Penguins closer to leaving Pittsburgh
PITTSBURGH (AP) – The Penguins moved a step closer to leaving Pittsburgh, declaring on Monday an impasse in their new arena negotiations with state and local leaders and saying they will actively pursue relocation. The breakdown in arena talks came only three days after Gov. Ed Rendell said he felt an agreement was close. It also increases the possibility the Penguins – one of the NHL’s most attractive franchises – will be playing in Kansas City next season.
“We have made a single-minded effort to bring this new arena to a successful conclusion and keep the team in Pittsburgh,” owners Mario Lemieux and Ron Burkle said in a letter to Rendell and local government officials. “… Our good-faith efforts have not produced a deal, however, and have only added more anxiety to what we thought at best was a risky proposition for us moving forward.”
In the letter, Lemieux and Burkle put the blame for the impasse on government officials, arguing they agreed to pay $120 million over 30 years to help build a $290 million arena and cover construction cost overruns, yet still have not reached a deal.
NHL commissioner Gary Bettman became involved in the talks several weeks ago, but also has been unable to finalize an agreement.
“We can do no more,” Lemieux, the longtime Penguins star, and Burkle said in the letter.
The Penguins had an agreement with Isle of Capri Casinos to build the arena at no expense to the team or taxpayers in exchange for a license to build a Pittsburgh slots casino, but a state board in December chose a competing bid.
On Jan. 4, the team, state, city and Allegheny County began negotiating an alternate arena funding plan. Originally, government officials wanted the team to contribute about $4.1 million per year, but lowered that to $2.8 million during the first round of negotiations.
During subsequent talks, the Penguins agreed to increase that annual contribution to $3.6 million, plus $400,000 in operating expenses, after the state said there was a funding shortfall. However, the two sides still could not close a deal.
With no agreement in sight, the Penguins said they must begin planning for next season. They are free to relocate once their Mellon Arena lease expires in June.
Don Barden, the successful bidder for the slots parlor, agreed in his winning proposal to contribute $7.5 million a year for 30 years toward the arena costs. However, he cannot start paying until the casino opens, and state Supreme Court appeals filed Friday by the two losing casino chains – including Isle of Capri – threaten to delay that opening past the projected date in late 2008.
The Penguins said the appeals “cause us great concern” because the arena project cannot be delayed any longer. Mellon Arena, built in 1961, is the NHL’s oldest arena and lacks the fan-friendly amenities of the league’s numerous new facilities.
“Unfortunately, we still don’t have a deal and are facing mounting uncertainty that an agreement can be reached in a time frame that is realistic for our organization,” the team said in the letter. “Therefore, we have no choice but to declare an impasse and to notify NHL Commissioner Gary Bettman that we will aggressively explore relocation.”
Last week, Rendell called the talks “somewhat precarious, although I’m very optimistic that we’re close. The attitude of the Penguins has convinced me that they want to stay here.”
Kansas City has offered its nearly completed Sprint Center to the Penguins rent-free, with no possibility of cost overruns. The Penguins would also gain revenue from development projects around the arena.
However, the Penguins would be leaving one of the NHL’s strongest U.S. markets for a smaller one that lost an NHL team in 1976 after only two seasons because of lack of support. The Penguins’ home attendance and local TV ratings are among the strongest of the 24 United States-based franchises.
When Lemieux’s group bought the team in federal bankruptcy court in 1999, the Hall of Fame player said he did so to ensure the team’s existence in Pittsburgh.
The Penguins’ hardball negotiating stance comes at a critical time in their own season, which finds them contending for a playoff spot for the first time in six years. A youthful team led by NHL scoring leader Sidney Crosby and rookies Evgeni Malkin and Jordan Staal has become one of the league’s prime attendance draws.
At home, the Penguins are playing to nearly 96 percent of arena capacity for the season. All of their remaining nine home games are expected to attract standing-room-only crowds.
The Penguins also have begun selling season tickets for the 2007-08 season in Pittsburgh, even though they have not agreed to play there another season.
“They’re tough negotiators,” Rendell said.