John J. Rigas, the founder and chief executive officer of Adelphia Communications Corp., is expected to take control of the Buffalo Sabres as early as this week, ending the Knox family's 28-year control of the team.
A cash crunch that nearly caused the National Hockey League franchise to miss its payroll Friday helped push along talks that would allow Rigas to become the team's majority stockholder, sources said.
A deal now, these sources said, would allow year-end tax breaks for shareholders who want out of a limited partnership that has controlled the team since its founding.
An agreement also would allow Rigas, 73, to step out from behind his recent role as the Sabres' major financial backer who is usually outvoted by other members on the Sabres management board.
Among those expected to leave the partnership are Northrup R. Knox, chairman of the board, and Robert O. Swados, the board vice chairman and team counsel. Knox and Swados, along with Knox's brother, the late Seymour H. Knox III, founded the franchise along with some limited partners in 1970.
Rigas is known to have tendered an offer to buy outstanding shares, principally from the Knox and Swados holdings. That is the offer that likely will be accepted.
When that happens, he would be the majority owner and would likely dissolve the managing partnership that now runs the company. It's expected Rigas will make managerial changes at the corporate level and perhaps in the hockey department as well. Rigas was a strong backer of Ted Nolan and disagreed with his firing as coach.
Rigas would take over a hockey club that has lost $32 million in three years -- $28 million of that during the team's last two years in Memorial Auditorium and the remainder last year in its first season in Marine Midland Arena.
The Sabres made no official announcement of the pending deal, but various staff members have sought -- and in some cases received -- assurances regarding their future terms of employment.
Lawrence Quinn, Sabres president and chief executive officer, said Saturday that no agreement has been reached "at this time."
"I don't want to mislead anyone on this issue," Quinn said. "Various elements of the ownership team have been talking for a long period of time."
"As far as I know, and I just got off the phone checking on this very question," Quinn added, "there is no change in that regard. That's not to say there might not be a change at some point in the future, but right now I know of no agreement."
Quinn acknowledged that payroll checks were late coming out Friday but stressed it is not uncommon at certain times of the year to finance payroll in ways other than cash on hand.
"It (the shortfall) was funded by the partners," Quinn said.
A transfer of ownership would virtually end the Knox era of hockey ownership in Buffalo. The Knox brothers and Swados founded the franchise in 1970 and have directed its fortunes for virtually all of that time.
Rigas founded Adelphia in 1952 and built it into the nation's seventh-largest communications company. He continues to run the growing business from his small hometown of Coudersport, Pa., just across the New York State line.
He was brought into the Sabres in 1994 as a principal investor and has increased his stake in the club repeatedly since then. Rigas is believed to currently own 49 percent of the Sabres' partnership. He has warrants and options that can increase that value to 52 percent.
Adelphia Communications Corp. has interests in cable and communication businesses across the country with more than 1.4 million subscribers. The company also owns and operates the Empire Sports Network.
Adelphia has a much larger financial base than the Knox family and the current board. If some of those resources were used for the betterment of the hockey team, observers feel the change in ownership could translate to a better team.
Despite Rigas' holdings and the team's growing reliance on his bankbook, the Sabres are run by a limited managing partnership that has been controlled by Knox, Swados, Robert E. Rich Jr. and others.
The Sabres player payroll has been estimated at between $20 million and $23 million for this season. Players salaries are pro-rated over an 82-game season that starts in October and ends in late April or early May. Pay periods come every two weeks.
Not having the payroll checks ready on time Friday caused a great deal of commotion in Marine Midland Arena. Rumors had been circulating for weeks that the Sabres would have trouble making this particular payroll.
Normally when a shortfall is on the horizon, the club relies on partners or letters of credit from various financial institutions to make up the difference and the checks are processed in routine fashion. However, the corporation is known to be in debt and has limited borrowing capacity.
There were also reports that some members of the partnership vowed not to fund their share of the shortfall unless a deal transferring ownership was consummated.
Meanwhile, several members of Local 235, Ushers, Ticket Takers and Doormen, called The News stating that numerous members received less than their full pay Friday. Union President William Greely said he had received some complaints on that issue late Friday evening and that he would be investigating. Quinn denied that any shortfalls in that area and said all vendors and support personnel should have been paid.
"The various vendors and people who work at the arena either work for the Arena Corporation or SportsService," Quinn said. "The arena has a cash surplus of some $9 million."