After meeting with team owners, city, county and state officials say their arena offer is competitive with Kansas City'sFriday, January 05, 2007
By Mark Belko, Pittsburgh Post-Gazette
With an enticing offer from Kansas City before him, Penguins owner Mario Lemieux emerged from a closed-door meeting with local and state officials optimistic about the prospects for keeping the team in Pittsburgh.
In brief remarks afterward, Mr. Lemieux described yesterday's 75-minute session with Gov. Ed Rendell, Mayor Luke Ravenstahl and county Chief Executive Dan Onorato at the State Office Building as "very positive."
When asked whether he was optimistic about keeping the team in Pittsburgh, he replied, "I've always been very optimistic. I've been here for 20-some years. But we have to evaluate all of our options, obviously. That's why we went to Kansas City ... to look at what they had to offer.
"But I'm optimistic with the meeting that we had today with the politicians here in town that they're willing to step up and talk about some issues that were a big concern for us going back seven years."
At the same time, Mr. Lemieux did not rule out a potential move, saying the team would take the next week or so to "really evaluate from our side where we're going."
Perhaps the most important faceoff of Mr. Lemieux's career, with the franchise's Pittsburgh future hanging in the balance, came on the heels of a visit to Kansas City during which the team was offered use of the new $276 million Sprint Center rent-free and a share of the profits from management of the venue.
State and local officials have countered with Plan B, the Rendell-crafted arena funding formula built around gambling revenues and contributions from the team. The team share was $8.5 million upfront, plus payments of $2.9 million a year for 30 years and $1.1 million a year from naming rights.
However, it is believed that Mr. Rendell, Mr. Ravenstahl and Mr. Onorato offered a somewhat sweetened version in their initial meeting with Mr. Lemieux, co-owner Ron Burkle, team President Ken Sawyer and other representatives yesterday.
None of the participants would discuss the details afterward. But Mr. Ravenstahl insisted the latest offer is "competitive with Kansas City."
"We're confident that we have a very competitive deal," he said.
Like Mr. Lemieux, the public officials described the session as a positive one, though it appeared there was still much work to do.
"It was very productive today," Mr. Onorato said.
No additional meetings have been scheduled so far, but Mr. Ravenstahl said the two sides expect to continue discussions and "get down to specifics" to try to craft a new arena deal and lease that would keep the team in Pittsburgh for years to come.
Mr. Rendell said before the meeting that the state, city and county would not offer a "free" arena to the Penguins. He said that all professional sports teams that have built new facilities in Pennsylvania contributed "significant" dollars to the projects.
"We just don't have the capacity to do that," he said, adding he was skeptical of the reports coming from Kansas City that the Penguins had a free arena waiting for them.
Nonetheless, Mr. Rendell, who did not meet with reporters afterward, said he was prepared to modify Plan B based on statements by the Penguins that they had significant losses since offering to provide $2.9 million a year and $8.5 million upfront as part of an arena funding plan several years ago.
"If that is true, and the [city-county Sports & Exhibition Authority] believes it is, we will restructure our offer and make it better and make it an aggressive one," he said.
The session was the first face-to-face meeting between Mr. Lemieux and local and state officials since Isle of Capri, in partnership with the Penguins, lost its bid for the Pittsburgh casino license. The Isle had pledged $290 million for an arena in its proposal.
Mr. Lemieux said after the loss that he would entertain offers from other cities about a possible relocation, and also talk to local and state officials about a new arena deal under Plan B. The team's lease at Mellon Arena, the oldest building in the NHL, expires at the end of June.
The visit to Kansas City Wednesday and yesterday was the first since his announcement, and team officials came away impressed with what they saw. Mr. Lemieux said he had two "great" meetings yesterday, one here and the other in Kansas City.
The Sprint Center won't open until October, but already all 72 suites in the arena have been sold. At a news conference yesterday, Tim Leiweke, president of Anschutz Entertainment Group, said the offer to the Penguins includes no rent and a portion of the profits from management of the center. The team would serve as partner with Anschutz, which invested $54 million in the Sprint Center, in overseeing the facility.
Initial reports indicated that the Penguins would have to pay $27 million to buy into the building, but that apparently changed overnight. Mr. Leiweke said yesterday there would be no buy-in. The Penguins also would get to keep at least some building revenue, although it was unclear how much.
"We are not here to steal the Penguins from Pittsburgh and have been very respectful of their process," Mr. Leiweke said. "We understand this is Pittsburgh's team to lose, and we respect that right. Should Pittsburgh and the state of Pennsylvania not be able to work out what is deemed to be a proper arrangement in the eyes of the Penguins and the NHL, we believe the best opportunity for the Penguins is Kansas City."
Mr. Onorato has said that local and state officials have a key advantage under Plan B in that none of the revenues from the arena would be used to finance construction. That presumably would leave most if not all of that money, millions of dollars a year, for the Penguins.
He said after the meeting with the team that he doesn't feel pressured by the Kansas City offer.
"I don't think that changes anything. Again, this was the first chance to sit down and the fact it was a productive meeting, I think, is a positive sign," he said.
Mr. Onorato has said that no Allegheny Regional Asset District money, the funding stream used to pay a large part of Heinz Field and PNC Park, would be earmarked for a new arena. Mr. Rendell said "very little public tax dollars" would be part of a deal.
Besides team contributions under Plan B, another $7.5 million a year for 30 years would come from Pittsburgh casino winner Don Barden and $7 million a year from a slots-financed state economic development fund.
Mr. Lemieux has expressed frustration at failing to secure a new arena over the past seven years, but none of the team owners and none of the political powers were in place when funding proposals were first bandied about in 1998.
"I know he's upset," said Mr. Onorato, who publicly reached out to Mr. Lemieux when the Isle of Capri deal fell through. "We have to get beyond that. Let's forget about the past."
(Staff writer Robert Dvorchak contributed. Mark Belko can be reached at mbelko@post-gazette.com or 412-263-1262. )
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