The fact that the Buffalo Sabres are throwing cold water on a THN.com report that billionaire Terrence Pegula has signed a letter of intent to purchase the Buffalo Sabres for $150 million could mean a number of things.
Most likely, it means the $150 million figure is not exact, but make no mistake, Pegula wants the Sabres and the purchase price will be in that range, perhaps even lower than $150 million. Does it mean he will definitely buy the team? No, he has simply signed an intention to purchase, which means he still has an out, but the team cannot be sold to anyone else.
A source with knowledge of the dealings told THN.com the announcement of the Sabres sale is expected sometime in late December or early January. The fact the Sabres are downplaying the report has to do with semantics. In fact, the source also said NHL commissioner Gary Bettman is expected to introduce Pegula to the owners at the Dec. 6-7 board of governors meetings in Palm Beach, Fla.
Deputy commissioner Bill Daly did not respond to an email request by THN.com.
And while both the Sabres and the NHL will scream up and down that $150 million is too little for the team, those in the industry will say that price tag is about right. The Sabres were recently valued at $170 million by Forbes, but franchise values in the NHL have plummeted in recent months. The problem with the NHL is the announced purchase price and the actual purchase price are almost always wildly different. Case in point is the Phoenix Coyotes, who are apparently on the verge of being purchased by Matthew Hulsizer for $160 million. But that deal is nowhere near being done and the actual purchase price when all the concessions are considered will be much less than that.
Current Sabres majority owner, Tom Golisano, bought the team out of bankruptcy for an announced price of $92 million in 2003, but it’s believed $30 million in loans and debts were forgiven upon the purchase, meaning he picked the Sabres up for just $62 million.
Golisano has sold a small part of his interest in the team to managing partner Larry Quinn and chief operating officer Dan DiPofi and the source said Pegula will likely pick up their portions of the team as well. However, there’s a good chance both Quinn and DiPofi will remain in their current positions with the organization. Should the three sell for a total of about $150 million, they would all stand to make a very handsome profit on the deal.
So what does all this mean? It can be nothing but good news for the Sabres. That’s because Pegula is a hockey guy through and through and with a net worth of about $3 billion – he’s the 110th richest man in the United States – has very deep pockets. His wife is from a suburb of nearby Rochester and he lived in Orchard Park for a brief period.
He and his wife, Kim, also recently donated $88 million to Penn State University to help build an arena on campus and create Division I hockey programs for both men and women. A native of Carbondale, Pa., Pegula apparently became hooked on hockey watching the Broad Street Bullies in the 1970s. He has also coached his son’s minor hockey team.
“When I helped coach my son’s team back 22 years ago,” Pegula said when he made the Penn State donation, “my passion grew.”
Pegula, 59, is the founder and CEO of East Resources, Inc., an energy exploration company headquartered in Warrendale, Pa. He recently sold his stake in the company to Royal Dutch Shell for $4.7 billion. He and his wife also own the Black River Music Group in Nashville. Pegula currently resides in Boca Raton, Fla. When THN.com called the Boca Raton office of East Resources, we were told Pegula was out of town.
The Sabres were never officially for sale, but Golisano has made it clear he would sell to the right buyer. Should the sale go through and be approved by the board of governors, it’s expected Pegula would open the purse strings in Buffalo and pursue free agents more aggressively.
The Sabres have taken a public relations beating over the past couple of years over the exodus of players from their organization, specifically in the cases of Dany Briere, Chris Drury, Brian Campbell and Jay McKee. But it’s not as though the Sabres don’t spend – their $55.15 million payroll is right in the middle of the league – and looking at the three players they lost, one could argue that the only one who would have been worth re-signing to a big-money, long-term deal was Briere.
But there is no doubt the Sabres have been watching their pennies. Under Golisano, GM Darcy Regier has had to make some difficult decisions and been forced to cut the Sabres scouting staff to the bone. The Sabres have had to rely heavily on video scouting in recent years because they don’t have enough scouts to adequately cover North America and Europe.
If and when Pegula takes control of the team, it would probably be in his best interests to get the contract situations of both Regier and coach Lindy Ruff cleared up. Both men are among the best in the league at what they do and given the resources, would undoubtedly be able to get the Sabres back to contender status in a reasonable amount of time. The contracts for both men expire at the end of this season.
For more great profiles, news and views from the world of hockey, subscribe to The Hockey News magazine.