The Pegulas hit the eject button

[inkman]

All of this screams it's about finances. It was mentioned several times during the press conference.  They are dumping solid hockey people, minus Botterill, across the board.  Taylor and Sexton didn't do a damn thing to deserve to be let go. The Amerks were poised to be a very solid contender this year.  

Adams was in a position built on finances. It isn't just a little coincidental that the Sabres unload anyone cashing a paycheck and hire the one guy who would have insight as to how much the Pegulas could save by ***** canning everyone?  

The Pegulas are cash poor and are doing every thing they can to stay financially solvent.  Convince me I'm wrong. 

[SDS]

Why is this topic different from the others?

[dudacek]

This is a different discussion than about firing Jason and hiring Kevyn, or about the suitability of the Pegulas.

Its about whether the Sabres have officially moved back into the ranks of small market teams, it’s about whether the days of “I’ll drill another well” are over, and whether we can put “cash-strapped” back on the list of things holding us back.

Its more than worthy of its own thread.

Edited June 17, 2020 by dudacek

[SDS]

6 minutes ago, dudacek said:

This is a different discussion than about firing Jason and hiring Kevyn, or about the suitability of the Pegulas.

Its about whether the Sabres have officially moved back into the ranks of small market teams, it’s about whether the days of “I’ll drill another well” are over, and whether we can put “cash-strapped” back on the list of things holding us back.

Its more than worthy of its own thread.

Can I take your explanation and make that the original post? ?

My answer is that we have definitely moved back into a small market structure. My gut tells me that will happen as long as the team is not experiencing success moving forward. My gut also tells me that once we do experience success they will bring in additional resources to “finish the job”.

[Marvin]

I think we may be for a few years.  The cap is flat and, in the worst-case scenario from medical economics types, th US may not recover until after 2025.

Honestly, the NHL and the NHLPA needed a quick salary adjustment phase for a couple of years to right the finances.  I imagine cutting the cap by up to 50% was unacceptable on both sides.

[jahnyc]

I agree the actions today feel like cost cutting measures, but didn't the Pegulas incur significant costs by firing everyone since I assume that they are still on the hook for the remaining terms of the contracts of JBot, Sexton, Taylor and the scouts?  Maybe a housecleaning was in order, but this seems about the stupidest way to go about it by hiring a GM with no experience and then getting rid of all of the hockey people.  What hockey people are going to want to come work for the Sabres after all of this and our recent history of firing GMs and coaches?

[Taro T]

32 minutes ago, SDS said:

Can I take your explanation and make that the original post? ?

My answer is that we have definitely moved back into a small market structure. My gut tells me that will happen as long as the team is not experiencing success moving forward. My gut also tells me that once we do experience success they will bring in additional resources to “finish the job”.

And that is my expectation as well and is a big part of why I'm opposed to the team being sold.

[Indabuff]

So am I to believe this is a reasonable cost cutting preservation effort because of unforeseen current events or because the Pegs have just decided to go cheap on this team?  I didn't know where to post this because my brain is fried from seeing so many new threads.

[SDS]

3 minutes ago, Indabuff said:

So am I to believe this is a reasonable cost cutting preservation effort because of unforeseen current events or because the Pegs have just decided to go cheap on this team?  I didn't know where to post this because my brain is fried from seeing so many new threads.

FWIW, on Twitter Tim Graham was told they have been losing $50M-60M a year in recent years. 

if that is in the ballpark then it is hard to call that cheap.

[shrader]

1 hour ago, jahnyc said:

I agree the actions today feel like cost cutting measures, but didn't the Pegulas incur significant costs by firing everyone since I assume that they are still on the hook for the remaining terms of the contracts of JBot, Sexton, Taylor and the scouts?  Maybe a housecleaning was in order, but this seems about the stupidest way to go about it by hiring a GM with no experience and then getting rid of all of the hockey people.  What hockey people are going to want to come work for the Sabres after all of this and our recent history of firing GMs and coaches?

This assumes that there was time remaining on those other contracts. Do we know about any of them other than Botterill?  Also, are these other positions even contract based or have any guarantee whatsoever? I’ve never heard a single word about the employment status of any scouts. 

[Stoner]

12 minutes ago, SDS said:

FWIW, on Twitter Tim Graham was told they have been losing $50M-60M a year in recent years. 

if that is in the ballpark then it is hard to call that cheap.

Can someone do the math on how they'd go from a modest amount of operating income (per Forbes, before taxes, amortization, depreciation and something else) to that much in losses? I did find it interesting that the Sabres' debt to value ratio is 20%. The Sabres owe someone $80 million?

[dudacek]

I haven’t rewatched, but didn’t Terry say something to the effect of not having any debt worth worrying about?

[freester]

2 hours ago, SDS said:

Can I take your explanation and make that the original post? ?

My answer is that we have definitely moved back into a small market structure. My gut tells me that will happen as long as the team is not experiencing success moving forward. My gut also tells me that once we do experience success they will bring in additional resources to “finish the job”.

I disagree. Not until the economy of the NHL and the oil markets improves. 

[SDS]

7 minutes ago, freester said:

I disagree. Not until the economy of the NHL and the oil markets improves. 

Disagree with what?

[nucci]

How do you lose $50M-$60M a year?

[That Aud Smell]

9 hours ago, PASabreFan said:

Can someone do the math on how they'd go from a modest amount of operating income (per Forbes, before taxes, amortization, depreciation and something else) to that much in losses? I did find it interesting that the Sabres' debt to value ratio is 20%. The Sabres owe someone $80 million?

It's not difficult for a business of that size to carry debt of $80M. Some or most of it could be tied up in a "suite" of "loan facilities" that are intended to give the business a ready, reliable access to cash so that all ongoing expenses are met and the business is never caught short.

8 hours ago, dudacek said:

I haven’t rewatched, but didn’t Terry say something to the effect of not having any debt worth worrying about?

He said that about his oil and gas business. It was a misleading answer because he was saying "there's no financial issue" because his oil and gas ventures don't carry (significant) debt. But that ignored the question of whether revenues from those ventures are down, which presumably they are (way, way down).

[Thwomp!]

How are all these cuts and making the organization "lean" going to look on ice and in the front office?  Are we back to video scouting or reduced scouting?  The Sabres were awful with Terry's "unlimited" resources.  How are they going to look now?   This cost cutting and focus on the bottom line only will manifest itself in some way, and it very likely won't be good.

The problem still is that the Pegulas are in over their head.  And I'll clarify, with the Sabres.  Things have progressively gone downhill since the Pegulas have owned the Sabres.  We're an embarrassment.  A laughingstock already.  They've now got even more say in things and far less possibility of any checks and balances on them.  I don't see this going well.  Sports owners focusing solely on the bottom line never goes well for the fans or on ice product.

[Getpucksdeep]

27 minutes ago, nucci said:

How do you lose $50M-$60M a year?

Napkin math is 2020 they are losing about 50% of their home games (march/april/oct/nov) which I assume makes up well more than half the revenue.

If 20 home games lost at 17K butts * $80(?) per (avg ticket and beer) = ~$1.4M  Add in whatever you want for merch sales maybe $100k per game?

So let's ballpark $30 million in lost revenue for 2020.  

Relative to estimate of total loss I can see it.  Salary cap is $80M, add in Amerks, total payroll for ops is $90M?  41 home games * $1.4M = $57.4M.  Not sure what TV brings, advertising etc but let's say $5M?

Spitball here but aligns w/ "we don't make money unless playoffs".  And if Pegulas are on year 7 or whatever of subsidy and total subsidy of close $400M or something, f yeah I can feel it.  Not suggesting they are victims, just trying to understand the EJECT button.

[PromoTheRobot]

12 hours ago, inkman said:

All of this screams it's about finances. It was mentioned several times during the press conference.  They are dumping solid hockey people, minus Botterill, across the board.  Taylor and Sexton didn't do a damn thing to deserve to be let go. The Amerks were poised to be a very solid contender this year.  

Adams was in a position built on finances. It isn't just a little coincidental that the Sabres unload anyone cashing a paycheck and hire the one guy who would have insight as to how much the Pegulas could save by ***** canning everyone?  

The Pegulas are cash poor and are doing every thing they can to stay financially solvent.  Convince me I'm wrong. 

 

Yeah, pretty hard to argue otherwise. About the only lame excuse I could think of is they're saving their pennies for that new downtown stadium. More likely they overextended and the pandemic and crash in energy prices punched a hole in their piggy bank.

[PromoTheRobot]

1 hour ago, nucci said:

How do you lose $50M-$60M a year?

 

On a country music label? On a healthy fast food restaurant? On tennis lessons?

[LabattBlue]

1 hour ago, nucci said:

How do you lose $50M-$60M a year?

If this is a number the Sabres are putting out there, the only answer is “fuzzy math”. 

[Pimlach]

In the original “Botterill is fired” thread we had a discussion on whether Kim Pegula was following the management model of the Bills.  There was a suggestion that (McD then Beane) was similar to (Krueger then Adams).  Some of our more hopeful and positive members were looking for some semblance of logic in this move.  
 

The smoke is clearing and we can see Kim and Terry have no model.  The Sabres are a mess and they won’t bring in any revenue for a long time.   The Pegula’s businesses are all struggling in the current economy, their kingdom is crumbling under the pandemic.  The Bills will make money because that is what the NFL does.  After that, nada.  The natural gas business will struggle, the Sabres and entire NHL will struggle, Lacrosse will struggle, Restaurants/bars/ hotels will struggle.  PSE is in trouble.  
 

The smoke is clearing and we see much more than Jason Botterill is gone.  So is Sexton, Greeley, Coach Taylor and his staff In Rochester, Lead Scout Jankowski and his staff , and many more.  The one thing Botterill was doing a nice job with was Rochester and the attempt to develop his own players.   The right effort was there, even if the NHL level talent still looked to be thin.   
 

The smoke is clearing and we see Botterill was going to stick to his plan and could not accept all the cuts the Pegula’s “need” to stop the bleeding.  I give Bots credit for being his own man on this.  I’ll bet he is relieved.  
 

The smoke is clearing and the Pegula’s believe that these cuts and the “extra time” will allow them to fix the business side of things under this new “effective, efficient, and economic”  paradigm shift.   But think about this ... Kevyn Adams has no NHL Hockey Operations experience and right now he essentially has no staff.  He is our GM.   He is on the phone calling other GMs to get himself established.  Think about those conversations.  
 

We are right back to the days of being run on a shoe string budget.  There will be no more “drill another well”.  We could very well lose Eichel and Dahlin, who knows? 

Listening to Terry babble on about communication breakdowns and the speed of information is bizzare.  LaFontaine left because of differences and a breakdown in communication.  GMTM and Disco Dan were publicly criticized for being bad communicators.  Now Botterill is a bad communicator too.  The common denominator here is The Pegula’s.  

This pandemic could be the beginning of the end for Terry and Kim Pegula’s hockey ownership.    The things typically needed  to navigate a business through tough times are: good people, a clear vision, lots of self sacrifice, and most importantly innovation - I question that there is enough of these ingredients left in this organization.   
 

My hope and dream is that The Pegula’s find a local buyer for the team and then they sell all the hockey related operations before the next season starts.   
 

 

 

Edited June 17, 2020 by Pimlach

[Randall Flagg]

I honestly think that terry just falls back on the communication thing because he's not mentally agile enough to give serious thought and then a sober diagnosis on the spot like that. I would struggle to say anything meaningful in the same situation 

[PromoTheRobot]

Let's hope Kev & Ralph can recreate some of that Lindy & Darcy post-bankruptcy magic. We need another miracle.

[Pimlach]

45 minutes ago, Randall Flagg said:

I honestly think that terry just falls back on the communication thing because he's not mentally agile enough to give serious thought and then a sober diagnosis on the spot like that. I would struggle to say anything meaningful in the same situation 

Good take but the "good communicator/bad communicator" thing is old.  

Now he is talking about using computers, data bases, and iPhones to scout and to  move information around quickly.   This is not new.  He does not get the fact that having the information is only part of the job.  There is actually too much "information" out there.  The successful leaders know how to use information to make decisions, and how those decisions will support the vision and plan forward. 

I am wondering what they saved by all the layoffs.   I would suspect some of these contracts are guaranteed but maybe not? 

Edited June 17, 2020 by Pimlach