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'Tom saved hockey in Buffalo': How the Golisano years rescued the Sabres

'Tom saved hockey in Buffalo': How the Golisano years rescued the Sabres

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He wasn’t looking to sell. He wasn’t eager to get out. Tom Golisano was actually having fun. He enjoyed owning the Buffalo Sabres. A hockey fan, he wasn’t — at least not before buying the team. But Golisano loved business, and he was a passionate competitor at all things that can be measured, from Trivial Pursuit to the challenge of transforming a money-gushing hockey team into a profitable enterprise.

When Golisano purchased the Sabres out of bankruptcy in 2003, the team had lost $14 million the previous year. Its future in Buffalo was questionable. Some players were putting their homes on the market, wondering if the Sabres would be scooped up by an out-of-town suitor and moved away.

But Golisano, the Rochester billionaire who built his fortune as the founder of the payroll company Paychex, was the one who swooped in. He did it out of duty for the region – “It would be a real psyche problem if this team left,” he said – and he did it to prove something.

“There was a little bit of that ‘one-trick pony’ attitude,” Golisano told The Buffalo News during an interview in his Pittsford office earlier this year. “Everybody knows I started Paychex and was very successful. Can I do it again?’”

His ownership made a difference in Buffalo. As the Sabres enter their 50th year, there is certain to be much reflecting on the team’s history, from its first three decades under the ownership of the founding Knox family, to its brief, tumultuous time owned by John Rigas, whose cable company Adelphia Communications went bankrupt. That threw the Sabres into turmoil, and Rigas, with his son Timothy, ended up in federal prison on multiple counts of fraud.

That reflection will also include the franchise’s current owners, Terry and Kim Pegula, who are still vying for a winning team but have invested heavily in the arena neighborhood and waterfront development. 

Tucked into that history between Rigas and Pegula is Golisano’s ownership, a vital eight years that stabilized the Sabres in Buffalo.

Under Golisano, the Sabres went from eight-figure losses to sizable gains. In the years following the NHL’s 2004-05 lockout, the Sabres made profits of between $5 million and $12 million annually, according to Larry Quinn and Dan DiPofi, Golisano’s minority shareholders in the franchise.

The team made the National Hockey League playoffs in four of the six seasons following the lockout, making it the most successful time span the Sabres have experienced in a generation. There were long-held criticisms, the loudest of which came from media and fans frustrated over the 2007 free-agency departures of stars Chris Drury and Daniel Briere.

Altogether, though, business was healthy in the middle of the 2010-11 season. But Larry Quinn, the man in charge of running the team for Golisano, was not. In fall 2010, Quinn entered the Cleveland Clinic for an aortic valve replacement. After the procedure, he went into cardiac arrest. Quinn was in intensive care for the next 14 days.

That jolted Golisano.

“Larry took his work very seriously, and I believe that he constantly felt under self-inflicted pressure, and that it might have had an effect on his health,” Golisano recalled. “And I said, ‘Well, we don’t want to lose Larry, and if we do, I don’t know what the hell we’d do. So maybe it’s time.’ ”

Enter Terry Pegula. Back then, Pegula was a little-known businessman who had just sold most of his oil and gas assets for billions. He had expressed interest in buying the team previously, and so had others, but “there was no incentive to sell,” Golisano said.

Now there was incentive: Quinn’s health. Golisano didn’t want to lose his business partner and friend.

Maybe it was time.

• • •

In the early 2000s, when the Sabres’ parent company Adelphia went bankrupt and it was apparent the team would need to be sold, Quinn called DiPofi. He wanted to buy the team. “Let’s put together a group,” Quinn said.

The pair had been friends for a decade. They met when Quinn was hired by the Knox family to oversee the building of what is now KeyBank Center, and DiPofi was a corporate controller — a numbers guy. Quinn went on to become president the Sabres under the Knoxes, but he was fired in 1998 when the Rigas family took control of the team. DiPofi left shortly after Quinn, and both found work elsewhere. When Quinn sensed an opportunity to return the Sabres, DiPofi was a natural call. They shared a mutual trust and a penchant for strategic thinking, and had differences that complemented each other neatly: Quinn is a passionate hockey fan who thinks big and creatively; DiPofi had a dispassionate approach that helped him keep an even keel when the team played poorly, and he always thought in terms of hard numbers.

Neither knew Golisano, but Quinn was introduced to him by a mutual friend, developer Carl Paladino, and by political operative Steve Pigeon, who had worked on Golisano’s gubernatorial campaign. (Golisano ran unsuccessfully three times for governor as a third-party candidate.) Quinn and DiPofi met with Golisano to show him reports detailing the team’s financial state. 

Golisano, who carries with him a ruler with a small magnifying glass in the middle, studied the figures, line by line, staying silent for about 15 minutes until he looked up and said, “This business is a disaster. All it does is lose money.”

Quinn and DiPofi, who both recounted this story with Golisano, affirmed it.

“Why did you give me a projection that does that?” Golisano asked.

“It happens to be the truth,” Quinn said.

“Well, I admire you guys for being honest,” Golisano replied. “You’re the first people who’ve ever come to me looking for an investment showing nothing but red ink, but I’m just not interested.”

They all shook hands, and Quinn and DiPofi figured it was over. But about four months later, Golisano called Quinn and said, “I’ve been thinking a lot about the Sabres thing, and I think we can make this work.”

The bankrupt Sabres were under the NHL’s control, and any bid would need to be appealing to the league’s commissioner, Gary Bettman. At one point, as Golisano worked with Quinn and DiPofi to structure his bid, he told them, “Let Bettman and other people know that we’ll do this without any public money.”

Golisano had the assets to buy the team without help, which would make a difference. The NHL initially accepted a competing bid from Buffalo businessman Mark Hamister, who ultimately couldn’t pull together the funding to purchase the team. The Golisano group was Bettman’s next call.

“Tom was focused on what it would do to Western New York if the team moved,” Bettman told The News during an interview in his New York City office this summer.  “He knew that he could do what had to be done to keep the team there.”

Golisano reached an agreement with the league in March 2003 to buy the Sabres. The deal was valued at $92 million, though the actual cash payment was $15 million. The rest of that figure, Quinn explained recently to The News, was calculated by including $22 million in assumed debt, $25 million in debt that was forgiven, $10 million that each team had to set aside in advance of the impending 2004-05 lockout season, and other factors.

“Well, I guess we own a hockey team!” Golisano said to Quinn as they walked through the arena security entrance before that night’s game. “There’s only one problem with that.”

“What?” asked Quinn.

“I don’t like hockey,” said Golisano, whose stern smile can make it difficult to discern when he’s joking. In this case, he was speaking lightheartedly, but his words were literal. Golisano, who was 61 at the time, had seen only three hockey games in his life. The sport eventually grew on him, but in the meantime, Golisano relied on a true passion to drive the way he led the Sabres.

“I was not a hockey fan, but I was a business fan,” he recalled during his interview with the News. “I ran it like it was a business. I thought of it like a business. And I questioned almost everything.”

• • •

The questioning began at that evening’s game, when Golisano asked Quinn how much his ticket would cost. When he learned it was around $90, he wondered aloud, “How could a family of four afford it?” Later, during a season-end meeting, the topic of the Sabres’ low season ticket count – under 6,000 – was brought up. “Are the tickets too high?” Golisano asked.

“Right at that first game he was thinking, ‘How can the average guy get engaged with this team?' ” said Quinn, who became the managing partner of the Sabres, essentially making him both the CEO of the organization and a minority owner. DiPofi, who was second to Quinn and oversaw finances, also had a deal to earn equity.

After their first full season running the Sabres, Quinn and DiPofi pitched Golisano on instituting variable pricing for tickets. The idea is that a seat for lower-demand games – say a Tuesday night against Carolina – would cost less than a Saturday evening contest versus the Toronto Maple Leafs. They also wanted to establish a guarantee that no seat would ever be sold for less than a season-ticket holder paid for it. 

They spent two days debating with Golisano.

“He really challenges you — a lot,” Quinn said. “If you’re trying to do something like that, he will come at you a hundred different ways, maybe 20 of them completely insane and idiotic, but another 80 that are really thoughtful and push you really hard.”

The Sabres created a variable pricing system that reduced season-ticket prices by 25 percent and built in the lowest-cost guarantee. In the years that followed, the team’s season-ticket count grew to 17,500, Quinn said, with a waiting list near 5,000, and revenue increases of nearly 150 percent.

Golisano’s penchant for questioning transcended the Sabres. In the NHL’s Board of Governors meetings, which include owners, team executives and league officials, he spoke passionately for the needs of small-market teams. “One of the great things about Tom,” Bettman said, “was you always knew what he was thinking, because he was never bashful about sharing.”

Or joking — but with purpose. At one meeting, Golisano suggested the league should cut down on fighting. Some of the old-school owners were against it, and one of them stood up and made a passionate speech about why fighting is integral to the game. He finished, and then Golisano looked at him and said, dryly, “Want to take it outside?”

• • •

Golisano’s questioning drove significant change on the hockey side.

“Tom is a contrarian,” said Darcy Regier, the Sabres' general manager for the entirety of Golisano's ownership. “He didn’t buy in to doing what other people were doing. He was very strong in ‘This is what I think we should do’ and ‘This is how we do it,’ and at times, ‘I don’t care what those other guys are doing.’ ”

Golisano regularly threw down challenges. During a meeting with head coach Lindy Ruff, Golisano said he wanted to stop seeing scores of 2-1 and 3-2. He wanted to see more scoring – which translates into more exciting games – and he wanted a plan.

Ruff, who recalled the meeting in a recent interview with The News, thought to himself, You want more scoring? I’ll get you scoring. Quinn, who was in the meeting, remembers Ruff slamming down his notebook as he left the room — and got to work. Over the next two weeks, Ruff and his staff switched some practice plans, and also started using a dummy goalie made of wood and fiberglass. It was designed to roll out, giving players less net, or roll deep into the crease, leaving more net. The team held regular 15- to 20-minute shooting drills to lead off practice.

“Players starting taking that as a competition," said Ruff, who is now an assistant coach with the New York Rangers. "A lot of times there were players having their own shooting competitions after practice.”

The on-ice results over the long-term were positive. The Sabres reached the conference finals – one series short of the Stanley Cup Finals – in both 2006 and 2007.  After the 2007 season, they lost two star players that the Golisano leadership had brought in – Daniel Briere and Chris Drury – to free agency. Both then and still now with Sabres fans, the departure of that pair is a point of frustration. Quinn, during the interview with Golisano, said the team opted to let Briere go the Philadelphia Flyers because they were too close to the salary cap. They wanted to retain Drury and expected to have a shot, but he opted to sign with his hometown team, the New York Rangers. (Drury, through a Rangers official, declined to speak for this story.)

Though the Sabres missed the playoffs in 2008 and 2009, business continued to be strong. The team hosted the first NHL Winter Classic at the Buffalo Bills’ stadium in 2008. The idea, which was championed by Quinn, has become an annual New Year’s Day event involving different teams each year. The Sabres returned to the playoffs in 2010, and again the following season, which was the year Golisano decided to sell the team. It was also the last year the Sabres made the playoffs.

• • •

Terry Pegula’s first meeting about the Sabres happened around 2009 at the Duquesne Club in Pittsburgh. He met with Quinn and DiPofi, not Golisano, and according to spokesman contacted for this story, walked away with the impression that they didn’t want to sell.

At that moment, the impression was accurate. Golisano wasn’t ready to sell, and in fact he had previously rejected an offer from a Canadian businessman. But when Quinn got sick, Golisano changed his mind, and soon enough, the Sabres changed hands. Pegula bought the team in February 2011 for $189 million — more than 12 times the cash Golisano paid eight years earlier.

Pegula bought the team with a fan’s enthusiasm, because he had indeed grown up a Sabres fan. It was a stark contrast to Golisano, who had long been criticized by media for seeming detached or disinterested.

“I was very competitive — it just didn’t come across to the world, probably because I made the statement, ‘I’ve only seen three games,’ ” Golisano said. “They figured I wasn’t interested. But I was very interested.”

Golisano left the NHL with the respect of his fellow owners. “He was a good owner,” said Jeremy Jacobs, the longtime owner of the Boston Bruins and chairman of the NHL Board of Governors. Jacobs is also the chairman of Buffalo-based Delaware North Cos., which runs concessions at arenas and stadiums around the world.

“I would have loved to have seen him stay, in many cases,” Jacobs continued. ‘I mean, Terry Pegula is an extraordinarily good owner and really loves the game more.

“I think Tom kind of got brought into this. It appealed to him, but I don’t think the way it does to Terry.”

That’s true: Golisano, in his words, was a “business fan,” and that’s how he ran it. And on that measure, it worked. The franchise stabilized. Golisano profited, and Quinn and DiPofi – as minority owners – became independently wealthy. “He made a great deal for Dan and I,” Quinn said, declining to reveal the percentage of their share, “and he’s made our lives great.”

Quinn, who got healthier after that heart surgery, went on to serve on the Buffalo Board of Education. He also dabbled in Broadway, investing in shows produced by his friend Mindy Rich of Rich Products, and has spent ample time in France, where he learned to paint.

DiPofi, who lives on the Niagara River in Youngstown, spent the last few years dabbling in woodworking and home renovation.  He recently went back to work for Golisano assisting him with private investments.

Golisano, who is 77, lives in Naples, Fla., with his wife, the former tennis star Monica Seles, whom he met at the Sabres' outdoor game in 2008. He continues to serve as chairman of Paychex, is an active philanthropist and has been a partner in more than two dozen other companies. Golisano considered making a bid for the Buffalo Bills after founder Ralph Wilson’s death in 2014, and says he was contacted three times by Donald Trump's attorney Michael Cohen about partnering with the then-New York developer to purchase the team. He turned down Cohen's Trump pitch, and backed off the Bills idea completely once he knew Pegula was going to buy the team.

"I wanted the Bills to stay in Buffalo," said Golisano, who along with Quinn and DiPofi, speaks in glowing terms about the Pegulas' investment in sports and development in Buffalo "When I became convinced that Terry wanted it and was willing to go the route, I called him and I said, ‘Don’t worry about me.’ ”

Golisano had already anchored a team in Buffalo. Whether his ownership of the Sabres is the reason the team stayed in Western New York is up for debate: Both Bettman and Jacobs insist the team wouldn’t have moved. Others aren’t as sure, but it’s certain that the Golisano ownership demonstrated that a hockey franchise can run successfully in Buffalo.

“Tom saved hockey in Buffalo,” DiPofi said. “I think that the three of us showed it could work.”

Sports reporter Mike Harrington contributed to this story.

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