life of the contract. It’ll be the 2040s before we to start talking about negotiating the Bills’ next lease.