The Buffalo Bills are taking steps to raise funds for the construction of their new stadium, which has ballooned in cost, now projected to exceed $1.2 billion. According to a report from Sports Business Journal’s Ben Fischer, the Pegula family, which owns the Bills, has arranged deals to sell more than 20 percent of the team to outside investors.
The two deals include a purchase by a group of business executives who will acquire 10.6 percent of the team, and a deal with private-equity firm Arctos Partners, which is set to buy an additional 10 percent. Both transactions will require approval from the NFL’s owners before they can be finalized.
The Pegulas Maintain Majority Control
Despite selling off a significant portion of the franchise, Terry and Kim Pegula will retain the majority control of the Bills. After these deals are completed, the Pegulas will still own more than 79 percent of the team. This move allows the family to bring in capital without losing their dominant stake in the franchise.
When the Pegulas purchased the Bills in 2014 from the estate of the late Ralph Wilson, they paid $1.4 billion for the team. Given the current landscape of NFL franchise valuations, it’s expected that the team is worth significantly more now, meaning the Pegulas will likely recoup most, if not all, of the original purchase price by selling just over 20 percent of the team.
Funding the New Stadium
The primary reason behind the sale of these minority stakes is to help finance the Bills’ new stadium. The new venue, which is expected to be located in Buffalo, has faced significant cost overruns. The initial projections have swelled, with the stadium now expected to cost around $1.2 billion — a significant increase from earlier estimates. The sale of equity in the team is one way to address the funding gap and ensure the project moves forward.
This stadium project has been a major priority for both the Bills and local government, with discussions about how to fund it involving public-private partnerships. However, the rising costs have left the team looking for additional sources of revenue. Selling off a portion of the team’s equity is a strategy to ensure that the project does not hit a financial roadblock.
What Does This Mean for the Bills?
If the NFL owners approve the sales of the equity stakes, it will mark a significant shift in the Bills’ ownership structure, but it won’t alter the Pegulas’ overall control. The involvement of a private-equity firm like Arctos Partners is notable, as it could signal further interest from outside investors in NFL franchises, particularly with the league’s ongoing growth and lucrative media rights deals.
In terms of the long-term future of the team, the sale of a minority stake might not drastically impact the Bills’ day-to-day operations. The Pegulas have been relatively hands-off owners when it comes to the team’s football decisions, leaving most of those responsibilities to general manager Brandon Beane and head coach Sean McDermott.
A Growing Trend in NFL Ownership
This sale follows a broader trend in the NFL, where increasing valuations of franchises are prompting owners to sell off smaller stakes to raise capital or bring in strategic investors. The NFL’s popularity continues to rise, and with the expanding landscape of digital and broadcast rights deals, teams are becoming more valuable than ever. For the Pegulas, selling these minority stakes might be a way to leverage their ownership stake in the team while maintaining control and securing the funds necessary to complete the stadium project.
The Financials of the Deal
While the financial terms of the deals have not been disclosed, it’s widely assumed that the Bills’ valuation has increased substantially since the Pegulas purchased the team in 2014. At that time, the franchise was valued at $1.4 billion, but now, with the overall growth of the NFL and its media revenue streams, the Bills are likely worth significantly more.
This sale is a way for the Pegulas to offset some of the new stadium’s expenses while still holding onto the majority of their franchise. It also provides a lucrative return on their initial investment, given the rising value of NFL teams.
Conclusion
The sale of over 20 percent of the Buffalo Bills represents a strategic move to raise funds for the team’s new stadium, which has faced significant cost overruns. While Terry and Kim Pegula will maintain control of the team, the influx of capital from the sale of minority stakes is expected to provide much-needed financial support for the stadium project. With the NFL’s franchise values continuing to climb, this transaction underscores the growing financial power of the league and the increasing interest in investing in NFL teams.