When you’re new to owning a sports team, the best practice is usually to bring in people experienced in running such an organisation to help guide you and teach you. A handbook of sorts, if you will.
The Pegulas apparently are not people who believe in those kinds of teachers, even when there is a multi billion-dollar investment like the Buffalo Bills involved.
In a lengthy story on Monday, Tim Graham of The Athletic Buffalo detailed an increasingly “toxic culture” at Pegula Sports and Entertainment (PSE), Terry and Kim Pegula’s organisation that includes the Buffalo Bills and Buffalo Sabres, with current and former employees describing the atmosphere within the company.
The picture painted isn’t pretty, particularly for Kim Pegula, and gives the sense that at best the couple has bitten off more than they can chew in recent years, and at worst could potentially do significant harm to the Bills just as they’ve become successful in the NFL again.
The Pegulas became instant heroes in the Buffalo area in October 2014 when they paid a then-record $1.4 billion for the team after its original owner and founder Ralph Wilson died. They vowed to keep the team in western New York. They were known in the city because they’d bought the Sabres three years earlier, and got a massive ovation when they were introduced at their first home game.
At the same time, they unveiled a new ethos: “One Buffalo.” But now those within PSE say that’s nothing more than a marketing campaign to splash on merchandise.
Kim Pegula serves as president of PSE, and by extension is president of both the Bills and Sabres, as well as the four minor league sports teams they own.
The root of most of PSE’s problems can likely come back to this: It’s an impossible undertaking. Being president of an NFL team is a full-time job and then some; same for being president of an NHL team. Being president of a multi-organisation conglomerate is a full-time job.
Pegula wants to do all, and as a result things will suffer.
In emailed responses to questions from Graham (give her credit for facing the music), she noted that “there [is] no handbook for being a sports owner,” but this is where team presidents come in handy. Ones who have experience.
Instead, Pegula seems to have pushed full-speed ahead over five years and now has to clean up the mess. It’s not clear where her husband, Terry, is in all of this, as Kim is the one mentioned in the report.
‘Pegula Family Goals’
The reasons why she’s cleaning things up, however, may not all be what you’d think.
In January, not long after the Bills posted their first 10-win season since 1999 and made the playoffs for the second time in three years, Pegula, from her home in Boca Raton, Florida, met with employees from multiple PSE departments via video conference.
She told them to prepare for not just increased scrutiny on budgets, but for tough times and sacrifices. Some PSE employees had already been nervous that moves would be made to “right-size” the company after it had expanded too quickly.
As she spoke, Pegula had a video presentation, which included the slide, “Pegula Family Goals.” There were three headers listed: “Win Championships,” “Sustainability” and “Return on Investment.”
As she discussed return on investment, Pegula said it also meant maintaining the family’s lifestyle, current and former employees recounted to Graham. Vice presidents who circulated the printed slide presentation to different departments reiterated that maintaining the Pegula family lifestyle is a primary organisational goal.
“People were walking out of those meetings like they’d been punched in the gut,” a Bills management source told Graham. “We just made the playoffs in the NFL, where it’s impossible to lose money. We’re firing on all cylinders. Now we have to pinch pennies?
“The morale after those meetings was lower than the day Ralph Wilson died.”
“What that told me,” a PSE employee said, “is I’m getting laid off before they cancel that family trip to Tahiti.”
We all — well, most of us anyway — know what should and shouldn’t be said in business settings. Usually the idea is to try to keep morale high even as you discuss cutbacks, and stress that cuts now are for the greater good.
Telling employees in your organisation, many of whom can’t fathom paying $1.4 million for something let alone $1.4 billion, that they’ll be working harder for the same amount of money so that your lifestyle won’t be impacted isn’t usually in the “how to talk to employees” handbook.
Over the last several months, dozens of people within PSE have been let go, including nearly the entire hospitality division, which was laid off last month. More than 100 other employees have been furloughed.
Once the coronavirus stopped the Sabres’ season and impacted that of the Buffalo Bandits lacrosse team, the Pegulas initially said they would wait and see how things played out, then said they’d pay Sabres employees when the remainder of the NHL season was officially cancelled (this is not unlike the Jacobses, who own the Boston Bruins).
The Pegulas’ big sacrifice to this point: pausing completion of their super-yacht, which was being built in Amsterdam. This, we assume, is a step up from their current yacht, the 157-foot “Top Five” Terry has had since 2005.
No one is blind to the notion that wealthy people are accustomed to certain things. But telling the people on whose backs you maintain your empire out loud that one of your organisational goals is to make sure you aren’t personally impacted is a sure way to create a poor work environment.
As for the Bills, those January meetings were the first time that team was exposed to the larger issues at PSE.
There’s a belief within the organisation that the Bills are the only one of the Pegulas’ teams turning a profit — a source told Graham the Sabres, who haven’t been to the playoffs since the 2010-11 season, have been losing between $40 million and $60 million each of the past few seasons.
Those close to Bills coach Sean McDermott reportedly said the meetings earlier this year were cause for concern. McDermott and general manager Brandon Beane have meticulously crafted a new culture in the franchise and he worries that low morale organisation-wide will affect that culture.
Graham’s entire piece is worth the time — there are also ticket salespeople who aren’t getting commissions in a timely fashion, numerous executives leaving for sexual harassment and other workplace misbehaviour, money being spent on vanity projects for family members and other family members getting cushy gigs, the firings of three well-liked Sabres vice presidents (who each only received two weeks health insurance coverage on the way out), and a seemingly thinly veiled hint that the Pegulas want to build a new stadium, which seemed unlikely to happen with significant public funds six months ago, and nearly impossible now.
“We are trying to correct our mistakes and the mistakes of others with the goal in mind that we need to be better in many areas to not only survive but to thrive,” Kim Pegula wrote in her email. “Despite these challenges, we believe there is still a lot of optimism and opportunity here in Western New York with the right people in place and the collaboration of all our entities we always envisioned.”
As long as her lifestyle stays up to her standards.