Pegula Family Looking to Sell Minority Stake in Buffalo Bills

[1]

As of late last week, Buffalo Bills owners Terry and Kim Pegula are currently exploring the possibility of selling a non-controlling, minority interest in the team.[2] The current working figure is a 25% stake in the franchise, though this number is not set in stone.[3] In a statement released on Friday, the Bills stated that the Pegula family has retained Florida-based investment bankers Allen & Company to handle the potential transaction.[4] The team further stated that currently:

“[T]hese discussions only involve the Bills and no other team. No investment would be possible without Terry Pegula and the Pegula family maintaining a controlling interest in the team. Their continued commitment to Western New York, the new Highmark Stadium, our fans and the other teams in their portfolio remains unchanged. Neither the team nor the Pegula family are able to comment further at this point.”[5]

An anonymous source close to the team stressed that the Pegula family will retain their controlling interest in the team under any potential sale.[6]

As the Pegulas also own the NHL’s Buffalo Sabres, it is interesting that the Bills felt it necessary to confirm that any potential transaction would not involve the Sabres, since a transaction involving the Bills and/or Sabres has been speculated about for some time now since the Pegulas separated their ownership interests in the two clubs last year by dissolving their parent company Pegula Sports and Entertainment.[7]

Allen & Company represented Terry Pegula when he originally bought the Bills from the estate of Ralph Wilson, Jr. in 2014 for a then NFL-record $1.4 billion. Since then, the value of NFL teams has skyrocketed, and as of August last year the Bills were valued at $4.13 billion.[8] The Pegulas currently own 100% of the Bills, and the hire of Allen & Company shouldn’t come as a surprise as multiple owners in recent years have looked to cash in on the rising value of their franchises and diversify their asset holdings in cases where much of their net worth is tied to their respective NFL teams.[9]

The announcement of a potential sale of a share in the team comes at a time when the Bills are facing a cash crunch due to the rising construction costs of the team’s new stadium that is well underway.[10] The initial cost of the new stadium was estimated at $1.4 billion when a preliminary agreement was struck with the state and Erie County, in which the state’s contribution would be capped at $600 million and Erie County’s capped at $250 million.[11] The Bills are responsible to cover any cost over-runs for the project beyond the initial $1.4 billion agreement, but estimates for the project have already risen to $1.7 billion and are likely to be closer to $2 billion when all is said and done.[12] Selling a percentage of the team could help provide the Pegulas with the necessary capital to cover these over-runs.

There are a number of other reasons why the Pegulas might be considering selling a portion of the Bills. For one, if Terry Pegula or his family ultimately decide to sell the Bills in the near future (potentially due to Kim Pegula’s health situation following her cardiac arrest in 2022), a minority owner of the team could serve as a clear potential successor to buy the team in such a scenario. In addition, many private equity firms are preparing funds to invest in ownership stakes of NFL teams as the league considers changing its stance on such investments in the near future.[13] As the Bills and Pegulas have both made no further comments on the matter, ultimately the question of “Why?” will have to remain unanswered for now.

[1] Photograph: https://theathletic.com/5429904/2024/04/19/buffalo-bills-sale-25-percent-stake/

[2] https://apnews.com/article/bills-pegula-shares-nfl-4c9c92d64431426529b9ace7423c9758

[3] Id.

[4] https://www.buffalorumblings.com/2024/4/19/24135123/terry-pegula-exploring-selling-25-minority-stake-ownership-in-buffalo-bills-per-report

[5] Id.

[6] Id.

[7] https://www.sportico.com/leagues/football/2024/buffalo-bills-hire-allen-sell-stake-1234776211/

[8] Id.

[9] Id.

[10] https://apnews.com/article/bills-pegula-shares-nfl-4c9c92d64431426529b9ace7423c9758

[11] Id.

[12] Id.