Proposal Could Have Buffalo Fans Owning Stock in Bills Team
In a letter to National Football League Commissioner Roger Goodell, Congressman Brian Higgins (NY-27) is asking the league to consider an amendment to its constitution which would allow community ownership of member teams. Under such a scenario individuals could purchase stock and maintain voting rights in a franchise.
“The Bills are a regional treasure and part of the fabric of our community,” said Congressman Higgins. “Community ownership in the Bills would give the Buffalo fans that built this franchise a real role in steering the future of this team.”
According to Higgins’ proposal, the Buffalo Bills team could mirror the current ownership structure of the Green Bay Packers, the only publicly owned football team in the NFL. The team would be owned by local shareholders and run by a board of directors elected by the shareholders. Current NFL policy prohibits establishment of leadership structure. The Packers Corporation was grandfathered in when these NFL constitutional guidelines were established.
The Congressman is also asking the NFL for consideration of an alternate “Hybrid Community Ownership” situation under which a majority of shares in the franchise would be sold to a “traditional owner” with the fans owning the remaining shares. Under this structure the majority of the day-to-day decisions would be made by the traditional owner, however the community shareholders would maintain a stake large enough to veto relocation to another community.
“We know all too well that Buffalo’s economy has seen better days, but I am just as confident we will see better days again, soon,” Higgins added. “For the first time in years there is new private investment, a massive state investment in UB, a thriving biomedical research community, and finally the development of our waterfront. A hometown NFL team is an important part of Western New York’s future.”
February 8, 2008
National Football League
280 Park Avenue
New York, New York, 10017
Dear Commissioner Goodell:
I am writing to respectfully request that the National Football League give consideration to amending its constitution concerning community ownership of member clubs.
As you know, the Constitution and Bylaws of the National Football League currently prohibits club ownership by a not-for-profit entity. This has the practical effect of preventing fans in smaller communities from banding together to purchase their hometown team. If the League is serious about the preservation of small markets whose fans have nurtured its teams throughout league history, it must review its policy preventing community ownership. Specifically, there are two scenarios which I believe merit your consideration:
· Full Community Ownership: A full repeal of Article 3, §2(A) of the Constitution would permit my community of Western New York to replicate the current ownership structure of the Green Bay Packers. Prior to the adoption of the NFL’s prohibition on community ownership, fans in Green Bay purchased the Packers, to the tremendous benefit of the team and the community. The result has been one of the most stable and successful franchises in history, as the Packers have become a financial asset to the league far beyond its ability to raise revenues locally. And as the Packers have demonstrated, community ownership leads to a level of community pride and team support unrivaled in professional sports.
· Hybrid Community Ownership: I also encourage you to consider allowing partial community ownership blended with a majority single or “traditional” owner. In such a hybrid approach, a majority of shares in the franchise would be sold to a traditional owner, providing the League the assurance of a single, accountable and profit-maximizing owner. Meanwhile, a minority stake would be sold to fans in the community, who would cede most decision-making power to the traditional owner but would maintain a stake large enough to veto relocation to another community.
The Hybrid approach also has the advantage of reducing the purchase cost for the owner. With up to 49% of the cost of the team defrayed by the sale of shares to fans, the number of potential owners who could afford to purchase the team will increase. This would allow the League to be more discriminating in selecting among a greater number of potential buyers. It would also increase the chances of finding an owner from within the community. For example, reducing the purchase price of the Buffalo Bills would make it far more likely that the League could select an owner from Western New York, a region with less “very wealthy” individuals relative to other parts of the country.
There was controversy in Western New York yesterday when the owner of the Buffalo Bills made statements that many interpreted as alluding to the eventual relocation of the Bills to Toronto. Mr. Wilson cited Buffalo’s weak economy and shrinking size as impediments to keeping the team in the region. In Buffalo we are realists, and we know all too well that Buffalo’s economy has seen better days. But we also know it will see better days again, and soon. For the first time in years we are attracting new private investment, a massive state investment in the University at Buffalo is underway, we are blessed with a thriving biomedical research community, and at long last we are seeing the exciting development of our waterfront.
These developments are giving our community confidence that our best days are once again ahead of us. Yet we are keenly aware that despite our improving economic fortune, our national perception and the nascent stage of our turnaround leave us constantly at risk of losing the team we hold dear. To that end, while I investigate appropriate legislative remedies to the situation, I encourage you to voluntarily reform the League’s regulations concerning community ownership of member teams. When and if Mr. Wilson decides to sell the Bills, the people of Western New York must be allowed to save the team, should they choose to do so.
Thank you for your attention to this matter.
Member of Congress
How Community Ownership of the Buffalo Bills Could Work
Here is an example of how community ownership of the Bills might work under the “Hybrid Community Ownership” scenario:
According to Forbes, the value of the Bills is approx. $821 million.
1) Current Owner Ralph Wilson sells the Bills to a newly incorporated, not-for-profit entity, the “Buffalo Bills Football Club, Inc.”
2) 10 million shares of the corporation are created.
3) 5.1 million shares (51%) are sold to a single person or partnership. At its current value, the new owner would pay $419 million.
4) There is an initial public offering (IPO) for the remaining 4.9 million shares. To raise the $402 million balance, shares are offered at $82.10 a share.
5) To limit the concentration of too much influence, the rules of the corporation
a) prohibit the majority owner from purchasing additional shares (i.e. caps him at 51%), and
b) prohibit any one shareholder to own more than 200,000 shares. Shares can be sold but they can not appreciate in value.
6) The rules of the corporation specify that it takes a vote of 75% of the shareholders to relocate the team.
- This is just a general outline of how it COULD work. Actual numbers and values, and ways of going about it, would be up to the Bills and the NFL.
- Also, the above approach would work for the full public-ownership scenario, except that – there being no majority owner - the shareholders would elect an executive committee to appoint a board to run the team.