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Fracking industry projected to have $300B in losses


cage

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This is a real problem when we think of future for Pegulas and their ability to continue to be viable owners.  We're already seeing the affect of this related to the Sabres.  They're seeing a trifecta of problems in front of them that may mushroom faster than we think.  

 

1. Rocked in core industry, where they can't just "dig a hole if they need $"

2. No NHL ticket revenue given they won't make playoffs and will have difficulty putting fans in stands next season

3. While NFL teams get substantial revenue from TV contract, the Bills have big money re-signings ahead of them including coach and GM

 

https://www.cnbc.com/2020/06/22/shale-industry-will-be-rocked-by-300-billion-in-losses-and-a-wave-of-bankruptcies-deloitte-says.html?__source=twitter|main

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During times of pricing volatility within the oil & gas sector, it is much easier for companies with no debt to survive, meaning the Pegulas can layoff their workers, cut capital expenditures, cut SG&A, etc., to conserve cash and retain liquidity.  If their oil & gas companies have no debt as been reported, then they will survive a downturn. Think of it like losing your job, but your house is paid for, you have no other debt, and a million dollars in your bank account. You have enough money to buy groceries and pay your utilities until you find another job.

Edited by Southtown Tommy
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The problems with the Sabres is they make bad trades, don't draft well past the obvious picks, sign expensive and unproductive free agents, and hire the wrong people.  The team has no identity and no vision on what kind of style or image they want to communicate.  When you think of Sabres what image comes to mind?  For me its draft lottery.   

 

The problems facing the fracking industry were well articulated by many several years ago but ignored.  More or less living on borrowed money and not generating enough income to service the loans, energy in greater than energy out, and very high depletion rates which required more and more drilling to just keep pace while seeing lower flow and production rates from new wells as fields got played out. 

Edited by All_Pro_Bills
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45 minutes ago, cage said:

This is a real problem when we think of future for Pegulas and their ability to continue to be viable owners.  We're already seeing the affect of this related to the Sabres.  They're seeing a trifecta of problems in front of them that may mushroom faster than we think.  

 

1. Rocked in core industry, where they can't just "dig a hole if they need $"

2. No NHL ticket revenue given they won't make playoffs and will have difficulty putting fans in stands next season

3. While NFL teams get substantial revenue from TV contract, the Bills have big money re-signings ahead of them including coach and GM

 

https://www.cnbc.com/2020/06/22/shale-industry-will-be-rocked-by-300-billion-in-losses-and-a-wave-of-bankruptcies-deloitte-says.html?__source=twitter|main

 

I could be wrong, but I thought the Pegulas sold virtually all of their oil and gas assets year ago to Shell.  That’s why they are so wealthy.  They may a few little assets here and there, but that’s just chump change—more for a hobby. 

 

Am I wrong? Are they still in the oil and gas business? 

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15 minutes ago, JR in Pittsburgh said:

 

I could be wrong, but I thought the Pegulas sold virtually all of their oil and gas assets year ago to Shell.  That’s why they are so wealthy.  They may a few little assets here and there, but that’s just chump change—more for a hobby. 

 

Am I wrong? Are they still in the oil and gas business? 

I thought the same thing. They got rich selling the leases they had paid almost nothing for years before. They were never that big or profitable from drilling and production. They got lucky and got rich selling leases on properties they could not develop using conventional drilling techniques they had bought them for, and made an unexpected fortune when big multinationals later developed fracking technology, and suddenly previous marginal or worthless leases became valuable.

Edited by simpleman
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41 minutes ago, Southtown Tommy said:

During times of pricing volatility within the oil & gas sector, it is much easier for companies with no debt to survive, meaning the Pegulas can layoff their workers, cut capital expenditures, cut SG&A, etc., to conserve cash and retain liquidity.  If their oil & gas companies have no debt as been reported, then they will survive a downturn. Think of it like losing your job, but your house is paid for, you have no other debt, and a million dollars in your bank account. You have enough money to buy groceries and pay your utilities until you find another job.

 

Wouldn't paying for the loans taken out to buy the teams count as debt? Assuming they didn't pay for it outright.

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12 minutes ago, JR in Pittsburgh said:

 

I could be wrong, but I thought the Pegulas sold virtually all of their oil and gas assets year ago to Shell.  That’s why they are so wealthy.  They may a few little assets here and there, but that’s just chump change—more for a hobby. 

 

Am I wrong? Are they still in the oil and gas business? 

If you check the investment section on the Wikipedia link it indicates that they have sold some of their oil and gas assets and have also kept them. From a business standpoint their strategy for their multiple business enterprises is to hang in and survive until the health and business environments improve. They are following the same basic business strategies of most businesses to tighten up and adapt to the new world challenging reality. 

 

https://en.wikipedia.org/wiki/Terry_Pegula

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5 minutes ago, HardyBoy said:

 

Wouldn't paying for the loans taken out to buy the teams count as debt? Assuming they didn't pay for it outright.

 

They paid outright - no loans.

 

Shortly after Mr. Wilson passed, The Pegulas liquidated a bunch of assets, which everyone took as an indicator that they planned to buy the Bills with cash, and they did. 

Edited by WhoTom
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The Pegulas aren't the only owners in trouble. Many owners borrow against the value of their teams because up till now it was guaranteed to increase in value 5-10% annually. The Houston Rockets owner just borrowed $300MM using the team as collateral. But banks are getting tight sphincters for lending these days. So expect many more stories of teams "getting lean."

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I don’t have too much of a problem with the premise of this post. A lot of companies are experiencing loss this year. But how in the world do you even come across this? It’s like you searched for problems to criticize the owners, and post them here to cause panic or worry.

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10 minutes ago, eball said:

They're going to sell the Sabres.  Just watch.

 

They seem to be having a hard time with the Sabres, not much the Pegulas do with that team seems to be working.  It's possible they sell the Sabres.

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13 minutes ago, eball said:

They're going to sell the Sabres.  Just watch.

 

They aren't in debt, unless they were borrowing against their teams. Besides who in their right minds would buy a sports team in the middle of a pandemic...in Buffalo? (Unless the plan is to move.)

Edited by PromoTheRobot
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The Pegulas stated a short while ago they carry no debt on their business, nothing for us to worry about.  That loss is on potential new business, not current assets. Get yourself a beer and relax, the rich are doing well as usual during this economic situation. Its us paycheck slaves that need to be worried...

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Didn't Terry already sell most of his fracking land so that money is already liquid or been re-invested in something else? Not really sure how much of his current wealth is depending on ongoing revenues from fracking...

 

"Pegula got into the fracking business in 1983 with a $7,500 loan from friends and family. His sale of the company in 2010 to Royal Dutch Shell netted him about $3 billion as majority owner. He subsequently sold company assets in Ohio and West Virginia in 2014 for $1.75 billion to American Energy Partners"

https://www.investigativepost.org/2018/05/08/pegula-back-fracking-and-violating-regulations/#:~:text=Pegula got into the fracking,billion to American Energy Partners.

Edited by Mrbojanglezs
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28 minutes ago, Mrbojanglezs said:

Didn't Terry already sell most of his fracking land so that money is already liquid or been re-invested in something else? Not really sure how much of his current wealth is depending on ongoing revenues from fracking...

 

"Pegula got into the fracking business in 1983 with a $7,500 loan from friends and family. His sale of the company in 2010 to Royal Dutch Shell netted him about $3 billion as majority owner. He subsequently sold company assets in Ohio and West Virginia in 2014 for $1.75 billion to American Energy Partners"

https://www.investigativepost.org/2018/05/08/pegula-back-fracking-and-violating-regulations/#:~:text=Pegula got into the fracking,billion to American Energy Partners.

So we can establish for the Bills:

1.  No worry on oil prices as they cashed out.

2.  No worry on Bills financials as they paid cash.

3.  As the cost of the stadium is low, they have a protection many teams that financed stadiums do not have.  Teams that leveraged to build will be hurt the worst.

4.  The cap is in good shape so if it drops in future years, the Bills will be positioned to take advantage of the market inefficiencies.

 

In terms of the Sabres, I suspect that as business people they want them tp stand on their own.  They may not need them to be profitable but to al least break even.  With the Bills and other local assets, a break even hockey team still contributes to their overall portfolio.

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Biggest thing i guess is when you "cash out" where do you put your $$$$$$ where did all or a lot of that Pegula bucks $$$$$$ go? stock market? etc,etc,etc..and how big a hit did that $$ take when they cashed in and lately with the market crash and COVID?

 

I mean i seriously know guys that had their 401K(in my case TSP) in a diversified account that STILL lost 40-60K when this market went south from COVID...and for many people their 401K is a good chunk of their net worth...what did the Pegulas have their cashed in $$ IN at the time(other than Bills Sabres in talking what kind of investments is my point..and how big a hit did they take?

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3 hours ago, JR in Pittsburgh said:

 

I could be wrong, but I thought the Pegulas sold virtually all of their oil and gas assets year ago to Shell.  That’s why they are so wealthy.  They may a few little assets here and there, but that’s just chump change—more for a hobby. 

 

Am I wrong? Are they still in the oil and gas business? 

 

This won't stop the threads that insist on tying Pegula's fortune to fossil fuel futures.

 

People are lazy..

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4 hours ago, cage said:

This is a real problem when we think of future for Pegulas and their ability to continue to be viable owners.  We're already seeing the affect of this related to the Sabres.  They're seeing a trifecta of problems in front of them that may mushroom faster than we think.  

 

1. Rocked in core industry, where they can't just "dig a hole if they need $"

2. No NHL ticket revenue given they won't make playoffs and will have difficulty putting fans in stands next season

3. While NFL teams get substantial revenue from TV contract, the Bills have big money re-signings ahead of them including coach and GM

 

https://www.cnbc.com/2020/06/22/shale-industry-will-be-rocked-by-300-billion-in-losses-and-a-wave-of-bankruptcies-deloitte-says.html?__source=twitter|main

You do realize they are two of the richest owners in professional sports? Yeh they can resign Beane and McDermott to very comfortable raises with their pocket change 

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I'm not sure if I'm right or wrong, but I have zero worry about the Pegulas having enough cash to own and continue to run the Bills.  

 

And I'm stoked because between Covid 19 slowing down cashflow for state and local governments for non-essential things like a NFL Stadium, and not a ton of new oil money, it seems to me that any support at all for financing a new stadium these days will be pretty lacking along with just being plain stupid hopefully.  Although, New York does harbor some of the dumbest politicians in the world, so nothing is guaranteed in terms of common sense.  I.E. use the money to pay for essential needs and services that serve citizens first, not a NFL Stadium.  

 

Renovating the Ralph seems much more plausible at this point.  Those of us that want the facilities to stay in Orchard Park seem to maybe have things swinging in our favor here.

 

#RenoTheRalph

 

 

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7 minutes ago, Lv-Bills said:

I'm not sure if I'm right or wrong, but I have zero worry about the Pegulas having enough cash to own and continue to run the Bills.  

 

And I'm stoked because between Covid 19 slowing down cashflow for state and local governments for non-essential things like a NFL Stadium, and not a ton of new oil money, it seems to me that any support at all for financing a new stadium these days will be pretty lacking along with just being plain stupid hopefully.  Although, New York does harbor some of the dumbest politicians in the world, so nothing is guaranteed in terms of common sense.  I.E. use the money to pay for essential needs and services that serve citizens first, not a NFL Stadium.  

 

Renovating the Ralph seems much more plausible at this point.  Those of us that want the facilities to stay in Orchard Park seem to maybe have things swinging in our favor here.

 

#RenoTheRalph

 

 

 

 

Exactly!  Buffalo will never be confused with Vegas....but can it not be Reno??

 

Reno that ol mofo!

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3 hours ago, Florida Bills Fanatic said:

Exactly....aren't they like number 8 among the owners?

 

https://www.cnbc.com/2019/11/10/nfls-richest-billionaire-owners.html

 

That's what CNBC says.

 

"His company, East Resources, sold most of its assets to Royal Dutch Shell for $4.7 billion in 2010. Pegula used some of those assets to build a portfolio of sports properties, including the NHL’s Buffalo Sabres and the Bills. "

 

For a relatively small and economically struggling city like Buffalo to have such wealthy team owners is an incredible blessing.  Among other things, it means we don't need to spend a lot of time fretting about the OP...

 

The internet.  It's amazing.  :rolleyes:

 

Also noteworthy from the list, I thought - Terry Pegula is the 2nd youngest owner in the top 10 (and the very actively involved Kim considerably younger than Terry) - so not only do we have wealthy owners (both of whom are area natives too), we probably have a lot more stability ahead than most.

 

 

Edited by BobChalmers
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6 hours ago, cage said:

This is a real problem when we think of future for Pegulas and their ability to continue to be viable owners.  We're already seeing the affect of this related to the Sabres.  They're seeing a trifecta of problems in front of them that may mushroom faster than we think.  

 

1. Rocked in core industry, where they can't just "dig a hole if they need $"

2. No NHL ticket revenue given they won't make playoffs and will have difficulty putting fans in stands next season

3. While NFL teams get substantial revenue from TV contract, the Bills have big money re-signings ahead of them including coach and GM

 

https://www.cnbc.com/2020/06/22/shale-industry-will-be-rocked-by-300-billion-in-losses-and-a-wave-of-bankruptcies-deloitte-says.html?__source=twitter|main

That’s what I do for a living , in west Texas my company went from having 18 fracks down to just 2 , but work is picking up we just got 4 more that are starting this week , and the price of oil is going up as well it’s at 

$40 a barrel....

90% of people here being cowboys fans I got a HUGE B Bills sticker on my hard hat !!!

GO BILLS !!!

Edited by Putin
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COVID may have saved us from ourselves.. in regard to the build downtown or renovate New Era decision.

 

Taxpayers Still on the Hook for Stadium Debts, Even Though Coronavirus Canceled Sports

Quote

American cities are going to lose about $360 billion in revenue over the next three years, according to a projection from the National League of Cities. The coronavirus pandemic isn't just emptying stadiums and eliminating ticket revenue. It's causing all sorts of economic spending to crater—including the common "tourist taxes" that cities often use to back debt, like those applied to hotel rooms and rental cars.

 

Quote

Study after study after study has debunked the idea that publicly funded stadiums are financially beneficial to anyone other than the team owners, who get free infrastructure for their business

 

 

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I’d probably panic if I got down to my last BILLION!    ?

 

 

Diversifying with a little ‘ole NFL team probably is a good thing in the long run. They tend to do kinda OK, even in the current environment. We love our entertainment! 

 

 

.

Edited by Augie
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8 hours ago, eball said:

They're going to sell the Sabres.  Just watch.

 

I don't see it.  Terry loves them.

 

4 hours ago, BobChalmers said:

https://www.cnbc.com/2019/11/10/nfls-richest-billionaire-owners.html

 

That's what CNBC says.

 

"His company, East Resources, sold most of its assets to Royal Dutch Shell for $4.7 billion in 2010. Pegula used some of those assets to build a portfolio of sports properties, including the NHL’s Buffalo Sabres and the Bills. "

 

For a relatively small and economically struggling city like Buffalo to have such wealthy team owners is an incredible blessing.  Among other things, it means we don't need to spend a lot of time fretting about the OP...

 

The internet.  It's amazing.  :rolleyes:

 

Also noteworthy from the list, I thought - Terry Pegula is the 2nd youngest owner in the top 10 (and the very actively involved Kim considerably younger than Terry) - so not only do we have wealthy owners (both of whom are area natives too), we probably have a lot more stability ahead than most.

 

 

 

He also sold the Ohio and West Virginia assets to American Energy Partners, LP for $1.75 billion in 2014.  That's $6.45B.

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