Photo credit: Flickr user Elite Sports Tour.
J. Paul Getty was once one of the richest men who ever lived. In fact, in 1966 the Guinness Book of Records actually named him the world's richest private citizen. He attributed his success to a simple formula: Rise early, work hard, strike oil. It's a slightly modified version of that formula that likely just saved the city of Buffalo from losing its beloved football team.
The Bills, which had been put up for sale by the estate of the team's longtime owner Ralph Wilson on his passing, had been rumored to be eventually destined for a larger market like Los Angeles or Toronto so its new owner could cash in on the NFL in those cities. That fate is highly unlikely now thanks to, of all things, fracking.
Meet the buyers
According to multiple reports, the Buffalo Bills have been sold for an NFL record $1.4 billion to the current owners of the Buffalo Sabers, Terry and Kim Pegula. The deal, which still needs to be approved by league owners, is well above the previous record of $1.1 billion for the Miami Dolphins, which included the team's stadium. The winning bid trumped the $1.1 billion estimated sale price and it also topped competing bids from Donald Trump and a Toronto-based group headlined by Jon Bon Jovi.
The reason the team will likely call Buffalo its home for a long time to come is that the Pegulas have made the city their adoptive home since buying the Sabers for $189 million in 2011. They are also involved in a privately financed $172 million downtown hockey-entertainment complex called HarborCenter. Not only that, but with a net worth estimated at $3.3 billion they don't need to make money on the team in order to make ends meet. In fact, if the Pegulas do need money again for another big ticket item they can simply return to the formula that has brought them so much success in the past. Terry Pegula said as much during the introductory press conference when he bought the Sabres by quipping, "if I want to make money, I'll drill another well."
Buffalo skyline. Flickr user sabreguy29.
Making a fortune on fracking
The Pegulas' rise to become one of America's wealthiest families is one that is firmly rooted in J. Paul Getty's formula for success. In fact, Terry even worked for Getty Oil after graduating college in 1973. However, instead of striking oil, Terry Pegula struck natural gas -- and a lot of it.
He founded East Resources in 1983 and slowly built up a significant natural gas business in the Appalachian region. In 2000, his company made a significant natural gas discovery in the Trenton/Black River Field in Central New York and north-central Pennsylvania. A few years later in 2008, with the help of horizontal drilling and hydraulic fracturing, or fracking, East Resources began to extract the vast natural gas riches of the Marcellus shale.
Two years later he sold the bulk of his Marcellus shale assets to global energy giant Royal Dutch Shell (NYSE: RDS-A)(NYSE: RDS-B) for a staggering $4.7 billion, of which $3.3 billion went right into Terry Pegula's pocket. However, even after selling these assets Terry Pegula didn't stop drilling for natural gas. He simply got up early, worked hard, and found more natural gas. Earlier this year he sold off more of his natural gas assets, this time to founder and former CEO of Chesapeake Energy (CHK +0.00%) Aubrey McClendon as his latest venture, American Energy Partners, bought Marcellus and Utica shale assets from Pegula's East Resources for $1.75 billion. Even after that sale Pegula has retained a significant amount of oil and gas assets spread around the country, so he should have plenty of money to invest in the Bills without needing to move the franchise to what some might think would be a more profitable location.
Marcellus shale drilling site in Pennsylvania. Photo credit: Flickr user Nicholas A. Tonelli.
Final thoughts
There are a number of formulas for success, and Terry Pegula found his in fracking for natural gas. Now his success will enable the Buffalo Bills' legacy in the city to live on. It's a story that demonstrates that the American dream really is possible for those that rise early and work hard toward achieving it.
