None of the three bidders for the Buffalo Bills offered more than $900 million, Forbes magazine reported Thursday, a day after the magazine pegged the team’s value at $930 million and said that it was unlikely to leave town.
The $890 million bid by Buffalo Sabres owner Terry Pegula and his wife, Kim, was the leader in the nonbinding first round, the magazine reported. A Toronto group fronted by rocker Jon Bon Jovi was second, at $820 million, while Manhattan developer Donald J. Trump offered $809 million.
In naming the bid amounts, Forbes cited two sources familiar with the sale of the Bills who are not yet directly involved in the deal.
After submitting their preliminary bids, the bidders were given access to the Bills’ financial records for use in preparing binding bids, which are due in the next few weeks.
But the lower-than-expected first-round bids may delay the process, meaning that National Football League team owners would not be able to approve a new owner for the Bills at their October meetings, Forbes said.
In his Forbes article, Mike Ozanian wrote that the NFL may not want the bad publicity from a sales price of under $900 million so soon after billionaire Steve Ballmer paid $2 billion for the National Basketball Association’s Los Angeles Clippers.
Describing the process as “the circus that has been masquerading as the sale of the Buffalo Bills,” Ozanian, who reports on the business of sports for Forbes, said: “The best thing NFL Commissioner Roger Goodell could do right now is convince the Wilson trust to fire Morgan Stanley and start over. There is no economic reason why the Bills must be sold during the next few months.”
A spokesman for Morgan Stanley, the New York investment banking firm that is handling the sale of the team, declined to comment.
However, it is common in business transactions for the first round of bids to come in significantly lower than the final bids because no business people want to overpay unless they have to.
In addition, there appears to be a good reason why the family of Bills founder Ralph C. Wilson Jr., who died at 95 on March 25, would want to sell the team in the next few months.
“Estate taxes are due nine months from the date of death,” making them due for Wilson’s estate on Dec. 25, said David H. Alexander, an estate attorney with Gross Shuman Brizdle & Gilfillan in Buffalo.
Nevertheless, Ozanian suggested that the trust that now controls the Bills should hire an investment banker that will not require bidders to sign a restrictive nondisclosure agreement, which has prevented potential bidders from speaking with each other and the league.
The nondisclosure agreement has not prevented a wide range of bid figures from being floated in the media, however.
For example, a Business First report last month said the bid from the Pegulas was $1.3 billion. The New York Post previously reported that the Pegulas’ bid topped $1 billion.
But The Buffalo News later reported that all the figures cited by the media at the end of the first round of bidding in July were inaccurate.
If the Forbes figures are accurate, though, it would mean that all three bidders were trying to get a bargain.
Their bids were far under Forbes’ estimated value for the team of $930 million, which was $65 million, or 7.5 percent, higher than the 2013 estimate.
Of all 32 NFL teams, only the St. Louis Rams – valued at $930 million – ranked lower than the Bills.
Forbes also said the Bills had revenues of $252 million and an operating income of $38 million, far short of the $560 million in revenue and $246 million in operating income enjoyed by the Dallas Cowboys, the league’s most valuable team.
Still, Forbes remains bullish on the Bills’ future in Buffalo.
“Whoever buys the Bills will most certainly keep the team in Buffalo,” the magazine said. “The terms of the 10-year lease the team agreed to with Erie County last year require anyone moving the Bills to pay the county $400 million should the team move before the end of the 2019 season. It also allows the public entities to get a court injunction preventing the Bills from moving.”
Ozanian predicted that the Rams and the Oakland Raiders would eventually move to a new stadium in their former home, Los Angeles, which is currently without an NFL team. Both the Rams and the Raiders have leases that would allow them to move after this season, as do the San Diego Chargers.
Forbes also noted, though, that the Bills’ lease includes a clause that permits the Bills to terminate the deal after the seventh year, 2020, for a relatively small $28.4 million penalty.
The Cowboys once again topped the Forbes list of the league’s most valuable franchises, at $3.2 billion. The New England Patriots ranked second at $2.6 billion, and the Washington Redskins came in third at $2.4 billion.
“There is a widening wealth gap in the NFL due to the piles of cash big market teams generate from modern stadiums and the premium a buyer would be willing to pay for entry into the most elite U.S. sports league in a big city,” Forbes said.
Forbes said that it calculated its estimates based on data and other information from sports bankers, several NFL team executives, financial reports by companies such as Fitch and Moody’s, trade publications, consulting firms and stadium leases.
Meanwhile, the Bills have been showing off their Orchard Park facilities to prospective buyers this week, The News has learned.
The sales process took another step Thursday with at least one tour.
Two sources told The News that Terry and Kim Pegula and one other group checked out Ralph Wilson Stadium, the ADPRO Sports Training Center and the team’s offices Thursday.
Another source said the group fronted by Bon Jovi was scheduled to tour the facilities Wednesday but did not show up for an unknown reason.
News Sports Reporter Tim Graham contributed to this report. email: firstname.lastname@example.org