Lemieux's settlement: $21 million

Penguins refinance to pay owner part of $32 million owed after bankruptcy

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The Penguins have settled with the final creditor from their bankruptcy of the late 1990s.

He also happens to be the most celebrated player in franchise history and one of the team's primary owners.

Mario Lemieux, who was owed $32 million in deferred compensation on the contract in effect when he retired as a player in 1997, will receive $21 million in the wake of a periodic refinancing of the team's debt earlier this week.

Mr. Lemieux will not get any additional money on that contract in the future and is believed to be the only unsecured creditor from the bankruptcy to receive less than 100 percent of money owed.

California businessman Ron Burkle, who shares control of the franchise with Mr. Lemieux, and the other investors who purchased a piece of it when it came out of bankruptcy in 1999 will be given varying percentages of their original outlay in conjunction with the refinancing.

There are several dozen people who hold at least a small interest in the team, none of whom will have their initial investment covered in full by this payment.

The distribution of money comes with a stipulation that if the team experiences major financial turbulence -- which seems an unlikely development at this point -- the investors must put the money they are getting back into the franchise.

The refinancing, which was done through Societe Generale and several other financial institutions, will not affect the ownership structure of the team.

Mr. Lemieux could not be reached for comment and Tom McMillan, the team's vice president of communications, declined to discuss the settlement with Mr. Lemieux or any other aspect of the refinancing.

This is the first time any of the partners will receive money for being part of the ownership group. All profits generated since Mr. Lemieux and the investors got control of the team were put back into the operation.

Refinancing is a common business practice for professional sports franchises, and Societe Generale is heavily involved in many of them, particularly in the National Hockey League. The Penguins' previous one is believed to have been about five years ago.

Mr. Lemieux, who resumed his playing career in December 2000, was the largest unsecured creditor of the team's previous owners, Howard Baldwin and Roger Marino.

During the bankruptcy proceedings, he dropped his claim to the total owed him by $7 million and eventually took $20 million of it in the form of a stake in the franchise. Mr. Lemieux also was awarded $5 million, which he immediately invested in the team.

Paying Mr. Lemieux a portion of the money he was owed closes the final chapter of the bankruptcy saga, and the value of the franchise has risen dramatically since he and his partners took possession of it.

It is believed to be worth more than $200 million now, thanks to a variety of factors.

Although the NHL lost the 2004-05 season because of a lockout, it came away from that labor dispute with an owner-friendly collective bargaining agreement designed to give all 30 franchises an opportunity to be competitive on the ice and profitable off it.

What's more, the Penguins are scheduled to move into the city's new multipurpose arena for the 2010-11 season and will enjoy an increase in revenues from playing in a state-of-the-art facility.

Finally, despite a disappointing 2-3 start this season, the team's nucleus of young talent, headlined by Sidney Crosby, is widely regarded as the finest in hockey, and that helped to generate the most vigorous ticket sales since the Penguins came into existence in 1967.

They sold more tickets heading into the 2007-08 season than in any previous year and cut off season-ticket sales during the summer to preserve some individual game tickets for purchase.

Dave Molinari can be reached at DWMolinari@Yahoo.com .


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