The Penguins and government officials ended months of difficult negotiations, agreeing to a US$290-million arena deal that ensures the team will stay in Pittsburgh.
Keys to the agreement included the government waiving up-front money from the team, the Penguins receiving about $10.5 million compensation for delays, and the sides agreeing to share responsibility for cost overruns.
“Well, this is a great day for hockey,” co-owner Mario Lemieux said Tuesday. “I’m glad that I’m here today announcing a deal with the city, the county and the state, to stay her for 30 years. That was my goal and I’m glad we finally achieved it.
“We would like to enjoy what’s coming with this young team,” Lemieux said.
He added that the extra arena revenue will help the team spend more in an effort to retain Crosby, the league’s leading scorer, stellar rookies Malkin and Staal, and other core players who have put the Penguins in position for their first playoff berth since 2001.
The Penguins will continue to play at 46-year-old Mellon Arena, the oldest in the National Hockey League, and hope to begin play in the new arena sometime during the 2009-10 season. President Ken Sawyer said it’s possible the arena will not be ready for the start of that season.
Gov. Ed Rendell said the negotiations were more complicated than those to finance four new baseball and football stadiums in Pittsburgh and Philadelphia in recent years because other cities were bidding for the team to move.
“With the other four stadium deals (Pirates, Steelers, Phillies, Eagles) none of those teams had an open competitor that was trying to take the team,” Rendell said. “Here we had Kansas City making a very good, some might say terrific, offer and we had to respond.”
As a result, the Penguins will not pay $8.5 million up front for the arena, as government officials first proposed, Rendell said. Instead, the team will receive $10 million to compensate it for delays, for property it purchased near the arena site, and to help with marketing.
Team officials weighing a move recently visited Kansas City, Mo., and Las Vegas, and were contacted by representatives from Houston. The Penguins were offered free rent and half of all revenues if they agreed to play in Kansas City’s soon-to-be-completed $262-million Sprint Center.
Rendell also commended Lemieux, who bought the team out of bankruptcy in 1999 and pledged to try to keep it in the city. At the time, Lemieux was owed millions in a long-term contract and leveraged that equity to buy the team with investors, including billionaire Ron Burkle.
NHL Commissioner Gary Bettman, who was credited with mediating the deal, said his “head was spinning” as Rendell itemized the terms of the deal.
“It’s clear that there were a lot of moving pieces and it didn’t come together easily,” Bettman said.
Under the deal, the Penguins will pay $4.2 million a year for the building, including $2.2 million a year for a 30-year lease. The rest could be funded by naming rights, if not the Penguins will make up that difference.
The team will also contribute $500,000 a year for a new parking garage.
The deal includes $15 million dollars a year in state proceeds from slot machine casinos – half from Don Barden, a Detroit casino owner who is building a slots parlour in Pittsburgh and half in state development money derived from other casino proceeds. No tax money from the city or Allegheny County will be used.
A sticking point to the negotiations, the Penguins and the state will split any costs above the projected $290 million price up to $310 million. The Penguins will bear any costs above that, Rendell said.
The deal also requires the Penguins to negotiate redevelopment rights for Mellon Arena with the city-county Sports & Exhibition Authority. Casino owner Barden is also to be included in those discussions.
Fans and players expressed relief that the team – one of the NHL’s most attractive franchises – would stay in the city. The Penguins began playing in Pittsburgh in 1967, and won Stanley Cup titles in 1991 and 1992. Their home attendance and local TV ratings are among the strongest of the NHL’s 24 U.S.-based franchises.
“I’m sure everyone’s happy, especially the fans,” said winger Ryan Malone, who grew up in the suburbs because his father, Greg, played then scouted for the Penguins. “Even all the guys really didn’t want to leave so, I think, deep down everyone’s excited.”
“It’s going to be nice just to know what’s going on and knowing you don’t have to talk about it anymore,” Crosby said.”
Mayor Luke Ravenstahl said, “It’s a hockey night in Pittsburgh, and it’s a hockey night in Pittsburgh for the next 30 years.”
Before Tuesday’s game against Buffalo, Lemieux walked onto the ice and stood in the spotlight as the crowd gave him a standing ovation, with his name “Mario” in lights on the scoreboard overhead.
A sign in the crowd said, “Hey Kansas City, in case you haven’t heard. The Penguins aren’t coming.”
Associated Press writer Marc Levy in Harrisburg, Pa., contributed to this story.