Lemieux Says Pens Certain To Lose Money

Lemieux says even selling out all season won't keep Penguins from losing money

Wednesday, September 14, 2005
By Dave Molinari, Pittsburgh Post-Gazette

More Penguins News:
Penguins Notebook: Orpik agrees to $650,000 deal

At this point, with the Penguins still weeks away from their first meaningful defeat, Mario Lemieux sees no limit to what his team could accomplish this season.

A playoff berth? Absolutely. Win a couple of rounds? Hardly out of the question. A Stanley Cup?
Hey, anything is possible.

Well, anything except turning a profit, apparently.

Lemieux, the Penguins' primary owner, said yesterday the franchise is guaranteed to lose money in 2005-06, even if it sells out all 41 regular-season home games. And that not even winning a Cup would push the operation into the black.

The only specific projection he offered is that team officials expect to lose about $7 million if the Penguins advance to the second round of the playoffs.

Lemieux's assessment of the club's fiscal outlook was corroborated by team president Ken Sawyer, who spent 14 seasons as the NHL's chief financial officer.

The Penguins rarely volunteer such information, but Lemieux apparently went public to combat what he described as a widespread misconception that the NHL's new labor agreement, coupled with a spike in season-ticket sales, will allow the Penguins to show a profit this season.

"I go around the city, and people are all excited that the team's going to make money," he said. "And that's not the case."

Lemieux's words are the Penguins' latest reminder to politicians and the public that the franchise's future here hinges on the city getting an up-to-date arena that includes revenue sources not available in buildings of Mellon Arena's vintage.

"Add it all up, and it's the difference that would allow us to put on a really good product and still, hopefully, make a modest profit," Sawyer said.

He went on to suggest that management envisions putting some of that money back into its team, saying that "when we're in a new arena, I'd like us to spend to the [NHL's salary] cap."

That limit is $39 million this season; the Penguins are comfortably below it, with a payroll in the $30 million-$31 million range. In 2003-04, when the Penguins lost about $3 million and attracted an average crowd of 11,877, they spent around $22 million on players.

Lemieux said ownership was willing to bump up the payroll -- and its financial losses -- to upgrade the on-ice product. Especially after securing the rights to super-prospect Sidney Crosby in the NHL draft lottery made Mellon Arena a destination of choice for some high-impact free agents.

"This franchise wants to win," Lemieux said. "We've been rebuilding for the last three years, and now it's time to put a great team on the ice for the fans here who've been supporting us. By doing that, we're willing to lose a little bit of money this year, and we're certainly going to lose more money next year."

Lemieux said his partners backed the decision to invest more in personnel, including big-ticket veterans such as Zigmund Palffy, Sergei Gonchar and John LeClair.

"They're big hockey fans, and they also understand the business side of it," he said. "They feel this is a great opportunity for us to put a great team on the ice, and that's the bottom line."

The Penguins have been collecting elite prospects for several years and can reasonably expect to have a competitive team for the foreseeable future. What they can't know is where they'll be operating in a couple of years.

Team officials have said for some time that the franchise's long-term viability is tied to having a modern venue and that if they are awarded the license to operate a Downtown slots parlor, they will use some of the profits to build one.

Lemieux said he believes that having an entertaining and successful team is "going to help" the Penguins' attempt, even though that license will be awarded by officials in Harrisburg, not here.
Any benefits, then, would be indirect, with Penguins supporters pressuring local politicians to back the Penguins' bid, and those officials speaking on the team's behalf with colleagues at the state level.

The Penguins' lease at Mellon Arena expires after the 2006-07 season. If plans for a new arena are not in place by then, ownership figures to offer the franchise to the highest bidder.

"In 2007, we're free to go," Lemieux said. "We're just going to have to do what's best for business."

Which is precisely what management believes it is doing by operating at a loss this season.

(Dave Molinari can be reached at 412-263-1144.)