Mario: Pens to lose money and move in 2007

[dave]

there needs to be some investiagtion for corruption with the slots. Too many backroom deals going on.

kdka.com/topstories/local_story_256175506.html

Lemieux: Without New Arena, Pens "Free to Go" In '07

Sep 13, 2005 6:14 pm US/Eastern
Pittsburgh (KDKA) It's no secret that the Penguins desperately want a slot license so they can build a new arena with the proceeds; but today Mario Lemieux threw down the gauntlet, telling KDKA that if the team doesn't get a new arena, they could be leaving town by the end of next season.

The team has generated a lot of excitement with the signing of top draft pick Sidney Crosby, but Lemieux says no matter how well the Pens fare on the ice this season, they'll lose money.

“I go around the city and people are all excited that the team's going to make money now,” Lemieux adds, "and that’s not the case."

In fact, Lemieux says, even if the Pens make it into the second round of the playoffs -- and sell out all 41 of its home games, they'll still lose money. "We’re projecting to lose $7 million with two rounds into the playoffs. In this building, that is the best we can do."

Lemieux desperately wants to replace the aging Mellon Arena with a new one; and he says he needs a slots license to finance it. "As you know, with the slots -- it's all politics," Lemieux adds, "and we're just going to play that game, too."

The Pens plan to launch a public relations campaign aimed at generating support behind their bid; but KD Investigator Andy Sheehan reports that the early favorite to get the license may be Station Square owner Albert Ratner from Cleveland.

Ratner, family members and business associates have pumped $151,000 into the political campaign of Governor Ed Rendell; and Ratner's bid will be made even stronger if he takes on two other partners with friends in high places -- political insider William Lieberman and investment banker Charles Zappala.

On their end, the Pens hope public pressure will sway the gaming commission; but if not, Lemieux warns, the lease at the arena is up at the end of next season. "2007 we're free to go, so we're just going to have to do what's best for the business. "

[dave]

sports.espn.go.com/nhl/news/story?id=2160995

PITTSBURGH -- The Pittsburgh Penguins expect to lose at least $7 million this season despite a more favorable NHL labor agreement, player salary concessions and a big jump in ticket sales created by adding rookie Sidney Crosby.

Owner-player Mario Lemieux said Tuesday his ownership group decided to increase the payroll by about $9 million, from $22 million in 2003-04 to about $31 million, in an accelerated effort to contend for the Stanley Cup immediately.

"We've been rebuilding for three years, it's time to put a great team on ice and, to do that, we're willing to lose and we're going to lose more money next year," Lemieux said. "We're prepared to do this to have a chance to win. We feel this is a great opportunity for us."

Lemieux's group, which recently chose to remain intact rather than carry out a planned sale to California businessman William "Boots" Del Biaggio, who bought the team in federal bankruptcy court in 1999. Since then, it has diligently repaid debt and, to keep from piling up new losses, trimmed payroll by shedding stars such as Jaromir Jagr, Alex Kovalev and Robert Lang.

The Penguins shifted course last month by adding defenseman Sergei Gonchar, goalie Jocelyn Thibault and forwards Ziggy Palffy and John LeClair during a whirlwind rebuilding project made possible by the end of the labor impasse that shut down the 2004-05 season and the drafting of Crosby.

"Getting Sidney allowed us to go out and get Gonchar right off the bat, and I think that was a key signing for us," Lemieux said. "Once we did that, the players realized we wanted to put a great team on ice and that gave an opportunity to go after Palffy and all the other guys."

As a result, the Penguins -- last in both the overall NHL standings and attendance in 2003-04 -- now expect to contend again before Lemieux, who turns 40 on Oct. 5, retires in another year, two or three. Also, they could increase their chances of getting a new arena if they can again fill Mellon Arena on a nightly basis.

The Penguins have sought for years to replace 44-year-old downtown arena, the NHL's oldest and smallest arena, but so far have been unable to persuade state or local officials to build a new building.

"If we have a great team and the politicians see the excitement we bring to the city, and the taxes we generate for this community, I think it's an easy sell," Lemieux said of a new arena. "But politics doesn't always work that way."

Lemieux said the $7 million loss is based on the Penguins reaching the second round of the playoffs and would be higher if they did not do so. Even with sellout crowds projected for most games this season, the Penguins lack the significant luxury box and suite revenues most teams generate from their arenas.

"People are all excited, saying we're going to make money now ... but in this building, that's the best we can do," Lemieux said. "Even if we go to the finals, we're not going to make money."

Also, the Penguins rolled back ticket prices following three consecutive losing seasons from 2001-04, then chose not to rescind the cuts after the NHL became the first major American pro sports league to lose an entire season to a labor dispute.

The Penguins expect the losses to end in a couple of years once they get a new arena or, as a last resort, they relocate to another city after their arena lease expires in 2007.

"I'm still optimistic this team will be here forever but, again, we need a new facility," Lemieux said. "I don't know how many times I need to say it, but this is the last time I'm going to."

[dave]

www.post-gazette.com/pg/05257/571078.stm

Lemieux says even selling out all season won't keep Penguins from losing money
Wednesday, September 14, 2005

By Dave Molinari, Pittsburgh Post-Gazette

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.



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

[dave]

www.pittsburghlive.com/x/tribune-review/sports/penguinslive/s_373929.html

and a related article

www.pittsburghlive.com/x/tribune-review/sports/penguinslive/s_373879.html

[leon]

Wow.

Wonder how much of this is true and how much of this just the Penguins trying to make the numbers lean in their favor.

Such as, does that 7 million lose count the money they make from selling jerseys and everything else that gets sold at the arena? How much do they get from sales of the jerseys of Penguin players from nhl.com and other websites?