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Pegula Sports Entertainment, behind the scenes


LGR4GM
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24 minutes ago, PromoTheRobot said:

"Cailin Birch, global economist at the Economist Intelligence Unit, said: “US crude oil production has begun to fall in the last two weeks, and will continue to fall in the coming months as already heavily indebted shale firms scale back activity or are forced into bankruptcy or consolidation.”

I feel if shale oil is dropping like a rock PSE might have limited funds for a few months until prices rebound. 

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The article mentioned that their net worth was estimated at $4.5B and that people close to them say that is a high estimate.  They've got somewhere between $1.5-$2B of that value in the sports teams.  None of the other businesses mentioned (HarborCenter, Black Rock Entertainment, PSE, PicSix, AdPro, pet vanity restaurants such as Healthy Scratch & the other one) seem to be anywhere close to combining for $1B of value.  Which would put their oil & gas holdings at $2-$3B PRIOR to the energy markets tanking.

The value of those properties will rebound, but right now they aren't making anything off them.  Can see them having a very real liquidity issue.

Thought it was interesting that K Pegula mentioned that "we used the majority of the NFL line of credit in the initial purchase of the team. ... It is a very small percentage of the valuation."  Considering they liquidated $1.7B to make the $1.4B purchase, hadn't realized they'd tapped into any line of credit at that time.  Anybody have any additional info on that?

Their comments are definitely hamhanded and they might deserve that flack they are receiving, but my guess is they're closer to potential bankruptcy filings than anybody has suspected.  (And not saying nor implying they're broke; they aren't.  But they could be very cash poor at present.)

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10 minutes ago, Taro T said:

The article mentioned that their net worth was estimated at $4.5B and that people close to them say that is a high estimate.  They've got somewhere between $1.5-$2B of that value in the sports teams.  None of the other businesses mentioned (HarborCenter, Black Rock Entertainment, PSE, PicSix, AdPro, pet vanity restaurants such as Healthy Scratch & the other one) seem to be anywhere close to combining for $1B of value.  Which would put their oil & gas holdings at $2-$3B PRIOR to the energy markets tanking.

The value of those properties will rebound, but right now they aren't making anything off them.  Can see them having a very real liquidity issue.

Thought it was interesting that K Pegula mentioned that "we used the majority of the NFL line of credit in the initial purchase of the team. ... It is a very small percentage of the valuation."  Considering they liquidated $1.7B to make the $1.4B purchase, hadn't realized they'd tapped into any line of credit at that time.  Anybody have any additional info on that?

Their comments are definitely hamhanded and they might deserve that flack they are receiving, but my guess is they're closer to potential bankruptcy filings than anybody has suspected.  (And not saying nor implying they're broke; they aren't.  But they could be very cash poor at present.)

Again, I don't know anything. But your wording strikes me as odd — they liquidated $1.7 billion to buy the Bills. They sold their land/mineral rights holdings and got $1.7 billion in cash, no? After selling holdings for $4.7 billion in 2010. That's $6.5 billion. Those holdings are gone. I don't see what the current oil/gas downturn has to do with it.

A bigger question is how any couple who had $4.7 billion plopped on their laps could be in this financial situation 10 years later? Why is there even a PSE? Why wouldn't it have been enough to buy the teams, Kim could have knitted some trinkets to sell on Etsy (which probably represents the sum total of her business acumen), go sit on your yacht and enjoy life? Why this need for more money, status, power? I honestly don't get it.

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18 minutes ago, LGR4GM said:

"Cailin Birch, global economist at the Economist Intelligence Unit, said: “US crude oil production has begun to fall in the last two weeks, and will continue to fall in the coming months as already heavily indebted shale firms scale back activity or are forced into bankruptcy or consolidation.”

I feel if shale oil is dropping like a rock PSE might have limited funds for a few months until prices rebound. 

Oil and gas would seem to be only a side business for Terry and his daughter. I have no idea what that business is worth. But I don't think it's a lynchpin of the Pegula financial empire that will either save or ruin them.

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Impressive. Most impressive.

The Pegulas have kept the team in Buffalo and renovated the hockey setup and city to host tourneys and combines and overall it appears they've had good intentions. But being rich and having good intentions doesn't qualify you for every role. PLF, ROR, no hockey president, electing to tank, cycling GMs with vastly different approaches so they can't build off each other, every single new hire and new player and every hockey talking head saying they have to change the culture....  The culture is a downward spiral for 13 years.

Wealth doesn't stop you from making mistakes in judgment or trusting people who aren't the best for a gig. And sometimes demand dries up and you run out of wells to dig. I hope the Sabres and Bills and the many people who work within the franchises and and live in the Buffalo community can get through this intact and improved so that the Pegulas can someday celebrate championships with them. That'd be nice. (And sure, ROI and personal lifestyle, too... hmmm... good they called those out.) But the first decade hasn't exactly built confidence in that potential.

4 hours ago, darksabre said:

I bet you could pick 5 people from this forum, give them total control over the Pegula empire, and it would work out fine.

I have brought peace, freedom, Stanley Cups, and security to my new empire!

(Your new empire?)

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1 minute ago, PASabreFan said:

Again, I don't know anything. But your wording strikes me as odd — they liquidated $1.7 billion to buy the Bills. They sold their land/mineral rights holdings and got $1.7 billion in cash, no? After selling holdings for $4.7 billion in 2010. That's $6.5 billion. Those holdings are gone. I don't see what the current oil/gas downturn has to do with it.

A bigger question is how any couple who had $4.7 billion plopped on their laps could be in this financial situation 10 years later? Why is there even a PSE? Why wouldn't it have been enough to buy the teams, Kim could have knitted some trinkets to sell on Etsy (which probably represents the sum total of her business acumen), go sit on your yacht and enjoy life? Why this need for more money, status, power? I honestly don't get it.

Yes, they sold land and mineral rights to buy a very illiquid asset.

They have never sold the entirety of their land holdings.  They no longer own East Resources but they do own JKLM Energy which according to their FAQ's is "the largest Utica shale  producing company in Pennsylvania."  Couldn't find how large it is, $ wise, but they have over 120,000 acres of land.  And that land has been providing zero cashflow since July according to the Athletic article.  (That's when the wells were capped.)

That has to be a huge hit for them to take.  Combine that making $0 along with all their other investments making $0 for the last month and it isn't an outrageous expectation that their cash reserves are dwindling precipitoysly.

And, again, not saying they're broke.  Saying they have a cashflow issue.  They aren't the same thing.

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Just now, DarthEbriate said:

Was the Sabrepede over 5 years ago now? ?

5 years ago this week I was in Florida. The draft lotto was happening. On the night of the lotto I was at a car show and made the proclamation that when we won this lotto I was going to buy a '66 Chevelle to celebrate. Trouble is there was only one '66 at the show and the guy was asking for triple its value. So I was off to a bad start. Then we lost the lotto, great! Then we have gone what seems like 5 years without winning a hockey game. Seriously, the only fun I've had with this team in the last five years have been on this message board and going to the Meet-up games with the people on this message board.

...and this article. 

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3 minutes ago, ubkev said:

5 years ago this week I was in Florida. The draft lotto was happening. On the night of the lotto I was at a car show and made the proclamation that when we won this lotto I was going to buy a '66 Chevelle to celebrate. Trouble is there was only one '66 at the show and the guy was asking for triple its value. So I was off to a bad start. Then we lost the lotto, great! Then we have gone what seems like 5 years without winning a hockey game. Seriously, the only fun I've had with this team in the last five years have been on this message board and going to the Meet-up games with the people on this message board.

...and this article. 

This board has kept me coming back, too. Because we all know the hockey product has been... less of a pull... than we'd wish. Oh my Threepio-to-Ewoks: Eichel's been in the league 5 years already!

Silver linings -- you kept some cash? And Eichel occasionally produces a hearty cheer?

 

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1 hour ago, That Aud Smell said:

I missed this initially. So, Kim flat-out told the rank and file that the needs of the sports franchises would not be allowed to diminish the family's luxury lifestyle?

The worst. And not even for thinking it, not even for being guided by it -- but for effing saying it out loud to everyone. Idiots.

Oh the humanity.

No.  According to the article, there was a management presentation that included a powerpoint presentation, in which 1 of the slides laid out 3 main Pegula family goals:  win championships, sustainability, and return on investment.  The ROI goal included a sub-heading that read "fund businesses, taxes, lifestyle."

The article also said:

Quote

Pegula, current and former employees say, explained that return on investment included maintaining the family’s lifestyle.

In other words, the 3rd of 3 articulated goals was for the business to pay for itself as well as to contribute to the family's lifestyle -- i.e. to turn a profit that the family could use to live large, or give to charity, or do whatever else they want with it.

So, nothing too inflammatory or nutty there, although it was probably pretty tone-deaf to include "lifestyle," since it's pretty clear that they live quite large and it didn't need to be waved in everyone's faces that they intend to keep doing so.

 

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53 minutes ago, Eleven said:

I can sure say this so far--anyone who thought that WGR is afraid to criticize the Pegulas needs to walk that back after the last half hour.

Meh. There were a couple of yacht cracks and a general tone of confusion/should we be mad? about the Pegulas' situation. You oversold it pretty good.

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12 minutes ago, nfreeman said:

No.  According to the article, there was a management presentation that included a powerpoint presentation, in which 1 of the slides laid out 3 main Pegula family goals:  win championships, sustainability, and return on investment.  The ROI goal included a sub-heading that read "fund businesses, taxes, lifestyle."

The article also said:

In other words, the 3rd of 3 articulated goals was for the business to pay for itself as well as to contribute to the family's lifestyle -- i.e. to turn a profit that the family could use to live large, or give to charity, or do whatever else they want with it.

So, nothing too inflammatory or nutty there, although it was probably pretty tone-deaf to include "lifestyle," since it's pretty clear that they live quite large and it didn't need to be waved in everyone's faces that they intend to keep doing so.

 

It absolutely was tone deaf to include "lifestyle" there.  But remember also, that the logos on that PowerPoint slide included "gas and oil."  They would seem to have been focused on all their businesses and those in the meeting were concerned with the 1 (or so) that they happen ed to be employed by.

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1 hour ago, Let's Go B-Lo said:

Spending to the cap to miss the playoffs is what they are doing now and it's neither viable nor sustainable.

Maybe Botterill needs the handcuffs thrown on him to become a good GM.  (Looking for a positive...)

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14 minutes ago, PASabreFan said:

Meh. There were a couple of yacht cracks and a general tone of confusion/should we be mad? about the Pegulas' situation. You oversold it pretty good.

Not at all.  There were comparisons to the Jacobs family, there was a lengthy criticism of the failure to pay game-day employees, and some serious discussion of the "drill another well" mentality.  

You either didn't listen to too much of it (because they did take a break after a few minutes to talk NFL draft) or are underselling it.

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59 minutes ago, Taro T said:

Yes, they sold land and mineral rights to buy a very illiquid asset.

They have never sold the entirety of their land holdings.  They no longer own East Resources but they do own JKLM Energy which according to their FAQ's is "the largest Utica shale  producing company in Pennsylvania."  Couldn't find how large it is, $ wise, but they have over 120,000 acres of land.  And that land has been providing zero cashflow since July according to the Athletic article.  (That's when the wells were capped.)

That has to be a huge hit for them to take.  Combine that making $0 along with all their other investments making $0 for the last month and it isn't an outrageous expectation that their cash reserves are dwindling precipitoysly.

And, again, not saying they're broke.  Saying they have a cashflow issue.  They aren't the same thing.

They have been acting like Jabba the Donner for a long time now though.  Their cash flow is the sports teams and Buffalo businesses.  I believe Kim when she says they've reinvested heavily in the Bills.  Quite frankly, they needed to.  What does that leave them as revenue streams?  Sabres and Amerks are cash flow sieves.  So 716, the harbor center and the Bandits(?) are their cash cows. Yikes!  

I'm sure I'm at least 50% wrong but I want to get some folks thinking about.  

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Kim is running things into the ground.  Not just one franchise will be affected.  The premature end to the season was a blessing.  I am not sure this team will recover.  The Pegulas are becoming a joke.  The only thing that is saving their collective reputation is the Bills.  

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I am not here to stick up for the Pegulas in this case.

Let's just be fair: If the Sabres had 10 straight years of making the playoffs, 2 ECF's and 1 SC title, is this even being discussed? Does this article even exist?

All they have to do is win. Winning masks most if not all of this. The Pegulas have earned being an easy target for the lack of winning the Sabres have been doing, so that is the only way this will change.

 

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4 hours ago, LGR4GM said:

Except is it from multiple sources so this theory just got destroyed. 

Multiple people can have vendettas. The point is that despite what this article may state, people are going to have to find a way to come together here if they want this organization to stay in Buffalo.

1 hour ago, Let's Go B-Lo said:

I apologize in advance, I'm probably not going to be very nice on this topic.  I'm having a hard time feeling bad for billionaires who can't run a business right now.  It's your money, you can spend it however you want.  You can hire whoever you want to do whatever you want.  I don't need to give a crap about your garbage product though.

Problem is the "garbage product" under normal conditions creates jobs for people. If you bite the hand that feeds you, there might not be a hand left anymore

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12 minutes ago, Theana745 said:

Multiple people can have vendettas. The point is that despite what this article may state, people are going to have to find a way to come together here if they want this organization to stay in Buffalo.

So all 30 some odd ppl had vendettas? Sure. 

How am I suppose to help keep the Sabres here? 

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1 hour ago, nfreeman said:

No.  According to the article, there was a management presentation that included a powerpoint presentation, in which 1 of the slides laid out 3 main Pegula family goals:  win championships, sustainability, and return on investment.  The ROI goal included a sub-heading that read "fund businesses, taxes, lifestyle."

The article also said:

In other words, the 3rd of 3 articulated goals was for the business to pay for itself as well as to contribute to the family's lifestyle -- i.e. to turn a profit that the family could use to live large, or give to charity, or do whatever else they want with it.

So, nothing too inflammatory or nutty there, although it was probably pretty tone-deaf to include "lifestyle," since it's pretty clear that they live quite large and it didn't need to be waved in everyone's faces that they intend to keep doing so.

Oy. Please don't strain yourself with the contortions needed to spin that reporting into something somewhat benign. Seriously. It's awful. Like: "Holy effing sh1t, that is effing awful."

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I’m actually pretty surprised that everyone seems to be so negative about this.

1) it was naive wording it as “maintaining their lifestyle” but it’s the goal of every business owner. The point of incorporating is to make sure fluctuations in business don’t effect your personal wealth.

2) anyone who was there at the beginning will tell your the first few years were run without regard to profit. That is unsustainable no matter how wealthy you are.

3) they have made mistakes, their admitting their mistakes and they are actively correcting them.

4) if they really wanted to save money they would have vetoed at least a couple of JNOT’s moves which would probably have been a good idea.

The sky isn’t falling. Relax.

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3 hours ago, LTS said:

It's like everything related to Buffalo professional sports at this point is terrible.  I have no sympathy for those two and frankly I'm done with them and their franchises.  I'll stick around the forums for the discussion, but the teams are dead to me. (Well, the Bills have been for awhile).

 

I posted something a few days ago very close to what you are saying.

I like the discussion, I like thinking about and projecting 'possibilities' as far as how well the team is doing, but I have lost most of the rest of my 'love' or even 'like' for these teams.

All things being equal, I want the Bills and Sabres to win. But I truly, truly just don't care that much anymore. Except for the few members of these forums who seem to always be looking to prove themself right all the time...I like the discussion more than the actual games....and I really don't feel any kind of need to support the teams anymore (or most pro sports teams, pro athletes, drivers, etc.)

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