March 5, 2007
Dear Governor Rendell, County Executive Onorato and Mayor Ravenstahl:
Nearly eight years ago we bought the Penguins out of bankruptcy and have worked ever since to try to get a new multi-purpose arena. Now, with a growing sense of urgency because our lease at Mellon Arena expires in June, we have engaged in two months of negotiations on your "Plan B" proposal. We agreed to pay $3.6 million in annual rent as part of our proposal to keep the team in Pittsburgh. We also agreed to pay $400,000 a year in capital expenses, for an annual contribution of $4 million. This amounts to $120 million over 30 years. In addition, we agreed to be at risk for cost overruns. We can do no more.
Unfortunately, we still don't have a deal and are faced with mounting uncertainty that an agreement can be reached in a time frame that is realistic for our organization. Therefore, we have no choice but to declare an impasse and to notify NHL Commissioner Gary Bettman that we will aggressively explore relocation.
This is a disappointing but necessary conclusion, given the uncertainty that exists as we attempt to move forward. The recent appeals filed with the Pennsylvania Gaming Control Board, which may delay even further the awarding of the slots license and the primary funding source of the arena plan, cause us great concern. A project of this scope, with so many complex issues, can ill afford further delays that add more risk and more uncertainty.
The risk has been magnified by what we perceive as a lack of collaboration from the public sector in the negotiations. That does not bode well for the public/private partnership necessary to successfully navigate the multiple issues of an arena development of this magnitude.
On January 4, we visited Kansas City and were greeted with open arms by arena officials and political and business leaders and were treated as valued new partners in the community. The terms of the deal offered in Kansas City were for a rent-free arena with no risk of cost overruns and no risk to arena funding. The arena is scheduled to open for next season.
Despite this great offer, we wanted to keep the team in Pittsburgh and thought we owed it to our fans to do everything we could to make it work here. With that in mind, and on behalf of our organization, our loyal fans and the Pittsburgh region, we have made a single-minded effort to bring this new arena process to a successful conclusion and keep the team in Pittsburgh. Since the January 4 meeting we have played by the rules, extended our original deadline by 30 days, declined to visit any other cities and sought to work with you to try to finalize a deal.
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. Those risks and the fact that our lease expires in less than four months leave us with no choice but to explore every option to ensure the long-term future of the Penguins organization.
cc: Gary Bettman, Commissioner