Exclusive: Toronto group bidding on Bills allowed to submit higher first bid, and must provide greater assurance it would not relocate team, sources say

The Bon Jovi/Toronto group seeking to buy the Buffalo Bills has been allowed a first-bid do-over.

In one of a bundle of surprising new developments in this melodrama, Sun Media has learned the Toronto trio is expected on Tuesday to resubmit a higher, non-binding initial bid for the Bills — probably between $1 billion and $1.1 billion.

The group also has been asked to submit greater assurances it plans to keep the Bills long-term in the Buffalo area.

Sources have told Sun Media the Bon Jovi/Toronto group’s first bid actually was rejected last week by Morgan Stanley, the investment bank conducting the sale of the NFL club for the trust of Ralph Wilson.

Until or unless they resubmit, they are out.

The reasons? The Toronto group’s bid was uncompetitively low and, perhaps as damningly, too much doubt existed within the trust, Morgan Stanley and that duo’s law firm regarding the group’s newly adopted intention to keep the NFL team in Western New York, sources say.

The latter is the most significant indication yet that a failure to provide convincing assurance of keeping the 55-year-old franchise in the Buffalo area is a potential bid-breaker in this sale, and all because of the Bills’ restrictive lease at Ralph Wilson Stadium.

If the Toronto group’s amended bid is still deemed financially insufficient, or if their non-relocation assurances fall significantly short again, its bid is dead. Otherwise, Morgan Stanley will invite the group into the final phase of the sale process, along with Terry Pegula, Donald Trump and any other qualifying late-comers the bank might yet recruit.

Adam Benigni of Buffalo’s WGRZ-TV on Thursday reported that Morgan Stanley has re-opened the first-bid process entirely.

The banker has set aside this week and next to meet in person with finalist bidders. The seller and prospective buyers will share much more detailed financial information. Probably by late August, finalists will be asked to submit binding, definitive bids.

The Toronto group comprises three parties: New Jersey rocker Bon Jovi, Maple Leaf Sports & Entertainment chairman Larry Tanenbaum and Edward Rogers and his family, who control Canada’s top telecom empire, Rogers Communications Inc.

Bon Jovi would be principal owner. Constituted in that manner, sources have told Sun Media the group cannot come close to matching even the reported initial bid of $1.3 billion submitted last week by Pegula, the cash-flush oil-and-gas multi-billionaire who already owns the NHL’s Buffalo Sabres.

Two sources said Pegula indeed bid about $1.3 billion.

Trump, the celebrity real-estate mogul from Manhattan, is the only other known bidder. A multi-billionaire himself, Trump reportedly bid about $1 billion.

Pegula and Trump learned on Thursday they are finalists. It is believed Pegula could easily pay for the team in cash. Trump’s camp has already gone on record as saying he can buy without financing.

Through various informed sources close to the sale process, Sun Media has learned the following additional information since late last week.

While some reports last week said the Bon Jovi/Toronto group had bid $1.2 billion, the amount was considerably less, perhaps under $900 million. Their ultimate bid limit is believed to be somewhere approaching $1.2 billion.

As the group mulled whether it could — or even should — continue, it received word from Morgan Stanley it could resubmit a more lucrative non-binding first bid, so long as it also provided more convincing assurances it would keep the team in Western New York.

All this likely speaks to the fact that the investment bank is (1) desperate to give Pegula more competition, (2) hoping to keep alive The Great Toronto Threat, which has successfully injected panic into the sale process since the beginning, and (3) desperate to save face, as the highly regarded investment bank still has not recruited a single new bidder to the process.

Bon Jovi still refuses to consider taking a background minority share in the bid, even though his Toronto partners are much wealthier.

By NFL rules, only the principal owner — who must have at least a 30% financial stake — has any power or influence, or can even attend league meetings, even if background partners possess a larger share.

The Toronto group hits its bid ceiling at the point Bon Jovi can no longer come up with 30% of the equity required in a bid price (that is, 30% of the cash remainder after the NFL’s $200-million financing limit has been maxed out).

The Bills are for sale because founding owner Wilson died in March.

The team’s uber-strict lease of Ralph Wilson Stadium, and an accompanying non-relocation agreement (NRA) also signed with the county and state, has indeed proved integral to this process. The lease runs through 2022, and is virtually unbreakable except for a one-time out in 2020 for a $28.4-million penalty.

These legal documents furthermore prevent the team from being sold to a new owner “who, to the Bills’ knowledge, has an intention to relocate, transfer or otherwise move the team” before 2023. Similarly, during the life of the lease the Bills owner cannot even hold a preliminary discussion about building a replacement stadium that would open before 2023.

It is in these areas that the trust, Morgan Stanley and the law firm advising both — Proskauer Rose — had issues with the Toronto group. The lease and NRA empower Erie County or the State of New York, or both, to go to court to block the sale of the Bills to an aggregation intent on premature relocation.

For about two years, until some time in June, Bon Jovi and his first partner, Tanenbaum, had been operating under the plan of relocating the Bills to Toronto at first opportunity.

Edward Rogers, whose family joined up with Bon Jovi and Tanenbaum just last month, similarly had for some time — and also not quietly enough, it turns out — looked into the possibility of bringing an NFL team to Toronto.

By the end of June, the Toronto trio did a 180 and started getting word out that they intended to keep the Bills in Buffalo. Barely anybody in Western New York — or Toronto — believes them.

On the weekend, Bon Jovi wrote a 340-word letter published in the Buffalo News that attempted once and for all to convince Bills fans his bid group’s recent about-face is sincere.

The slickly written but ultimately tone-deaf letter failed drastically in that mission. Nowhere in it does Bon Jovi vow to keep the Bills long-term in Buffalo — the only words that could have changed public opinion against him. Thus, the letter has only further entrenched opposition to Bon Jovi and his Toronto group.

On Monday, Tim Graham of the Buffalo News obtained a copy of the non-disclosure agreement signed by all potential bidders. Among his many revelations, Graham reported that it appears Bon Jovi technically violated this strict agreement with his public plea.

A source familiar with such agreements said that as long as Bon Jovi received advance verbal approval from Morgan Stanley, there likely is no issue.

A source says when Bon Jovi wrote his letter to Buffalonians, he was under the belief his group’s bid was toast. The letter was intended to be a face-saver for him, nothing more — just an attempt to get on record that he would have kept the team in Buffalo had his group’s bid won.

The trust and Morgan Stanley are expected to decide quickly whether the Toronto group is in or out. Even if in, the group appears to have little hope of winning unless Pegula, for whatever reason, drops out.

One thought on “Exclusive: Toronto group bidding on Bills allowed to submit higher first bid, and must provide greater assurance it would not relocate team, sources say

  1. regan flint

    The BILLS are staying in Buffalo. This is great for American Bills fans and CFL fans.
    It is funny that some Canadians thought that this would be a slam dunk for , JBJ / MLSE?
    ” Toronto is such an amazing NFL market. The NFL wants to come here ” was their cry.
    Did they really think that American Bills fans wouldn’t fight this at all?
    Did they really think that the NFL didn’t know about the failed NFL in Toronto , series?
    Did they not research the relationship between the CFL and the NFL?
    Talk about a bush league attempt to get an NFL team. Such arrogance and conceit.
    It really serves them right.

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