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Penguins, officials strike arena deal to keep team in Pittsburgh

NHL.com @NHL

PITTSBURGH (AP) -Mario Lemieux strode onto the ice amid a standing ovation and thunderous applause and gave the Pittsburgh Penguins faithful exactly what they wanted.

No, it wasn't a Stanley Cup, although young stars Sidney Crosby, Evgeni Malkin and Jordan Staal might deliver that soon enough.

The Hall of Fame co-owner of the Penguins delivered the word that the oldest arena in the NHL will soon be replaced by a gleaming, multimillion dollar facility. And the franchise will be staying in Pittsburgh for the foreseeable future.

"Tonight, I'm proud to announce that your Pittsburgh Penguins will remain right here in Pittsburgh, where they belong," Lemieux said, standing in the spotlight under a scoreboard with his name, "Mario," in lights.

Just hours earlier, the Penguins and government officials said they had ended months of difficult negotiations and agreed on a $290 million plan to build a new arena.

Under the deal, the government agreed to waive upfront money from the team, while the Penguins will receive $10.5 million in compensation for delays. The sides also agreed to share responsibility for some cost overruns.

At a news conference, Lemieux said keeping the team in Pittsburgh was always his goal.

"Well, this is a great day for hockey," he said.

The deal means the Penguins shunned offers from other cities and young stars such as Crosby, Malkin and Staal will continue to develop in the team's home of four decades.

"We would like to enjoy what's coming with this young team," Lemieux said.

He added that the extra arena revenue would help the team retain players such as 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 until the new arena is completed sometime during the 2009-10 season. President Ken Sawyer said it may 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."

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 $10.5 million to compensate it for delays, 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 Houston officials. The Penguins were offered free rent and half of all revenues if they agreed to play in Kansas City's planned $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 was credited with mediating the deal.

"It's clear that there were a lot of moving pieces and it didn't come together easily," Bettman said.

According to the deal, the Penguins will pay $4.2 million a year for the building, including $2.2 million a year for a 29 1/2-year lease. The rest could be funded by naming rights or covered by the Penguins.

The city will provide a 500-space parking lot next to the new arena, or the Penguins may elect to contribute an additional $500,000 annually for a new parking garage. Mellon Arena will be demolished when the new arena is completed.

The deal includes $15 million dollars a year in proceeds from slot machine casinos - half from Don Barden, a Detroit casino owner who is building a slots parlor 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.

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 the Mellon Arena site with the city-county Sports & Exhibition Authority. Casino owner Barden is also to be included in those discussions.

Fans and players expressed relief that 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.

"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.

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Associated Press writer Marc Levy in Harrisburg, Pa., contributed to this story.

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