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Bill Foley’s Big Bet

The billionaire has invested $500 million to bring ice hockey and professional sports to Sin City. Here’s why, despite tough odds, he’s convinced he’s going to win.

BY Noah Davis | Work | Oct 12, 2016
Bill Foley's Big Bet

If all goes according to plan, on a balmy evening in October 2017, the Las Vegas Strip’s brand-new $375 million T-Mobile Arena will light up with activity, casting a pinkish hue over the New York-New York and Monte Carlo casinos perched on either side. Buzzing with anticipation, locals and tourists will stream into the facility. They won’t be coming to check out Britney Spears or Céline Dion or Penn & Teller. They’ll be here to see the debut of the city’s new National Hockey League franchise, the first for the sport in 16 years.

On June 22 of this year, NHL commissioner Gary Bettman announced that an investor group led by billionaire businessman Bill Foley, who put up $500 million for the privilege, would be awarded the league’s first new franchise since the Columbus Blue Jackets and the Minnesota Wild joined the NHL in 2000. The Vegas team, unnamed as of this writing, will be the league’s 31st. Other investors include Joe and Gavin Maloof, the inheritors of a beer fortune and former owners of the NBA’s Sacramento Kings.

Foley’s half-billion-dollar expansion fee is more than six times the $80 million that the owners of the Blue Jackets and Wild each paid the NHL. While investing in sports teams, particularly in the NBA, has been an excellent bet in recent years—the Maloofs bought the Kings for $156 million in 1998 and sold the team for $535 million in 2013—this gamble is unprecedented: Vegas has never had a major professional sports franchise, mainly because the major sports leagues are leery of parking a team in the home of legalized gambling. The National Football League, for example, once banned ads for Las Vegas during the Super Bowl—ads that don’t even reference gambling—for fear of association. In July, Foley told a press conference that the name of his hockey team couldn’t have anything to do with gambling. “The league has made it very clear that it really should not be associated with gambling,” he explained.

Can Las Vegas support an NHL franchise? The existing record for sports teams in Vegas is mixed. The Las Vegas Wranglers, a minor league hockey team founded there in 2003, folded in 2015 when the previous arena lease was not renewed and the team could not find a new venue in which to play. The Las Vegas Gladiators (arena football) relocated to Cleveland in 2008, and the city launched another arena football team, the Outlaws, in 2014, but it went under in 2015. The Las Vegas 51s (a New York Mets–affiliated minor league baseball team) is healthy, but it has a much lower cost structure than a major league franchise. And does anyone really want to watch hockey in a city where there are notably few opportunities to play it? The Arizona Coyotes, another NHL team based in a southwestern city, ranked 29th out of 30 teams in fans per game during the 2015–2016 season.

But from other angles, an NHL team in Vegas makes perfect sense. There are 2.2 million residents in the metropolitan area, and many of them hail from cities that do have hockey teams. Plus, some 42 million tourists visit the city every year. Though they typically don’t stay long and have no shortage of entertainment options, you can see the appeal of a hockey game in a modern, downtown arena. In recent years Vegas has aggressively and, somewhat successfully, rebranded itself as a family-friendly destination, and a pro hockey team fits that marketing strategy. Think, for example, of vacationing Canadians delighted to see their home team playing an away game in Vegas.

When Bettman announced the winning bid, Foley proclaimed that some 14,000 people had already put down deposits for season tickets—a remarkable number given that the T-Mobile Arena only seats 17,500. (Though Foley didn’t say so, some appeared to be tickets for just a fraction of the season.) The online scuttlebutt: Many who plunked down a 10 percent deposit planned to resell the tickets to tourists at hefty markups.

Talking to Worth over the phone from his home in Healdsburg, Calif., Foley insists that hockey can flourish in Vegas. “I know I can create a winning culture,” he says. “I believe hockey is going to be easier than some of my businesses.”

T-Mobile arena, conveniently located on the Las Vegas Strip

T-Mobile Arena, conveniently located on the Las Vegas Strip. Photo by Ethan Miller/Getty Images

Even at age 71, William P. Foley II is not the type of businessman—or billionaire—inclined to invest in a sports team just for the fun and glamour of ownership. After a long career running companies that range from financial services to fast-food chains to timber operations to wineries, Foley has earned a reputation as a skillful and tough executive, with an eye for a bargain, a talent for building value and a passion for cost-cutting. A student of military history, Foley once told the Wall Street Journal that, as a manager, he is a “dictator,” deeply involved in all aspects of his businesses. That way, “if there’s a failure, it’s my fault.”

Foley was born in Austin, Texas, in 1944, the son of a soldier and a homemaker. When he was in first grade, his father was posted to Canada. Foley learned to skate on the frozen ponds and canals near Ottawa, and played shinny—basically pickup hockey with makeshift equipment. Two and a half years later, the family would move again, as it did every few years—Alaska, California, Virginia, Pennsylvania, Maryland, even Venezuela. Summers were mostly spent at a family ranch near Amarillo, Texas, where his mother had grown up. But Foley still remembers the impromptu hockey games in which he ostensibly played as a defenseman, but really, “you’d just try to get the puck and score.”

Foley graduated West Point in 1967 and eventually rose to the rank of captain in the Air Force; he would likely have served in Vietnam, but imperfect vision kept him from piloting. Instead, he was dispatched to Seattle to serve as an Air Force liaison at Boeing, monitoring military contracts; he reportedly excelled at rooting out waste, and 
by 26, according to a profile of Foley by Washington, D.C.–based writer Robert Struckman, he had “authority to negotiate contracts up to $250 million.” Foley also attended law school at the University of Washington and met and married a flight attendant named Carol Johnson. Still married, the couple has four children, two boys and two girls.

Sensing that the state was attracting investment from around the country, Foley took a job at an Arizona law firm after graduation. Just a few years later, he founded his own law firm. One deal, helping a client buy a small title insurance company called Fidelity National Financial, would set the course for his future career: In 1984, he and other investors bought the company themselves. Over the next two decades, Foley would build the company through mergers and acquisitions—reportedly over 100 of each—transforming it into one of the largest title insurance companies in the country. It wasn’t a sexy business, but it was lucrative: FNF, where Foley is now chairman of the board, paid Foley $104.9 million in 2014, making him the fourth-highest compensated executive in the country, according to Bloomberg.

“The title business is kind of boring,” Foley once admitted, and in the 1990s he began to branch out. Even as he served at FNF, he became embroiled in a bitter internal fight at CKE Restaurants, owner of Carl’s Jr. fast-food restaurants. Ousted by his board, founder Carl Karcher asked Foley for help regaining control of the company, which was struggling with declining revenue and market share; Foley wound up becoming a part-owner and, in 1994, CEO of CKE. He quickly moved to rejuvenate the chain, improving the food and jazzing up the marketing. And he went on an acquisitions spree, spending nearly a billion dollars snapping up other distressed fast-food chains—Rally’s, Checkers, Hardee’s. Foley, the Wall Street Journal concluded, was building “an empire by buying ailing also-rans.” But the acquisitions were expensive and difficult to execute, and by the time Foley left the company in 2000, CKE was in significant financial distress.

Foley’s freelancing wasn’t limited to fast food. He bought some 90,000 acres of Pacific Northwest timber forest, the Hôtel Les Mars in Healdsburg, a 40,000-acre ranch in Montana, a Montana restaurant chain and, starting in 1996, wineries in California, Washington and New Zealand—typically distressed properties making good, not great, wine. (“I’m a bottom-feeder,” Foley told the Journal.) Foley Family Wines now boasts 56 vineyards. Its website describes Foley as “by turns hard-nosed and soft-hearted,” committed to making wine that “resonates not only with wine professionals worldwide, but also with the average American consumer, who enjoys a memorable bottle of wine at the end of a long work day.”

“He’s a homey kind of guy,” says Clark County (Nevada) commissioner Steve Sisolak, who worked with Foley on the T-Mobile Arena. “He’s not a slick hustler. He’ll meet with a group of three people, five people or 500 people to try to make this happen, to keep pitching the idea, to keep selling tickets. He never said no to an invitation.”

Ken Boehlke, a cofounder of the Sin Bin, a website devoted to the team, remembers meeting Foley in April after attending a radio interview. Boehlke and a friend went up to shake Foley’s hand, and Foley invited them to join him for lunch. “We were sitting in the corner of this little bar, eating lunch with a billionaire,” Boehlke says. “He ordered a hamburger and fries. He was just this down-to-earth guy. You’d never know that he had all this wealth. He’d listen to my suggestions and seemed like he was taking a lot of it to heart.”

“He’s really smart,” NHL commissioner Bettman says. “He’s a creative and disciplined businessman. He’s extraordinarily thorough, very focused and he does his homework. And he’s very passionate about what he does. In this case, he’s particularly passionate about bringing the NHL to a new and exciting market.”

For Foley, building a team from scratch isn’t that different from building any other type of business. Sure, he admits, the logo development, the marketing, the jersey creation and dealing with the NHL is new. But he’s confident that he can replicate the culture of winning he has instilled in his other companies—in fact, doing so with hockey players might actually be easier. “They are warriors. They are soldiers,” Foley says. “They get hurt. They lose some teeth. And they are back there on the ice. That culture is the same culture that I learned at West Point. It’s all about being a team, not being an individual, and working together for a common goal.”

The idea, he says later, is “putting people in the right spot and giving them authority, and then holding them accountable. I’m being a little, not arrogant, but confident about what we can do.”

Foley intends to be the same hands-on leader he has been throughout his career. He and his general manager, George McPhee, who drafted star Alex Ovechkin of the Washington Capitals, are busy planning their expansion draft strategy, even though it won’t take place until next June. Already, the pair believe they’ve stumbled onto an overlooked approach involving unrestricted free agents that will help them score enough talent to compete in the Pacific Division of the Western Conference along with Anaheim, Arizona, Calgary, Edmonton, Los Angeles, San Jose and Vancouver. Their goal: to make the playoffs within three years. During salary negotiations, Foley remembers McPhee saying, “‘Bill, you put what you think is reasonable in front of me, and I’ll sign it. I want to win the Stanley Cup.’ I said, ‘This is my man. This is 
my guy.’”

The elephant in the room is, of course, gambling. Foley and the NHL have to walk a fine line, maintaining a professional distance from legalized gambling while recognizing that social attitudes towards sports gambling are changing. “Our game apparently doesn’t lend itself to gambling to the same extent as the other two sports [pro football and basketball],” Bettman told Sports Illustrated earlier this year, because hockey has low scores that don’t lend themselves to point-spread betting. “We’re comfortable with the integrity of our sport,” Bettman added.

Nonetheless, legalized sports betting represents an enormous potential revenue stream that league commissioners would love to tap. The NBA has gone so far as to take an equity stake in fantasy sports site FanDuel because, as league commissioner Adam Silver told Worth earlier this year, “We wanted to have a seat at the table.” And while there are no gambling facilities inside the T-Mobile Arena—a rarity for a building on the Strip—visitors can place a bet on the evening’s game at the nearby Monte Carlo or New York-New York sportsbooks. It’s hard not to think that putting a team in Vegas isn’t just a bet on attendance, but a bet on gambling.

There are, meanwhile, other revenue opportunities. Foley has expressed frustration about the slow process of naming his team—the obvious choices have already been taken, he’s said—but if Foley and his crew get the branding right, they believe they can create enormous interest in jerseys. Foley says that team apparel usually accounts for about $2.5 million worth of sales annually, but the businessman anticipates selling significantly more to the 42 million visitors who hit Las Vegas every year. Team stores will dot the city, from casinos to the airport and downtown. Foley sees a near future where anyone leaving town with $175 left plunks it down for a shirt. “If there are 42 million people coming through and I can’t sell 100,000 jerseys a year, I’m a failure,” he says. Doing some quick math, he concludes that 100,000 jerseys work out to around $11.5 million in profit a year. That’s not a trivial number: Forbes reported that the Arizona Coyotes lost $4.5 million in 2015, so jersey sales could actually push a team into profitability.

Ultimately, Foley isn’t sentimental about team ownership; this is a business for him, like title insurance or hamburgers. “The economic opportunity is probably the sale of the franchise in seven years, 10 years if we chose to do that,” he admits. “We believe that after a few years we’ll start having a return on investment. We’ll start doing distribution. It’s not a big moneymaker. It’s not 10 percent per annum return. It’s going to be 3 or 4 percent return, but it’s not going to be a money-loser either.” And if the team wins some play-off games, those returns might be even better.

Meantime, Foley is devoting nearly all his time, up to 75 hours a week, to the team. “I have good people in every one of my private businesses,” Foley says. “I don’t want to say they run themselves, but they do pretty well when I’m not there. If I spent only 40 percent of my time on hockey, we don’t have a team.”

And with that, Foley has to go. He has spreadsheets to examine, salary cap numbers to crunch—a hockey team to build. The idea is to transform Bill Foley, businessman, into Bill Foley, Stanley Cup winner. He’s not playing defense. He’s looking to score.

CORRECTION: The print version of this article erroneously stated that the Las Vegas Wranglers folded due to poor attendance, when in fact the team was a success; it folded as the result of not finding a new home venue in which to play after its previous arena lease was not renewed.

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