The Buffalo Sabres are extending their lease at KeyBank Center for five more years.
This provides more of a cushion for the Sabres to negotiate a longer-term deal that could include public funding for needed renovations to their aging arena.
The Sabres will operate this season under the existing terms of their lease with Erie County and then for the four seasons after – or until a new, long-term agreement can be reached.
This comes as the Sabres negotiate with the county and other parties for a more modern lease than the current one first developed around three decades ago. It’s a process that will likely also involve the state, and possibly the city, and a request for public funding to pay for improvements and upgrades at the arena.
The Sabres had to make a decision on the lease by Sept. 30. A provision in the agreement allowed the team to either continue it under the existing terms for a five-year period or opt out.
There continues to be some initial conversations about a new lease and what it would take to help make some much-needed renovations at the almost 30-year-old downtown arena, but those conversations aren’t expected to heat up until construction on the Buffalo Bills’ new stadium is complete.
Construction on the over $2 billion Bills stadium is slated to be substantially done by July 2026, with some punch-list and final items to be completed by the end of next year.
The team says the decision to continue the lease for another five years under the existing terms represents a show of commitment to Western New York by team owner Terry Pegula.
“It creates a window to continue to have those discussions,” said Pete Guelli, chief operating officer and executive vice president for both the Sabres and Bills. “Ultimately, at some point, modernizing that lease and looking at a longer-term commitment would be something I think everyone would be interested in, and this gives us the opportunity to determine exactly how to get there.”
The formal notification that the main tenants of the arena, the Sabres, along with the Buffalo Bandits, will be continuing under the current terms of the lease will be filed next week. It will extend the lease through Sept. 30, 2031.
Guelli said he spent time with the Sabres owner and his daughter, Laura Pegula, an increasingly bigger player in the leadership for the team, digging into the operation of the arena property and having discussions with stakeholders to see if there is a shared vision for the arena and the area around it.
The team has been keen on bringing even more events to the arena and having it be a catalyst for downtown growth.
The arena hosted 140 events in the last calendar year, bringing 1.3 million people through the building, and KeyBank Center is expected to host closer to 200 events per year.
“We came away from our discovery process feeling very optimistic about the future, relative to where we can take the arena and the Sabres,” Guelli said.
The county owns the arena building, while the City of Buffalo owns the property it sits on. County officials would like to get out of the arena business and could do so during the new lease negotiations.
It already has done that with the Bills stadium. The state is taking ownership of the stadium property, after providing $600 million of the $850 million in public dollars to the Bills new stadium and leasing it to the team once the new facility is completed. A similar agreement is not out of the question for KeyBank Center.
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One thing they won’t be talking about is a new arena, even though KeyBank Center pales in comparison with more modern arenas around the NHL. That’s a positive in the negotiations, considering the high cost of modern stadiums and arenas.
“You don’t negotiate in the last year of a lease, so to speak, expecting to have a brand new lease the next year with all kinds of work that’s done. It takes time,” said Erie County Executive Mark Poloncarz.
“This gives the county, the team and possibly the state and city, if they’re participating, an opportunity in the future without the lease expiring and us having to figure out something by a certain timeline or otherwise, they theoretically can move,” he added. “This gives us plenty of time to figure out the next iteration of the KeyBank Center.”
Guelli said the team is still in preliminary discussions with the county, as well as the state – through its economic development arm. He wants to be ready to move on the lease relatively quickly after the Bills stadium is complete.
The state has already made some significant investment in areas around the arena, so Guelli is talking to them about how the team can help in those efforts to provide more of an economic boost and drive people into neighboring downtown venues.
“We’re bullish on that opportunity and you can see the arena being the center of it,” Guelli said. “We’d love to be part of something that could help revitalize the City of Buffalo.”
Poloncarz said the arena is a key piece of what drives people downtown, being next door to Canalside, the Cobblestone District and Harborcenter. That’s still true, even as the Sabres languish in a 14-year playoff drought.
“When the arena was hopping and the team was doing quite well, people wanted to be downtown around there,” Poloncarz said. “I’m hoping we not only have a team on the ice that brings people downtown, but also the facility itself is part of a continued entertainment district that is key to the future of the city.”
But Poloncarz said the county is not in a position where it can focus on the arena because so much of their time is still being spent on the Bills new stadium in Orchard Park and resolving some minor issues that come up at times.
“I expect we’ll get it done, sooner before the end of the five-year period, but the most important thing we’re all focused on is ensuring that the stadium is done and ready for next year,” Poloncarz said.
The downtown home of the Sabres originally opened as Marine Midland Arena in 1996. The aging building now faces a host of pressing renovation needs, which could supersede its original construction cost of $127.5 million. Accounting for inflation, that is equivalent to $247 million today.
Since buying the Sabres in 2011, Pegula has spent millions on improving the fan experience in the arena, but he may require some financial support for what’s ahead.
The team is supposed to be responsible for upgrades to the building and took on the costs of a new roof and new video scoreboard before the start of last season. That price tag was around $10 million. Before the start of this season, the Sabres installed a multimillion-dollar audio system to pair with the videoboard.
But there are numerous additional needs inside the arena, including in the seating bowl and concourses, which have gone virtually untouched since the arena opened three decades ago, as well as potentially improving the inside infrastructure and look of the antiquated building from the outside.
“We know there is work to be done there,” Guelli said. “It’s just a matter of when, and not if.”
Architectural firm, Populous, which designed the new Bills stadium, was brought in earlier this year to do a study on the building that will help form a plan for some of the next steps.
A big part of the early conversation with Populous has centered on improvements to the fan experience, needed technology advancements and what may be necessary to make the arena more of a multipurpose venue.
Poloncarz knows it is important to the Sabres to renovate the back of the house infrastructure, as well as improving cosmetics that are more fan facing. There are items that may not be as large but could still come with a lofty price tag, he said.
“It’s got to be great for the hockey team and the Bandits, but for the variety of events that we’d like to attract, it needs to be able to handle those and be equipped to handle quick turnover, because we know that will have the biggest impact on our business and the city,” Guelli said.
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Michael Petro
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