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Pegula buys Bills


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(Updated 11:32 AM: Pegula bid over $1.2 billion).

Sources are telling me that Terry Pegula has won the bidding for the Buffalo Bills for about $1.2 billion, a record price paid for a professional football team that does not own its stadium. The deal could be officially announced today by Morgan Stanley MS -1.86%, the banker conducting the sale for the trust of the team’s late founder, Ralph Wilson.

There are lots of rumors that the true enterprise value (equity plus net debt) is in the $900s.Recall that when the Houston Texans expansion team was bought by  Robert McNair the “announced” expansion price was $700 million. But in fact the true purchase price (enterprise value) was about $550 million because McNair had an agreement with the NFL to pay the league most of the money in five years at zero interest, lowering the cost to McNair by about $150 million depending on the exact discount rate used.

Either way, the owner of the NHL’s Buffalo Sabres beat out a Toronto Group and Donald Trump.

My source says the Toronto Group, which included rocker Jon Bon Jovi, Larry Tenenbaum, chairman and 25% owner of Maple Leaf Sports & Entertainment, and the Rogers family, bid “around $1 billion” while Trump’s bid did not top $900 million.

Last month we valued the Bills at $935 million, 31 out of the league’s 32 teams. The Bills posted revenue and operating income of $252 million and $38 million, respectively, in 2013.

The most recent NFL team to be sold were the Cleveland Browns, who were purchased by Pilot Flying J CEO James Haslam for $987 million two years ago. The highest price paid for an NFL team previously was $1.1 billion for the Miami Dolphins by Stephen Ross. The real estate mogul bought 95% of the team and its stadium in a two-part deal from Wayne Huizenga; $550 million for 50% ownership in 2008 and the remainder the following year.

The 63 year old Pegula, who made his fortune in oil and gas, has a net worth of $3.3 billion.

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Sabres

Penn State Hockey Major Donor (100+ million)

Buffalo Bandits Lacrosse

Rochester Americans Minor League Hockey

Buffalo Bills - Minor league football.  :-D

 

 

Pegula founded East Resources, a natural gas drilling company that profited heavily upon the discovery of deep layers of natural gas in the Marcellus Formation and the development of the hydraulic fracturing process to recover said gas. Pegula eventually sold the Pennsylvania, New York, and Rocky Mountain assets of the company toRoyal Dutch Shell for approximately $4.7 billion. Pegula sold the Ohio and West Virginia assets of the company to American Energy for $1.75 billion in 2014.[3]

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That's good for Buffalo.  I've been to Buffalo a few times and I don't think it has enough people to support a minor league baseball team, but they do show up for games in the worst of conditions and still have decent attendance (especially considering the lack of success they've had recently).  So as much as I hate the Bills and some of their obnoxious fans, I think it's good that they get to keep their team.  The only downside is that, the new owner is supposedly pretty savy about hiring good people and building through the draft (atleast in the NHL), so that might actually mean some long term success there. 

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If the revenue/income figures are correct, running the Bills as a for profit business is a horrendous proposition.  Only $38 million operating revenue on $252 million gross revenue is a terrible ratio.  God only knows what the net income is, but it cannot be good.   

 

I am glad they are staying in the land of beef on weck and not moving north of the border.  That place is only suitable for fugitives and aging knuckle ballers.  

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