By Frank Parlato
Escalating Costs of the Bills Stadium
On November 15, 2024, the Buffalo Bills management confirmed the new Bills stadium will cost more than $2.1 billion, 50% higher than the original estimates in 2020 of $1.35 billion.
The $560 million increase is primarily due to inflation, which has driven up labor costs and prices of materials, including structural steel. Additionally, expenses related to the Bills stadium may rise, as only about 35% of the stadium is complete. Construction is expected to continue until June 2026.
Just north of Buffalo, a mayor of a city with 48,000 residents faces the challenge that an arena he wants to build but has yet to find the taxpayer money to fund will also cost more than his estimated $150 million.
The Buffalo Bills stadium will have a larger capacity of 62,000 seats, while Niagara Falls Mayor Robert Restaino plans to construct a 7,000-seat arena. Mayor Restaino had to consider smaller options, as his plans to build an arena lacked a sports team to play there.
Mayor Restaino’s Arena Challenges
In 2022, Mayor Restaino estimated the construction cost to be $150 million. Still, that cost may be higher or lower since Mayor Restaino relied mainly on his estimate of costs since he had yet to do a cost estimate study.
Pat Whalen, the former director of the Niagara Global Tourism Institute, stated at the time that the estimated cost of $150 million is likely significantly underestimated. Whalen expressed a pessimistic view of Mayor Restaino’s plan, telling the Niagara Gazette that the project was financially unfeasible and likely would fail.
Restaino had no way to know whether Whelan was correct. The mayor decided against conducting a feasibility study to assess the need for an arena or its costs before selecting the site for construction.
He also chose to avoid a site selection study.
The sketch of the arena is all the public has right now, but this is one that Mayor Restaino had drawn for his dream of an arena.
Legal and Financial Complications
The mayor’s $150 million cost – which might be $225 million – or more or possibly less doesn’t include the costs of acquiring the land where he wants to build the arena. The mayor, relying solely on his judgment, decided on land owned by a private developer, Niagara Falls Redevelopment. The company has other plans for the site. When NFR told the mayor it planned a $1.5 billion Digital Data Center on its land to accommodate the growing demand for A1, he decided he wanted the front 10 acres of its land for his arena.
The land (above) Mayor Restaino selected for his hoped-for arena happens to belong to a company he considers his political enemy, which might provide a clue why the mayor seems so clueless about costs and funding for his plans.
NFR did not want to sell the land to the city, since it would kill its fully-funded AI Digital Data Center plan, which they had worked on for well over a year.
The mayor decided his vision of an arena was more lucid than the bricks-and-mortar project NFR had and took the company to court based on eminent domain to force the company to sell the land. The cost of this proceeding and the purchase of NFR’s land will increase the price of the arena project by tens of millions of dollars, including the legal fees in litigation, which could take years to complete.
Comparative Analysis with AI Data Center
An AI Digtial Data Center would put Niagara Falls at the forefront of a new growth industry.
A delay could be suitable for Restaino since he does not have the money to purchase the land, let alone the money to build the arena. He has searched but has yet to identify a taxpayer-funded source. He talked about borrowing through a bond and raising taxes to pay for the arena, and he decided he needed to improve the city. Without a comparison study, he has determined that the arena would do more for the city than a $1.5 billion AI digital data center with 550 permanent full-time jobs.
If Restaino successfully forces the sale of the land from NFR and gets the money to pay for it, he has to consider the rising costs of an arena that the city might not build during his time as mayor. Other arena projects – where the people who planned them and had a team in mind to play there have faced issues in rising costs– in some instances, causing cancellation of projects.
Arena Projects and Rising Cost Issues
In early 2022, the University of Alabama announced a $184 million, 10,000-seat arena to replace the outdated Coleman Coliseum.
By August of 2023, Alabama trustees indefinitely delayed the construction project, according to Alabama.com: In November 2022, President Stuart Bell said the costs had
risen 30-40%, making the project’s total cost $250 million.
In 2023, Alabama AD Greg Byrne stated the price may be $30 million more, adding that “the costs have gone up about $100 million in a year.”
Ultimately, the University of Alabama decided to update its existing facility instead.
Restaino cannot determine the final costs since that may be years away. But he has crafted a default plan.
Suppose he can get taxpayer money to pay for the forced sale of NFR’s land, but he can’t get the money to build the arena. In that case, he will at least control the land and could give it away to a developer who is more friendly to his administration and political ambitions.
Questions Raised Over Mayor’s Priorities
While this would prevent the AI digital center from being built, it would at least give the mayor control over who has control of the land, even if he cannot build an arena.
But Mayor Restaino, in the face of extreme odds against him, will not admit defeat despite evidence that the arena may cost more than his original $150 million estimate.
The mayor has also pushed back on critics who say his lack of an anchor tenant – a sports team to play there – is a problem. He has countered that he could lure little league tournaments from all around the country to play there instead of where they currently play.
He has also pushed back on the argument that the AI Digital Date Center will generate new taxes for the City of $3.8 million annually by arguing that the boost in revenue from an arena where people will come to see sports and concerts if he can find a sports team and the right concerts will be more valuable.
Though he has yet to support this theory with evidence, the mayor feels that the public can depend on his thinking since he has wanted to build an arena for years.
Possible Financial Scenarios
If the mayor fails to thwart the data center, he could use that nearly $4 million yearly in new tax revenue to pay the bond for his arena – if he selected another site.
An arena filled regularly might only lose half a million per year. If the mayor never finds a sports team and does not find events and concerts, the annual cost might be more than a million per year.
While it cannot provide the 550 full-time jobs NFR’s AI Data Center will provide, the mayor argues that an arena will provide part-time jobs during a sports event or concert.
The mayor has so far pushed back on building the arena on property already owned by the city, which would spare the cost of the forced buy from NFR and the cost of building a parking ramp – about $30 million of the estimated cost – because the city-owned property has an underutilized parking ramp adjacent.
If the mayor opted for the city-owned property, the new taxes from the AI digital center would pay for the bond to build a new arena.
But we can’t blame Restaino for not selecting the city-owned site since he never did a site selection or feasibility study, so how would he know if either project would work?