Kim Pegula is billed as a co-owner of the Buffalo Bills and Buffalo Sabres, but for years, she was the clear-cut leader of her family鈥檚 sports franchises. Pegula served as president of both teams. She created Pegula Sports & Entertainment, the organization that oversaw the family鈥檚 holdings. She was a tone-setter for the organization, from initiating PSE鈥檚 鈥淥ne Buffalo鈥 campaign to steering the vision for a new Bills stadium to parting ways with top executives whom she felt had to go.
It is different now.
Pegula fell ill 15 months ago, suffering a cardiac arrest overnight on her 53rd birthday and embarking on a recovery that continues today. Her medical situation created a series of circumstances that have shifted the family鈥檚 business organization. This summer, Kim鈥檚 husband, Terry, took over her former role as president of both the Bills and Sabres. Kim鈥檚 top Bills executive, Ron Raccuia, was fired and replaced by John Roth, a trusted friend of Terry, who months earlier was given a similar role at the Sabres. Terry Pegula also dissolved PSE, essentially splitting the Bills and Sabres into separate organizations with shared leadership.
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None of these changes are visible to fans watching games, but they are transformational for the organization鈥檚 day-to-day operations, and for the future. Here鈥檚 a look at what we know:
Why wouldn鈥檛 Terry Pegula hire someone with a background in hockey, rather than himself, to fill the role of president for the Sabres? Or, for that matter, why not find someone with a football background to be president of the Bills?
Pegula owns the teams, and he can do what he wants. Clearly, he sees himself as the right person for the job 鈥 and because he is the owner, that鈥檚 all it takes.
But running a sports franchise involves more than the sport itself. A typical team president operates the business side of the organization, from finance to marketing to human resources. They need expertise in business, not necessarily in the sport.
Abraham Madkour, the publisher and executive editor of SportsBusiness Journal, a widely read and authoritative publication in the sports industry, offered this insight in a column this week:
鈥淭he bigger role would challenge anyone, but sources close to the organization think Terry believes he鈥檚 the best person for the role and isn鈥檛 comfortable with any other name than a Pegula being president.鈥
Pegula has plenty of experience in sports 鈥 he purchased the Sabres in 2011 and the Bills in 2014 鈥 but he is unlikely to be running either team on a day-to-day basis. That will be the job of Roth, a former investment-fund manager whom Pegula appointed to be chief operating officer of the Sabres in January. In July, when Pegula fired Ron Raccuia as the Bills鈥 COO, Roth added that title with the football team.
Pegula has long been involved on the sports side of his franchises, spending time with his general managers (Kevyn Adams with the Sabres; Brandon Beane with the Bills), watching games and attending the draft. After the Sabres changes were announced last month, sources told The Buffalo News that nothing will change in terms of Pegula鈥檚 involvement in hockey operations. While Pegula will be involved in discussions anytime his approval is needed for an expenditure 鈥 particularly long-term contracts or significant trades that add salary 鈥 he has entrusted Adams to run the department and oversee the Sabres鈥 long-term plan. The same is almost certainly true for Beane and the Bills.
Bottom line: Little to nothing is changing on the football and hockey side.
What, then, is the change?
Short answer: John Roth.
A former investment executive who spent 24 years with Fidelity, Roth came to work for Terry Pegula in January, when he became chief operating officer of the Sabres. That put Roth in charge of the day-to-day business operations of the hockey team.
Over at the Bills, Raccuia held essentially the same job: As executive vice president and chief operating officer, he ran the daily business side of the football team and also oversaw the development of the Bills鈥 new stadium, which is under construction across from the team鈥檚 current home in Orchard Park.
In July, Pegula fired Raccuia and gave Roth the titles of Bills executive vice president and chief operating officer. He also elevated two other executives 鈥 Kathryn D鈥橝ngelo and Josh Dziurlikowski 鈥 to senior vice president.
The upshot of that move is straightforward: Raccuia was out. Roth was in. But there鈥檚 a more layered answer: Raccuia was Kim Pegula鈥檚 guy. He had her trust, and she empowered him to run the daily operations of the Bills 鈥 and be the Pegulas鈥 chief representative in stadium negotiations with New York State and Erie County 鈥 even when she was healthy and working as team president.
Roth is Terry Pegula鈥檚 guy.
Kim is recovering, and while her family tends not to share specific details, she is presumably doing well. She鈥檚 traveling, visiting family and some team events, all of which is part of her recovery process. It is not, however, a return to work. With Terry Pegula taking over the presidency of both teams, he is putting his own people and systems in place. Empowering Roth is one of those moves. Dissolving PSE, which Kim created in 2011 as a way to link the family鈥檚 holdings, is another.
The dissolution of PSE was announced at the same time as the reorganization of the Sabres. How does dissolving PSE help the Sabres 鈥 and, for that matter, the Bills?
鈥淓fficiency,鈥 according to an internal memo sent to Sabres employees.
You can take that in a couple of ways. First, by eliminating nine jobs at PSE and moving other people to the Bills and Sabres, there is at least some cost savings. On top of that, most employees will be focused one other team, rather than juggling different projects between the Bills and Sabres.
鈥淲e are very excited about the direction we are heading and feel strongly these changes will allow us to operate with more efficiency, optimize our resources, and enhance the employee experience,鈥 Roth said in the internal memo.
The changes occurred at a pivotal time for the Sabres, with their roster strong enough to compete for a spot in the Stanley Cup Playoffs next season. Pegula wants to maximize revenues at a time when he鈥檚 preparing to pay to renovate KeyBank Center, which, according to The News鈥 recent conversation with Roth, will include a new roof, scoreboard and, eventually, new seats for the building that opened in 1996.
It is challenging to make money operating an NHL team, given the reliance on ticket revenue. Missing the playoffs for 12 consecutive years is a recipe for bleeding money, especially when the Sabres spent near the salary-cap ceiling during some of those seasons. Now, everyone who works for the team can ideally focus solely on projects and initiatives to help fill the seats for each of the 41 home games.
Ideally. But keep this in mind: In any organization, sports teams included, there鈥檚 a significant difference between how reorganization is described in a press release and intra-company email and what it actually feels like for the people working there. Jobs have shifted. Bosses have changed. Office locations have been adjusted. Co-workers have been let go.
Roth鈥檚 memo acknowledged the 鈥渄ifficult decision to part ways鈥 with nine people, and then named them. He also noted, 鈥淲hile we understand this change may be difficult for some, we would like to reiterate that we truly believe this will allow our employees to come home to their respective teams and create a better workplace experience. This is a critical time for our organization with where the direction of the on-ice product is heading, and we know each and every individual will come together to help our organization reach new heights.鈥
The true benefit to the Sabres will come if that actually happens.
Could separating resources be a move to prepare the hockey team to be sold?
It theoretically could be, but sources told The News that these changes weren鈥檛 made to prepare the team for a sale.
The speculation was inevitable given that the price tag for building the Bills鈥 new stadium continues to rise because of inflation, and recent sales in the NHL illustrate that it is a good time to cash in if you鈥檙e an owner. Terry Pegula bought the Sabres in February 2011 for only $189 million, and the team has likely multiplied in value since then.
Canadian businessman Michael Andlauer paid a reported $950 million for a 90% stake in the Ottawa Senators this summer, and Fenway Sports Group鈥檚 acquisition of the Pittsburgh Penguins was approximately $900 million.
That fuels speculation 鈥 but right now it is only speculation, and nothing more.
Do the changes intertwine with the involvement of Pegula family members?
Possibly, but the details and implications are unclear.
Some background: Terry Pegula has five children: Michael and Laura, from his first marriage; and Jessica, Kelly and Matthew from his marriage to Kim. All five are adults. Over the years, Terry and Kim have involved the kids in the family鈥檚 teams. Some of them have engaged in visioning and planning meetings for the new stadium. Jessica鈥檚 husband Taylor Gahagen worked closely with Kim Pegula, Raccuia and other Bills executives, touring other stadiums and working on the details of the Bills鈥 next home. Gahagen, who is an investment adviser, was a PSE executive who left the organization in recent months, before it dissolved.
Meanwhile, Laura Pegula has been more visible and involved, including attending NFL owner meetings with her father. In his SportsBusiness Journal piece, Madkour noted that Laura Pegula has 鈥渂rought in some new executives on the business side.鈥
Matthew continues to show an interest in the Sabres. He has attended the team鈥檚 annual development camp and Prospects Challenge, and he had a seat at its table on the floor of the NHL draft in each of the past two years. Matthew has also attended the Sabres鈥 pre-draft scouting meetings with his father to learn more about the processes in hockey operations.
Jessica Pegula, meanwhile, is busy with her professional tennis career. She is ranked No. 3 in the world, and she suggested to The News in August that she hopes to play another half-dozen years. Jessica has acknowledged in the past that her mom hoped for her to step into a leadership role one day.
That does not make her the heir apparent, however. A couple of weeks ago at the U.S. Open in New York, Jessica spoke about staying in sports after her athletic career finishes, but didn鈥檛 lock solely on the family business.
鈥淭here are so many different elements to the teams,鈥 she said. 鈥淚t鈥檚 a lot of moving parts. I don鈥檛 even know where I would begin with that. But that鈥檚 definitely something that鈥檚 in the back of my mind.鈥
None of this is surprising. In family businesses, roles often evolve, succession is typically complex and the details are closely held. The Pegulas鈥 most significant holdings 鈥 the Bills and the Sabres 鈥 have millions of fans and the scrutiny that comes with it. But after all of that, the teams are simply family businesses. And family businesses are complicated.