One day after Terry Pegula stunned the region by announcing that he was interested in selling a minority stake in the Buffalo Bills, the key question seems to be: Why?
There are ample reasons why this is an ideal time for such a transaction, from the rising value of the franchise and the ballooning cost of the new stadium to his wife’s health and his responsibility to pay for improvements to the building where his other major asset, the Buffalo Sabres, play.
“Terry is getting ahead of the curve here,” said sports consultant Marc Ganis, an adviser to the NFL, who said he’s known about Pegula’s desire to seek a minority ownership partner for weeks. “And there are individuals who have a high interest in investing in NFL teams.”
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The Pegula family has retained Florida-based investment firm Allen & Company to explore the potential sale of a noncontrolling interest in the Bills, the team confirmed in a statement Friday.
Allen & Company, which offers wealth management solutions, advised the Pegulas when they bought the Bills for $1.4 billion in 2014. It also assisted the Denver Broncos in their 2022 sale, as well as advising entities like the New York Mets, Facebook, Time Warner Cable and AOL during acquisitions and mergers.
And while some have questioned for years whether Pegula will sell the Sabres, the Bills said these discussions involve no other teams owned by the Pegula family. They also own the National Lacrosse League’s Buffalo Bandits and Rochester Knighthawks, along with the American Hockey League’s Rochester Americans.
“No investment would be possible without Terry Pegula and the Pegula family maintaining a controlling interest in the team,” the Bills said in a statement. “Their continued commitment to Western New York, the new Highmark Stadium, our fans, and the other teams in their portfolio remains unchanged.”
According to a report from The Athletic, Pegula may look to sell 25% of the team, although the specific amount could ultimately change.
“The team’s valuation has shot up incredibly, and once the facility was finalized, the team is worth a whole heck of a lot more,” said Nellie Drew, professor of sports law at the University at Buffalo. “So, perhaps, this is a judicious time to do this.”
Why now?
A league source, who spoke with The News on the condition of anonymity, pointed to three reasons why Pegula might choose to sell a minority share of the Bills:
• Cash flow. Terry Pegula is worth $6.8 billion, according to Forbes. That obviously means he’s uber rich. But grandiose wealth does not necessarily mean copious amounts of cash in the bank. Forbes also values the Bills at $3.7 billion and the Sabres at $750 million. (Sportico, separately, has valued the Sabres at $900 million, and it’s possible the team could fetch $1 billion or more on the market.)
Sticking with the Forbes numbers, Pegula still has a net worth of more than $2 billion outside of his two big-league clubs. But much of that is still likely tied up in holdings and investments. Selling a quarter of the team could inject several hundred million dollars – maybe close to $1 billion – into Pegula’s bank account. He bought the Bills outright for $1.4 billion in 2014. That’s a nice return on his investment, and it could also help pay for the Bills share of the stadium costs.
• Kim Pegula’s health situation. Pegula’s wife, who is 54, has been away from work for nearly two years after suffering a brain injury following a cardiac arrest in June 2022. At the time, Kim Pegula was the president of both the Bills and Sabres and presumably positioned to lead the franchises into the foreseeable future. She was a hands-on leader, involved in the business side on a day-to-day basis, and relatively visible in the community.
By all accounts, Terry Pegula is not those things. While he is involved in big-ticket decisions, such as major costs associated with the construction of the new stadium, he is not known to be a details man within the organization, and on the outside, he hasn’t done a media interview in years. The recent hiring of Pete Guelli as chief operating officer of the Bills and Sabres means the organization will have a single person leading the day-to-day operations, but sometimes there’s a need for ownership to be accessible to the media and visible to the fans. It’s possible, though hardly guaranteed, that the eventual new minority owner could be that person.
• Succession. If Pegula or his family opt to sell the Bills, the minority owner could be an obvious buyer, especially if the deal gives them the first right of refusal.
The league source also pointed out that while the influx of cash could be helpful for covering the Bills’ share of the new stadium costs, it is likely far more than is needed. For example, after accounting for the government’s contribution of $850 million, it’s likely that Pegula is responsible for about $1 billion in stadium costs. Much of that will be in hand, however. PSLs could fetch $250 million, and the NFL’s G4 loan program could bring in another $300 million to $350 million. That leaves another $400 million to $450 million for construction, which can be financed, paid in cash or a combination of both. But in any configuration, it’s far less money than what Pegula will get for selling 25% of the team, which means he’ll likely have a lot of liquid cash left over.
Unsaid by this source but understood as a factor is the situation with the Buffalo Sabres. Mired in a 13-year playoff drought, the Sabres have struggled to put fans in seats at KeyBank Center over the past several years and have many costly needs around their arena, which opened in 1996. The team will eventually need to address the seating bowl and building structure in the arena owned by Erie County but run by the Sabres.
Enter limited partners
The NFL is close to allowing private equity firms into ownership groups, something that could be approved as soon as leaguewide meetings in May. It could open the door to an array of wide-ranging investors, allowing owners to raise significant capital from quick pools of cash.
The average valuation of the 32 NFL teams rose 14% in the past year alone, to an average of $5.1 billion per team, according to Forbes’ annual analysis. That’s up from an average of $1.4 billion from just nine years earlier.
The skyrocketing costs means a smaller pool of people have enough wealth to enter into majority ownership in the most popular professional sports league in America.
The last two franchises that changed hands went to large ownership groups.
The Washington Commanders were sold in 2023 for $6.05 billion to an ownership group of 20, the largest in the league. The majority owner is John Harris, who is the co-founder of the private equity firm Apollo Global Management and has an estimated net worth of $9 billion. Harris’ ownership group includes billionaire investor and art collector Mitchell Rales and basketball legend Magic Johnson.
A year prior, the Denver Broncos were purchased by Walmart heir Rob Walton for $4.65 billion. His group includes at least five minority owners, including former U.S. Secretary of State Condoleezza Rice and F1 auto racing star Lewis Hamilton.
Additionally, the Pittsburgh Steelers, according to latest reports, have 18 in their ownership group under Art Rooney II. They include Bruce Rauner, a venture capitalist and the former governor of Illinois, along with Steelers Hall of Famer John Stallworth.
The NFL also approved a group of limited partners for the Atlanta Falcons in 2019.
The Miami Dolphins have a group of famous limited partners, including tennis stars Venus and Serena Williams, and pop music celebrities Gloria and Emilio Estefan, and earlier this year, owner Stephen Ross said he’s looking to sell an additional portion of the team.
Renowned author Tom Clancy owned a small stake in the Baltimore Ravens until his death in 2013. Retired quarterback Tom Brady and billionaire financier Tom Wagner are currently seeking to purchase a limited stake in the Las Vegas Raiders.
Private equity is a factor
According to reports, private equity firms are preparing funds to invest in stakes of NFL teams – another reason someone like Pegula might now be considering selling a portion of the Bills.
The NFL is considering a model for bringing private equity into the fold, which would likely provide for an influx of bidders and sources of capital for franchises.
When the NBA allowed for private equity investment, it made for dozens of transactions over a few years, Ganis said.
The NFL has done well with more restrictive ownership policies but adding more capital from other sources “is not a bad thing for a business,” Ganis said. The value of teams has become so astronomical that it’s hard to hold off the private equity firms any longer.
The matter was discussed and tabled at the annual owners meeting in March and will be talked about again in May. There is an expectation that a plan permitting it under certain conditions will be approved at that time or later this year.
“How it is done will determine how valuable it winds up being for the NFL as a sports league,” Ganis said. “It will be valuable for anyone who wants to sell, that’s for sure.”
What the future holds
Could this signify the beginning of an ownership transition for the Bills?
“You never know what the future holds, but the team is locked into Buffalo,” Ganis said.
Drew does not believe this is a bridge to selling the entire team, which recently signed a 30-year lease that kicks in once stadium construction is completed.
“I don’t think you would embark upon a stadium project like this unless you intended to stay the course,” she said. “That would not make any sense at all.”