Next owner of Bills likely to face heavy mortgage payments
May 21--The Buffalo Bills are one of the National Football League's most profitable teams, but that could change in a hurry if the team is sold.
Because Bills owner Ralph Wilson founded the team for a mere $25,000 back in 1959, he doesn't have to worry about paying off a huge loan to finance the team's purchase.
But whoever buys the Bills from Ralph Wilson or his estate will have that worry -- and those loan payments could easily turn the franchise from one that makes a nice profit to one that roughly breaks even or worse.
And that could be the biggest hurdle to keeping the Bills in Buffalo once the team changes hands.
"The financial pressure on any new owner of an NFL franchise is significant," said David Carter, a sports business professor at the University of Southern California.
The Bills do not disclose how much money the team makes. The team had an operating profit of $11.6 million in 1999, according to court documents that offered a glimpse of the organization's financial status, but no updated information is available.
One widely cited report on NFL finances, from Forbes magazine, estimates that the Bills in 2006 were the seventh most profitable NFL franchise, earning an operating profit of nearly $35 million, despite ranking in the bottom third in revenues. That profit does not include taxes the team pays. But that profit will be much smaller, or even eliminated entirely, for the team's next owner because of the huge debt involved.
"To not have that mortgage is huge for keeping the team viable," said Kenneth Shropshire, a consultant and the director of the Wharton Sports Business Initiative at the University of Pennsylvania.
But if a new owner has to borrow $500 million to purchase the team, that loan will carry interest payments that could average around $35 million a year, effectively wiping out most of the franchise's current profits.
The result is that the Bills, who are on solid financial footing in Buffalo as a bought-and-paid-for franchise under longtime owner Ralph C. Wilson Jr., would suddenly be weighed down by a hefty debt load under a new owner.
"There is a serious problem on the horizon," Shropshire said.
The Minnesota Vikings are an example of a team burdened by debt. Owner Zygi Wilf purchased the team for a reported $600 million in 2005. He and his investors say they have had to pump more than $50 million of their personal cash into the team to cover operating expenses the past three years. Last month, Wilf had to make a capital call to investors for $20 mi llion more so the Vikings could sign newly acquired defensive end Jared Allen.
