The Sabres may be getting a new owner, but the future of the Buffalo Bills in WNY remains in doubt. Early last week, a community-based financial plan intended to help keep the Bills in Buffalo spread across Western New York. Recently, the idea has spread beyond Buffalo with reports from sports business publications and popular Wall Street blogs. While some readers poked fun at the idea, nobody poked holes in it. Opinions expressed from the reporters/bloggers were mostly positive and some complimentary. One even called it “brilliant.”
The idea, proposed by Stevens Brady a 25-year-old investment banker and lifelong Bills fan, involves fans loaning money to the next owner of the Buffalo Bills by purchasing low-interest bonds called Bills Bonds. These bonds would help a new owner cover the purchase of Bills franchise (which Forbes estimates to be near $800 million) and would ease the often onerous interest payments owners face when borrowing money to buy a franchise.
The idea, tweaks the Green Bay Packers community ownership model to comply with the current bylaws of the National Football League, which prevent public ownership. In 1923, with the Green Bay Packers on the brink of bankruptcy, fans bought the team by purchasing shares of Packers stock. NFL Bylaws now prevent Bills fans from replicating this idea, but with a twist, Bills fans could still use the concept.
The twist — instead of buying the team, Bills fans could provide a “loan” to a new ownership group that is committed to keep the Bills in Buffalo. Proceeds from that loan, or more specifically bonds (a loan chopped into many pieces and sold to the public), would be used by the new ownership group to help pay the expected $800 million price tag the team would demand on the open market. The Bills new ownership would then pay the bondholders back over time plus interest with cash flows generated by the team.
The reason a new ownership group would be interested in Bills Bonds rather than loans from banks or other financial institutions is that fans may be willing to accept a below-market rate of interest. New ownership will likely borrow hundreds of millions of dollars in order to help cover the purchase price of the Bills. If provided by a bank or financial institution, these loans would be accompanied by burdensome interest rates that could quickly erode the Bills profitability. However, if fans provided financing at a lower rate by purchasing Bills Bonds, the interest savings could go a long way in helping to keep the Bills viable in Western New York.
Below is a collection of the thoughts and reactions from around the web:
Business Insider – 25-Year-Old Investment Banker Devises Unusual Plan To Save The Buffalo Bills
“Unfortunately, there’s nothing preventing the NFL from altering its rules and simply rejecting the idea out of hand. They shouldn’t though. The bonds would not give fans traditional ownership rights — like picking a board of directors or voting on league rules — but it would tie the franchise more closely to the city and its fans. It allows fans a way to show direct support for struggling franchises, without forcing cities to makes horrible tax concessions or funnel millions of dollars into boondoggle stadium projects.
We’d love to see this idea replace the traditional financial arrangements that cripple municipal budgets or deprive loyal fans of their beloved teams.”
By Dashiell Bennett
The Sports Economist – Fan Finance
“This has the potential to exploit a loophole in the NFL’s policy against community ownership. The public has an equity interest in the Packers and this keeps the team wedded to its Wisconsin location. Debt finance by the public could achieve something similar.”
“This might be fantasy, but it might just keep a team in its hometown when it might otherwise move. Moreover, this form of subsidy is completely voluntary: the fans who want the team in Buffalo subsidize the team through accepting lower interest payments than in the market, not the general taxpayer, and not the out-of-town visitor who has no interest in the team or sport but gets hit with a hotel or rental car tax.”
By Skip Sauer
Reader Comments on Dealbreaker – Bills Bonds: Great Idea Or Greatest Idea?
”We tried that sh#t with Lebronds – it didn’t work.”
Commenter pretending to be Dan Gilbert, Owner of the Cleveland Cavaliers
“Oh, I forgot to add…each investor gets a collector’s edition Trent Edwards bobblehead doll.”
Commenter pretending to be Steve Brady
“Why not? It’s been working for the Fed so far.”
Commenter named James Grant
Sports Business Daily (subscription required) — Banker Suggests Fans Buy Bills Bonds To Keep NFL Team In Buffalo