ALBANY – When NFL owners welcome Terry and Kim Pegula into one of America’s most exclusive clubs this week, they are getting a couple with a love of sports and a commitment to not move the Buffalo Bills.
The NFL owners also are accepting into their ranks one of the richest couples in the nation.
If all goes as expected, the Pegulas will become the NFL’s fourth-wealthiest team owners with assets of $4.6 billion, according to Forbes. That’s enough wealth that Pegula could spend $500,000 a day and not run dry for 25 years.
Terry Pegula was not interviewed for this story as he has not commented since the Bills’ bidding process began and won’t until at least he takes ownership of the team. But three senior executives within his organization spoke to The Buffalo News about the Pegula empire, two not for attribution. In addition, The News interviewed six people who know him professionally and examined financial records in several states to determine the extent of the Pegulas’ assets.
What emerges is the portrait of a self-made billionaire and his wife who have the usual trappings of money. Yet despite that wealth, they are described by people who know them as modest and anything but flashy. For instance, though his companies have access to three private jets, he prefers to drive himself more than 1,500 miles just to watch prospective hockey players.
“You would have no idea he has the means that he does,” said Tom Gaglardi, owner of the Dallas Stars of the National Hockey League, who met Pegula at a hockey tournament of young players in Michigan.
And whether Pegula is working on oil and gas, country music or professional hockey, Pegula is hands on, acquiring, analyzing and discussing at length the smallest details of his businesses.
The couple own a house off a narrow, tree-lined street in Boca Raton, Fla. – not far from a house owned by rocker Jon Bon Jovi, who lost to the Pegulas in the Bills’ bidding war.
There’s the big yacht, the private jet and the other symbols of wealth that Pegula accumulated as one of the most successful natural gas and oil drilling and development moguls in the country. And with that wealth, Pegula was able to out-muscle other Bills suitors by bidding $1.4 billion.
The couple have not used their money just to amass companies, two professional sports franchises and a country-and-western recording studio.
Their money also has gone to political causes. They have donated at least $940,000 the last 10 years to several candidates, most of them Republican, including Pennsylvania Gov. Tom Corbett, former Sen. Scott Brown of Massachusetts and presidential candidate Mitt Romney, who received more than $150,000 in donations from the Pegulas. Most recently, the Pegulas broke the GOP cycle, donating $25,000 to Democratic Gov. Andrew Cuomo’s re-election.
A review of active corporation records with the Department of States in Florida, Colorado, Wyoming, Pennsylvania and New York reveals a far-flung empire of companies controlled by Terry or Kim Pegula, or both. They are tied to at least a dozen companies, and several of those companies have a host of subsidiaries. They range from the oil and gas industry to country music to their ever-expanding sports industry holdings, as well as accompanying training facilities, such as the Buffalo HarborCenter, now under construction.
Forbes last week ranked Terry Pegula as the 108th wealthiest person in America, and that fact was not lost on the Buffalo business community, which has never seen someone so wealthy and so willing to spend so much of his money locally.
“They are significant stakeholders now going forward in the success of the community,” said Howard Zemsky, a Buffalo developer deeply involved in state economic development policy-making in the region.
“They certainly jumped in with the Sabres in a big way. This is a considerable magnitude greater. I assume they would consider additional investments here as well. I don’t think this is the end of the line for them,” Zemsky said.
And come Wednesday, the Pegulas are expected to join the NFL owners, a group that has been described as the second most exclusive club in America after the U.S. Senate. The Pegula club is even more rarefied: ownership now of two major pro sports franchises.
As billionaires go, people who have met or worked with Terry Pegula describe him as the least flamboyant of any of the Bills’ suitors. The Pegulas were not even mentioned in a local weekly newspaper column listing top 10 “well-known” residents of Boca Raton.
The couple purchased their home there in 2010 for $6.58 million, according to Zillow, the online real estate listing company. The 22,000-square-foot home is worth $9.1 million today.
By contrast, 30 miles up the road from the Pegulas’ house is Mar-a-Lago, the palatial estate of Donald Trump, who is rich but not as rich as Pegula. Trump, who lost out to Pegula in bidding for the Bills, flies in his private Boeing 757 – with the letters TRUMP painted across the top of the fuselage – an aircraft he purchased from Microsoft co-founder Paul Allen, the owner of the Seattle Seahawks and the NFL’s wealthiest owner.
Pegula also has access to private aircraft: One of his companies has a share in two jets: a Dassault Falcon 2000 and a Cessna Citation Sovereign.
Pegula’s East Asset Management is also the sole owner of another mid-size private Cessna jet, records show.
But Pegula doesn’t appear to be in the skies all that much. That’s because he prefers to drive himself.
Gaglardi, who is also head of a Vancouver-based hotel, restaurant and real estate conglomerate, said he was standing alongside a rink wearing his Stars’ jacket when he saw Pegula walk by and stopped him to introduce himself.
“Hi, nice to meet you,” Pegula said, and walked away.
Five minutes later, Pegula returned, apologized for not recognizing the fellow NHL owner. The two went on to talk about hockey and during their discussion, Gaglardi said, Pegula opened up about his childhood, living for a time on food stamps and looking forward to the treat he loved best at the time: a big tub of peanut butter with the oil on top.
But what struck Gaglardi most about Pegula were the small things. For starters, Pegula drove himself from South Florida to northern Michigan. That’s not something Gaglardi believed many billionaires do.
Also, Pegula knew hockey, and knew all the names of the young prospects, their nicknames and statistics. He also was attending an event, the prospects tournament, where few NHL owners are ever seen.
“That takes a particular owner, in my opinion. Most of the players will never play for his club,” Gaglardi said about Pegula spending time to scout players.
The Political Pegulas
The appearance of the Pegulas at a recent Cuomo fundraiser, held at the East Aurora estate of Jeremy Jacobs, head of Delaware North Cos. and owner of the Boston Bruins, probably turned some heads.
The Pegulas rarely give to Democrats. The $25,000 that Kim Pegula donated to Cuomo was one of only a handful of such donations to Democrats over the years. Others have included $2,500 that Terry Pegula donated to Sen. Charles Schumer and $12,000 that Kim Pegula donated last year to Buffalo Mayor Byron Brown.
Though not major donors in New York, the couple has given $5,000 to the Independent Oil & Gas Association of New York, which has been unsuccessfully pushing Cuomo to permit natural gas fracking, and $2,500 to the Buffalo Niagara Partnership’s PAC.
Nationally, the Pegulas are a GOP cash bonanza. The couple contributed $588,000 to federal causes, according to Federal Election Commission records, and all but $2,500 – the Schumer check – went to Republicans.
Besides Romney and Brown, their cash went to a who’s who of Republicans: House Speaker John Boehner, Rep. Chris Collins, Rep. Paul Ryan, and central accounts, including the Republican National Committee and House and Senate election accounts.
In Florida, Kim Pegula this year gave $50,000 to Let’s Get to Work PAC, which supports GOP Gov. Rick Scott’s re-election. In Pennsylvania, government watchdog groups reported the couple donated $280,000 in 2010 to Corbett, the Republican governor.
The Corporate Pegulas
As both sides in the fracking debate know well, Pegula made his initial wealth in the Appalachian Basin, fracking for natural gas.
In 2010, his flagship company, East Resources Inc., sold its Marcellus Shale and some other assets to Royal Dutch Shell for $4.7 billion.
Pegula and his wife made another mega-business deal this year, a $1.75 billion sale of drilling rights on 75,000 acres of land in Ohio and West Virginia. That well-timed transaction in August made it clear to NFL owners, and the other bidders, that Pegula had both the means and the desire to purchase the Buffalo Bills.
Following those two sales, East Resources today is essentially an asset-less company, though it is now looking at new opportunities in Colorado and Wyoming.
“I think he wants to stay in the oil and gas industry,” said one senior employee who has worked for Pegula for 20 years. He spoke on condition his name not be used.
The employee said Pegula, born in Carbondale, Pa., site of the nation’s first underground coal mine, was educated and trained as an engineer but became a self-taught geologist over the years.
In 2000, Pegula purchased from Pennzoil, a company with roots back to the Rockefellers of the 1870s, its remaining assets in West Virginia and Pennsylvania in the Appalachian Basin. With the purchase came records – boxes of them – containing meticulous details about decades of studies on prospecting and drilling and rock formations.
Pegula loved those records, and spent hours going through them to try to pinpoint where the next energy find might come.
“Terry to this day loves picking through those old records,” said his employee, who added that Pegula is willing to spend hours talking about geology, Detroit Tigers’ baseball or their joint love of Penn State football.
Pegula graduated in from Penn State in 1973 with a petroleum and natural gas engineering degree. In 2010 it received $102 million from the Pegulas for a new hockey arena and scholarships.
“What sets himself apart in the oil and gas industry is he works harder than everybody else,” said the employee.
These days, Pegula, because of his time constraints, doesn’t get to spend as much time in the field as he once loved to do, the employee said.
Besides East Resources, Pegula also owns Greater Rocky Mountain Regional Oil & Gas, which has acreage, as the industry calls land where drilling leases are held, in Colorado and Wyoming.
A third company, JKLM Energy, is based in Pennsylvania, where it also holds acreage.
People who know Pegula describe him as having the intuition and ability to take risks when he prospects for new oil and gas sites.
Backing what he likes
As profits from his energy companies began to come in, Pegula started to invest in opportunities where he had personal interests: Specifically, country-western music and sports.
Pegula’s empire has grown in recent years to include a country music label, a Nashville recording studio and now two major sports franchises, records with government agencies across the country show.
In Nashville, Pegula’s holdings include Black River Entertainment, an independent country music label, and two studios, including Sound Stage Studio, where artists from Johnny Cash to George Strait have cut records.
The Pegulas, both avid country music fans, employ about 30 songwriters, engineers and others in Nashville. They have pumped money into studio infrastructures so that major and up-and-coming artists now are eager to record there, said Gordon Kerr, Black River’s CEO.
Among the artists who have recorded or worked in Pegula’s studios are Miranda Lambert, Carrie Underwood, Keith Urban, the aforementioned Strait and the rock band Phish.
The company’s in-house writers and artists are increasingly showing up in the country music charts and winning awards. Black River Publishing company’s Josh Osborne, along with Kacey Musgraves and Shane McAnally, won a Grammy earlier this year for Best Country Song.
“There’s no question, if Kim and Terry didn’t have belief and the financial resources, there’s no way we could be doing what we’re doing,” Kerr said.
The Pegulas are involved owners, getting cuts or albums of new music for them to consider, he said.
“They afford us the opportunity to offer the top quality, and that’s what attracts people to be a part of it,” Kerr said.
While he invests in his companies, Pegula is known for his lean operations, small enough that he and his wife can hire people they personally trust.
His Boca Raton operation, the seat of his sprawling empire that includes three management companies providing a range of corporate services to his various holdings, has a dozen employees. That is about the same size as his Pennsylvania office, which oversees much of his oil and gas business.
Pegula does not reveal much about his business dealings. The website for East Resources lists no information about the company beyond its address and logo and asks people to fill out a form if more information is sought.
A Buffalo player
After acquiring the Buffalo Sabres in 2011, Pegula was asked at a News editorial board meeting whether he had any interest in owning a football team.
“Nope …I have too much going on right here right now,” he responded.
Three years later, Pegula has been welcomed into Buffalo’s close-knit business community in ways that Tom Golisano, the previous billionaire owner of the Sabres, never could attain. It hasn’t hurt Pegula that he has become a major real estate force in Buffalo, with the construction of the $172 million HarborCenter hockey/entertainment/hotel complex.
That Pegula might have the kind of cash to build or help build a new stadium for the Bills also has not been lost on the local community.
Zemsky said Pegula, who once lived in Orchard Park, has already “demonstrated a commitment to Buffalo and Western New York, and has a historic emotional and financial commitment to this community and has the resources to take the long view for the (Bills) and the community.”
Gaglardi, the Dallas Stars owner, called Pegula “a real gentleman” who has a “stellar reputation” in the NHL. He described him as an unassuming man who keeps the commitments he makes behind the closed doors of the NHL boardrooms.
“I’ve never seen him boisterous or anything like that. But the fact of the matter is he’s involved, and a lot of owners aren’t as involved. He’s one of the good owners,” Gaglardi said.
“If I owned a NFL club, he’s the kind of owner you’d like to see join. Without naming names of owners in other sports that I might not like to see join, if I owned an NFL club, he’s the kind of owner I’d like to see join,” he added. “I think Buffalo fans are lucky.”