Penguins balk at 1-year extension on arena lease

Pressure builds to reach agreement on new deal

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The Penguins won't accept a one-year lease extension to stay in Pittsburgh, keeping the pressure on state and local leaders to cut a deal for a new arena or face the prospect of losing the franchise to another city.

Today is the last day for the Penguins to exercise an option for the one-year extension under an arrangement with the city-Allegheny County Sports & Exhibition Authority.

But even county Chief Executive Dan Onorato, one of the politicians trying to negotiate a new arena deal with the Penguins, doesn't expect the team to take advantage of the offer. He called the pending deadline "totally irrelevant" to the larger talks.

"To us it's not a big deal because we're negotiating," he said. "We just want them to stay here long-term."

The Penguins declined comment yesterday.

The fact the team won't jump at the extension isn't surprising. It can relocate this summer after its Mellon Arena lease expires June 30. The Penguins likely would want to keep that option open in the event the arena negotiations fall apart.

In addition, accepting an extension to play another season in Pittsburgh would remove some of the leverage the team has in the arena talks. If the team can't reach an agreement here, there's a good chance it will be playing in Kansas City next season, where the rent-free $276 million Sprint Center awaits a hockey franchise.

"I think they want to have that option open to them of moving immediately if they want," said Neil deMause, co-author of "Field of Schemes," a book about stadium financing controversies.

Not accepting the one-year extension "puts the pressure on and makes it look like we're out of here if we don't get a new arena deal," he added.

The Penguins and local and state leaders have been trying to negotiate an agreement for nearly two months now.

Team-co-owner Mario Lemieux emerged from a Jan. 4 meeting to say he was optimistic about the prospects about keeping the franchise here. But talks have moved slowly since then, with the two sides stumbling over issues like development rights to the Mellon Arena site, parking revenues, and the teams' share of the arena cost.

Another issue that has surfaced is what happens if construction costs exceed the amount of money available under Plan B, the funding formula developed to finance a new arena, estimated at $270 million to $290 million.

The Penguins have agreed to cover cost overruns once a guaranteed maximum price has been established. The question is what happens if that price exceeds the Plan B financing, which includes $14.5 million a year for 30 years in slots gambling-related revenues as well as a team contribution.

Gov. Ed Rendell has said he hopes to contain the cost through the design of the building and through a no-strike agreement the city, county and state will seek from the unions to be involved in the project.

Nonetheless, Mr. Onorato said progress is being made. He said the parties are talking just about every day.

"There are constant negotiations and it's all getting closer," he said. "The items where we differ, that list gets smaller and smaller. So it's moving in the right direction."


Mark Belko can be reached at mbelko@post-gazette.com or 412-263-1262.


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