All things Pegula 1
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Buffaloed
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$88 million donated to Penn State
$23 million donated to Hilbert
1.2 million donated to WNY
$57 million State and Local Tax Breaks donated to Terry Pegula
$23 million donated to Hilbert
1.2 million donated to WNY
$57 million State and Local Tax Breaks donated to Terry Pegula
Puppa2Miller
Registered User
- Oct 4, 2007
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You leave out the purchase of the Sabres, Bills, New Era Field investments, Harborcenter and other downtown investment.
People have a disgusting way of thanking someone. I will not be one of them.
Thank you very much to the Pegulas to their generosity to WNY in these difficult times for all.
ckg927
Registered User
Duly noted, but my question is what are people going to take away from this: All that you mentioned...or, when the chips were down, the half-hearted way they treated not only the people at their restaurants, but all the people who do the front-line and behind the scenes stuff on Sabres game nights?
Jim Bob
RIP RJ
brian_griffin
"Eric Cartman?"
Fracking produces oil concurrent with the natural gas. USA has been a net exporter of oil the past 4 or so years. With the drop in oil price from foreign sources, demand for US oil exports decreases (assuming USA does not follow by dropping price). With a drop in export demand, there will be a drop in extraction demand, beginning with the higher-cost methods, which include fracking.
(Also, some of the energy systems are dual-fuel capable, e.g., coal and LNG, but I don't think that's the major driver in the current situation.)
There are two international benchmarks for oil pricing, Brent (UK North Sea) and WTI (West Texas Intermediate). The latter is the US oil price index and closed at $24.81/bbl on Friday. WTI was priced at $63 just after Christmas and the breakeven price for most US operators is above $50. Every US barrel sold today is for a massive loss. I will spare the technical details but you can't just shut-in (stop flowing) most oil wells because they will either flow at a far lower rate or be completely dead when you go to open the flow again. This is a price war coming from OPEC (mainly Saudi Arabia) and Russia. Saudi Arabia's break even is estimated between $10-15 per barrel. You can see who will win this fight if it continues.
Things are not any better in Natural Gas. The Henry Hub (US index) closed at $1.67/mcf on Friday. Break even is above $2 for most US operators and our friends in Ohio and Pennsylvania are receiving less than the Henry Hub price (known as a negative price differential). It doesn't matter if you are in Oil or Gas, you are currently losing money hand over fist.
The combination of price collapse hitting whatever energy interests Pegula has remaining and Covid-19 hitting his sports entertainment business must be taking a huge toll on his finances. There is no way anyone could have foreseen the fallout from Covid-19 and planned for it. Also, the energy price collapse likely prevents Pegula from using his energy interests to rescue his entertainment business. He is getting squeezed from both sides. The comparison of Pegula to the Loblaw owner is unfair because business is REALLY good for grocers right now.
I don't like to see his employees suffer but I would recommend people refrain from chastising Pegula. Wait until after the Covid-19 issues clear up and the businesses opens back up. Hopefully, all of this was just a (painful) blip and we can all get back to our normal lives.
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Buffaloed
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https://www.bizjournals.com/buffalo/news/2019/07/23/pegula-owned-company-cutting-natural-gas.html
Sewickley, Pennsylvania-based JKLM Energy, which is owned by Buffalo Bills and Buffalo Sabres owner Terry Pegula, told stakeholders last week in Potter County that it would be temporarily halting its drilling rig due to the low price of natural gas. A spokesman for JKLM Energy confirmed the pause in development in Potter Township, where its drilling operations are based and said it was due to low commodity prices.
JKLM has spent about $500 million in the past several years and drilled 43 wells in Potter County, located just south of Allegany County in New York state.
Pegula was bleeding money from his natural gas operation long before COVID-19.
It isn't inconceivable he'll be filing for bankruptcy.
joshjull
Registered User
The fracking industry is getting dragged into the Oil industry fight between Russia and Saudi Arabia. Or is being targeted by it depending on who you read on the subject. Either way its cratering the prices.
As for filing bankruptcy. How much is the Pegula's person wealth vs the company's value? Is all their money tied up in that company? IIRC they sold various assets to buy the Bills I think effectively as a cash payment. Any NFL franchise effectively prints money with all the TV money etc.
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Buffaloed
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Over supply is what killed the fracking industry.
Why some frackers aren't profiting from the fracking boom - Marketplace
Natural Gas Boom Fizzles as a U.S. Glut Sinks Profits
Over supply through overfunding of the sector by wall street and private equity. They have some accountability in this mess.
Long before the price collapse the profit margins were razor thin (or even negative in some cases), I would expect money men to be a bit smarter than this. But then again these are the same guys that overfunded real estate to the point of creating the housing crisis.
There has been a lot of cash chasing fewer and fewer true value assets. The Fed keeps printing it; the banks keep lending in their chase for profits and everyone sees assets rising in price though God knows re worth. Pension plans, investment funds, wealth management companies, corporate directors are all trying to inflate the value of limited actual assets because sitting on cash was a way to lose your job.--driving prices higher. Now we have more trillions out in the financial world but it hard to say that suddenly the world is actually more "valuable" just because more paper has actually or notionally been printed with pictures of various presidents, monarchs or whatever. it is a mugs game but only game in town ..
TheDawnOfANewTage
Dahlin, it’ll all be fine
- Dec 17, 2018
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gave them the biggest tax break?
Is Pegula paying arena staff now? Or is it still that fund bullshit that only kicks in once the season is fully canceled?
- Aug 19, 2005
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They are super cheap, nickel and diming all over the place. Wonder if he lost some money on natural gas.
SackTastic
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- Mar 25, 2011
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He absolutely did. Buffalo'd links tell the story quite simply. Anyone who could get in on fracking did so, and they saturated the markets to a point where they destroyed their own profits.
SackTastic
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Pegula sold drilling rights worth $1.75B to raise the cash to buy the Bills. From a business perspective he nailed that one hard; those drilling rights aren't worth anything close that today, and as you say NFL teams are personal ATMs.
I don't think the Pegulas will have to file bankruptcy. A lot of his wealth is tied up in the JKLM Energy in PA, and additional assets out west. JKLM was actively producing until mid-summer as reported on most of their land in PA. Downside is obviously not producing means no incoming, but upside is that means the infrastructure investments are mostly done, and that's the bulk of the investment. Idling them until the price of gas recovers is good business and common practice for the industry, and the price will come back up. ( Futures, which are leading indicators of commodity prices, for nat gas have been ticking back up recently, but not something I'd rely on in this economic environment.)
Natural Gas Prices - Historical Chart
In my view, the way that things have shaken out breaks down this way.
- Out of the gate, Pegula was cash flush post sale to RDS, buys the Sabres. He uses a big chunk of the rest to start developing gas production in the JKLM properties, and spends a lot building and developing Harborcenter.
- When the Bills come up, he sells those other rights to generate the cash for that purchase. Easier to sell undeveloped rights than developed parcels like his JKLM stuff, plus he likely views JKLM as his long term play in that industry.
- Over the next few years he funnels some, not all, of the sports team income back into JKLM to develop all the wells and keep production flowing. NG priced bottomed out again in early 2016, so he was able to ride the rebound back up.
- Late 2018 into 2019 continued to see a downturn in NG prices that put a crimp on his non-gas cash flow. This lines up with the 'cheap Pegula' period.
- Prices hit the 2016 bottom early 2020, and then COVID-19.
He has been in the oil and gas industry for 30+ years. I'm sure he understands the volatile nature of that industry, and that you can succeed if you play the long game. Short term he got burned a bit on the price drop, but longer term that will be ok. He's actually in a good position there that he can ramp up production as pricing makes sense to do so, and not eat too much more.
Current COVID-19 issues notwithstanding, I do hope that he has learned a lesson here and shifts some of his non-sport wealth into some less volatile business venture to be better protected from price swings in oil and gas. He's not large enough like an Exxon or Shell to ride these out every time.
SackTastic
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- Mar 25, 2011
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$1.2M is almost exactly what Forbes estimated the Sabres operating income to be for the 18-19 season.
Buffalo Sabres on the Forbes The Business of Hockey List
I read in the Globe and Mail today that Whiting Petroleum Corp-which produced oil from shale in the US has filed for bankruptcy. Its market capitalization-15 Billion $ in 2011 had shrunk to $61.5 million this year.
Buffaloed
webmaster
KeyBank, M&T and Pegula Sports and Entertainment team up for $540,000 donation
KeyBank and M&T Bank usually compete head to head.
But the two banks are teaming up with each other, and with Pegula Sports and Entertainment, to donate $540,000 to the fight against Covid-19. The funds will go to Kaleida Health, Erie County Medical Center and Roswell Park Comprehensive Cancer Center.
The specific amounts donated by each of the three parties was not disclosed.
The money will be used to purchase PPE's and other tools for caregivers. They're also purchasing tablets to be used by patients & loved ones to be later donated to local schools.
KeyBank and M&T Bank usually compete head to head.
But the two banks are teaming up with each other, and with Pegula Sports and Entertainment, to donate $540,000 to the fight against Covid-19. The funds will go to Kaleida Health, Erie County Medical Center and Roswell Park Comprehensive Cancer Center.
The specific amounts donated by each of the three parties was not disclosed.
The money will be used to purchase PPE's and other tools for caregivers. They're also purchasing tablets to be used by patients & loved ones to be later donated to local schools.
The Sabres remind me of this episode of "Restaurant Impossible." The idea behind the show is that Chef Robert Irvine goes to a struggling restaurant and in 48 hours, evaluates and invests $10,000 into remodeling it, works out what's wrong with the restaurant and tries to fix it.
Here, he goes to a BBQ joint in Alabama. The owner, who's a successful owner of a nearby saw mill, bought it almost a year before Irvine got there and it's failing badly.
Irvine: "Here's you, a smart guy who runs a saw mill, and it's successful, but you have no common sense when it comes to a restaurant
(Owner: "Not at all.")
Irvine: "And it's not even technical knowledge, it's common sense."
(Owner: "That's probably why we're failing.")
Irvine: (Holds head in his hands and screams)
Lacking passion. Looks like we have Hockey Team Impossible.
Calling a Fixer!
Here, he goes to a BBQ joint in Alabama. The owner, who's a successful owner of a nearby saw mill, bought it almost a year before Irvine got there and it's failing badly.
Irvine: "Here's you, a smart guy who runs a saw mill, and it's successful, but you have no common sense when it comes to a restaurant
(Owner: "Not at all.")
Irvine: "And it's not even technical knowledge, it's common sense."
(Owner: "That's probably why we're failing.")
Irvine: (Holds head in his hands and screams)
Lacking passion. Looks like we have Hockey Team Impossible.
Calling a Fixer!
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Jim Bob
RIP RJ
Not entirely safe for working from home and definitely not safe to watch if you have a liquid in your mouth.
But, this is scarily accurate.
Fezzy126
Rebuilding...
- May 10, 2017
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The irony here is that Bills' twitter has been an unadulterated tire fire for the last 15 years and somehow after one successful season they're regarded locally as the complete voice of reason
SackTastic
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- Mar 25, 2011
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The irony here is that Bills' twitter has been an unadulterated tire fire for the last 15 years and somehow after one successful season they're regarded locally as the complete voice of reason
0% of anything on Twitter is a 'voice of reason' for anything.
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