The Athletic Tim Graham on the rumors that the Sabres are for sale

[Jim Bob]

The Satchel: Any truth to Sabres sale rumors? Which Bills home game is a must-attend?

Tim Graham's mailbag also addresses who might start in net for the Sabres this fall and Josh Allen's influence on Bills team decisions.

theathletic.com

Is there any truth to the rumor of the Pegulas selling the Sabres? If so, who are potential buyers and what is the risk of relocation? — Adam Z.

Now that the details of the Bills’ new stadium have been finalized, do you believe the Pegulas will sell the Sabres, or sell part of the team? — Joey M.

Much to the bemusement of the Pegulas and their executives, these rumors have been roiling in Western New York for about a year.

People I trust on many matters assure me they’ve heard on good authority the Pegulas are selling the Sabres, are selling a piece of the Sabres, need to sell the Sabres, will sell the Sabres once the Bills’ stadium deal is finalized, will sell the Sabres, sell the Sabres, sell the Sabres.

Even so, I never take second- or third-hand information as gospel. Hell, I don’t always believe first-hand information from my mother.

The Pegulas and their top lieutenants have been 100 percent consistent each time I’ve gone to them to vet any tip the Sabres are on the market. In March at the NFL owners’ meetings, Pegula Sports and Entertainment executive vice president Ron Raccuia told a bank of television cameras and reporters’ microphones the Sabres are not for sale. He was succinct and short when asked: “No.”

As someone who’s cognizant of semantics — I’ve dealt with Don King and Darcy Regier for a living — I know how words can be minced. Was Raccuia saying the Sabres are not for sale at this very moment? He didn’t say they won’t be for sale eventually, did he?

So I asked him again over the weekend.

Raccuia reiterated the Sabres are not for sale, “not today and not once the stadium deal is finalized.”

I’ll also add I had a lengthy, off-the-record Sabres conversation with Terry Pegula at the NFL owners’ meetings, just chit-chat about the club and where he thinks they’re headed. Since he wasn’t being interviewed, I won’t share any specific comments Pegula made, but I don’t think he would mind me noting his excitement about the Sabres’ future and that he didn’t sound one bit like a man who wasn’t going to remain the owner.

Add in that ownership was a part of the interviews with prospects at the combine and I am not buying rumors that the Pegulas are close to giving up controlling ownership of the Sabres any time soon.

Click to read more...

 

[Gabrielor]

Despite a decade of bad decisions, Terry does still seem to love hockey.

 

[Jim Bob]

Despite a decade of bad decisions, Terry does still seem to love hockey.

Exactly.

If there is a change with ownership, I would just expect it to be a sale of a minor, non-controlling, share of ownership and nothing that removes the Pegulas from control of the Sabres.

 

[TehDoak]

The Satchel: Any truth to Sabres sale rumors? Which Bills home game is a must-attend?

Tim Graham's mailbag also addresses who might start in net for the Sabres this fall and Josh Allen's influence on Bills team decisions.

theathletic.com

Add in that ownership was a part of the interviews with prospects at the combine and I am not buying rumors that the Pegulas are close to giving up controlling ownership of the Sabres any time soon.

As others have speculated, I think they are likely selling off a piece of the team to a private equity firm to tap into the equity they've gained as the team value has appreciated. So it means the rumor mongers are right and the Pegula's aren't being dishonest. They will remain owners while selling a part of the team.

 

[old kummelweck]

To quote my friend "these rumors are almost always true."

 

[Dingo44]

Non-story. I read the article before this post and didn't even think it worth mentioning.

 

[RefsIdeas]

It’s starting to seem like the Pegulas had real interest in selling part or all of the team, but something changed along the way. Maybe their fracking business is doing better? Maybe they got a better than anticipated deal for the Bills stadium? But there was an awful lot of smoke for a while that seems to have calmed down considerably

 

[TehDoak]

It’s starting to seem like the Pegulas had real interest in selling part or all of the team, but something changed along the way. Maybe their fracking business is doing better? Maybe they got a better than anticipated deal for the Bills stadium? But there was an awful lot of smoke for a while that seems to have calmed down considerably

I think the biggest smoke was the absolute bare minimum spend on the team/staff/facilities last year. That is pretty typical near a sale of any business, they aren't going to spend more on non revenue related pieces than they have to. Like I said, I think its likely a PE style deal than an actual sale. But weirder things have happened.

 

[Nikolajs Sillers]

It’s starting to seem like the Pegulas had real interest in selling part or all of the team, but something changed along the way. Maybe their fracking business is doing better? Maybe they got a better than anticipated deal for the Bills stadium? But there was an awful lot of smoke for a while that seems to have calmed down considerably

Oil prices skyrocketed.

 

[RefsIdeas]

Oil prices skyrocketed.

I've tried to dig a bit into this. I know they still operate JKLM Energy and Sabre Oil Company LLC + 1 other I think? It seems like JKLM Energy hasn't produced since January of 2022 and was actually blocked from digging another well by the Seneca nation. Plus they have a bunch of regulatory and compliance fines.

They also founded a SPAC that raised $300 million in an IPO with East Resources Acquisition Company, that was also recently found out of compliance for not producing a quarterly report lol.

So I truly have no idea how to gauge if/how much they are making from their fracking businesses at the moment.

 

[UnleashRasmus]

Please sell the team Terry.

 

[Buffaloed]

As others have speculated, I think they are likely selling off a piece of the team to a private equity firm to tap into the equity they've gained as the team value has appreciated. So it means the rumor mongers are right and the Pegula's aren't being dishonest. They will remain owners while selling a part of the team.

I don't see that happening now. The Pegulas have been steadily getting their financial house in order by jettisoning the hospitality business. The Sabres are at a state where they could rapidly appreciate in value. Unless they really need the money, which I don't believe they do, they'd be crazy to sell a piece of that.

 

[TehDoak]

I don't see that happening now. The Pegulas have been steadily getting their financial house in order by jettisoning the hospitality business. The Sabres are at a state where they could rapidly appreciate in value. Unless they really need the money, which I don't believe they do, they'd be crazy to sell a piece of that.

They likely don't NEED to, but the Sabres still bleed cash. If they sold 20% at a 500M valuation, it'd be 100M cash they could use to offset their losses while hopefully the Sabres returned to break-even-ish as the team improves and the fans come back.

 

[brian_griffin]

They likely don't NEED to, but the Sabres still bleed cash. If they sold 20% at a 500M valuation, it'd be 100M cash they could use to offset their losses while hopefully the Sabres returned to break-even-ish as the team improves and the fans come back.

Not directed to you singularly, but why is it important the Sabres are profitable if PSE holds many more entities and the Sabres losses offset (for taxable income purposes) gains by the Bills and other PSE businesses? Why is it important for the oil / LNG / energy interests the Pegulas hold / operate to be profitable if those businesses offset the operating income / profit in the Buffalo Bills / PSE side of the house makes?

Too many of us think like heads of households and not heads of businesses. It's an ideal arrangement to have an operational structure which provides you enough [business] personal cash flow to [operate the business] live the lifestyle you want, yet minimizes (or eliminates altogether) taxes paid, all the while the assets you hold appreciate in value which is not taxed until time of sale / transfer / death. And even the taxes due at death can be planned for and reduced. Are ANY of the Pegula businesses publicly owned and incorporated in states where there are regulations for fiduciary responsibilities to the investors????

Pegulas, even if they are funding a portion of the Bills stadium, aren't in a Melnyck-like gambling debt situation

 

[Buffaloed]

I'm just glad they were able to scrape together enough pennies to get the new yacht done.



Learn to ignore the haters Pegula’s $75 million yacht riles New York taxpayers

 

[TehDoak]

Not directed to you singularly, but why is it important the Sabres are profitable if PSE holds many more entities and the Sabres losses offset (for taxable income purposes) gains by the Bills and other PSE businesses? Why is it important for the oil / LNG / energy interests the Pegulas hold / operate to be profitable if those businesses offset the operating income / profit in the Buffalo Bills / PSE side of the house makes?

The Sabres were never going to be profitable, I'm sure the Pegula's were told that by their advisors going in. At best, a widely successful team would break even or marginally profitable. They likely didn't anticipate 10 years of the Sabres bleeding money, however.

I mean, is it important in wider scope of things for a family that have more money than can ever spend? Probably not. I have to think they'd rather see it lose less money than it is, however. That is evident in the layoffs during the pandemic and the cap floor team we saw last season.

 

[VaporTrail]

I'm just glad they were able to scrape together enough pennies to get the new yacht done.



Learn to ignore the haters Pegula’s $75 million yacht riles New York taxpayers

Hmmm kind of wonder if that's true...$6 million per year to operate ?? That's $16,438 per day...If it is true that's nutzzz

 

[WhereAreTheCookies]

The Sabres were never going to be profitable, I'm sure the Pegula's were told that by their advisors going in. At best, a widely successful team would break even or marginally profitable. They likely didn't anticipate 10 years of the Sabres bleeding money, however.

The Sabres haven't been "bleeding money" most years. In fact, most years if they've suffered losses they have been extremely minimal.

Generally speaking their expenditures each season can be anywhere from 90 - 120 million from my understanding, and obviously that increases as the salary cap increases and the largest portion of that is player salaries which obviously fluctuates quite a bit. They also have mostly fixed costs that are generally going to be about the same each season for things like scouting, analytics, arena expenses, broadcast, advertising etc etc.

The below link is their revenue since the lockout, and as you can see it has gradually risen up until the covid season where they generated like 2 million in ticket sales due to the lockdowns. Obviously they took a massive hit of like 40 million last season, but generally they have been completely fine. The TV deal revenue sharing has really helped reduce the losses small market teams were taking year to year.

Buffalo Sabres revenue 2021 | Statista

 

[brian_griffin]

I'm just glad they were able to scrape together enough pennies to get the new yacht done.



Learn to ignore the haters Pegula’s $75 million yacht riles New York taxpayers

Are there any professional hockey goalies with a current yacht Captain's license? If so, those Venn diagrams would have a potentially LARGE overlap.

Hmmm kind of wonder if that's true...$6 million per year to operate ?? That's $16,438 per day...If it is true that's nutzzz

Hookers and blow...

In all seriousness, dock / slip fees are probably a half million or more per year. Crew. Insurance. Fuel. Fuel.

 

[Sabre Dance]

Please sell the team Terry.

All they need is a smart GM. Hopefully Adams is the guy. Once the Sabres are good under the Pegulas they’ll be good for a long time.

 

[Djp]

The Satchel: Any truth to Sabres sale rumors? Which Bills home game is a must-attend?

Tim Graham's mailbag also addresses who might start in net for the Sabres this fall and Josh Allen's influence on Bills team decisions.

theathletic.com

Add in that ownership was a part of the interviews with prospects at the combine and I am not buying rumors that the Pegulas are close to giving up controlling ownership of the Sabres any time soon.

i don’t buy it because they went through integrating much of the non sport focused departments such as merging marketing and advertising, ticket sales and promotions, HR, etc.

 

[Zach716]

The Sabres were never going to be profitable,

The Sabres aren't profitable? Even with the complete lack of competitiveness and playoffs, our owner has enjoyed a massive increase in valuation of the franchise. Pegula could sell the team today and get a double evaluation. PSE also owns the Bills of course. It really isn't a debate about profit.

 

[TehDoak]

The Sabres haven't been "bleeding money" most years. In fact, most years if they've suffered losses they have been extremely minimal.

Generally speaking their expenditures each season can be anywhere from 90 - 120 million from my understanding, and obviously that increases as the salary cap increases and the largest portion of that is player salaries which obviously fluctuates quite a bit. They also have mostly fixed costs that are generally going to be about the same each season for things like scouting, analytics, arena expenses, broadcast, advertising etc etc.

The below link is their revenue since the lockout, and as you can see it has gradually risen up until the covid season where they generated like 2 million in ticket sales due to the lockdowns. Obviously they took a massive hit of like 40 million last season, but generally they have been completely fine. The TV deal revenue sharing has really helped reduce the losses small market teams were taking year to year.

Buffalo Sabres revenue 2021 | Statista

So, I tried to figure out where those numbers came from and I couldn't find a source. However:

Buffalo Sabres on the Forbes The Business of Hockey List

Buffalo Sabres #31 on the Forbes The Business of Hockey List

www.forbes.com

Seem to be pulling the same numbers.

I think you should note the 'operating income' numbers. -40M last year, -11M in 2020, And, if these numbers are true, they are making money some years, but its much smaller amounts than years when they are losing

The Sabres aren't profitable? Even with the complete lack of competitiveness and playoffs, our owner has enjoyed a massive increase in valuation of the franchise. Pegula could sell the team today and get a double evaluation. PSE also owns the Bills of course. It really isn't a debate about profit.

Unless he sells all or part of the team, that valuation doesn't mean much. Equity isn't income unless you sell.

 

[WhereAreTheCookies]

Seem to be pulling the same numbers.

I think you should note the 'operating income' numbers. -40M last year, -11M in 2020, And, if these numbers are true, they are making money some years, but its much smaller amounts than years when they are losing

Yea, the past 2 years have definitely been rough for them, and it's clear that they need to sell tickets to break even which they were unable to do this past season. I think they were probably fine financially pre-covid. Since the Pegulas bought the team just looking at their ticket sales each season, they were getting nearly full arenas, and the new TV deals as I mentioned have been a lifeline for many small market teams. Someone on the Sens board had posted teams operating losses for the past 10 years and the Sabres were right around 50 million which can be explained by 19-20 and 20-21 while they mostly broke even the rest of the time.

They made a lot of knee jerk reactions during the lockdowns just like a lot of other businesses did. Cutting payrolls, laying off or furloughing employees etc. So it's entirely possible that they looked at selling a piece during that time as a knee jerk reaction to try and offset their losses. Then their net worth increases quite substantially during the pandemic and maybe they simply calmed down and went back to business as usual. Adams said he had no financial constraints, and I don't know that he's given fans any reason not to take him at his word just yet, but obviously that can change.

 

[SnuggaRUDE]

Not many MBAs in this thread are there?