Balsillie ends bid to buy Penguins
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Canadian billionaire Jim Balsillie today withdrew his offer to buy the Penguins after he and the National Hockey League reached a stalemate over terms in a last-minute consent agreement.
Among the NHL's several stipulations, sources close to the sale process said, are that Mr. Balsillie promise to keep the club in Pittsburgh regardless of the arena situation, and that he agree to contingencies for the NHL to step in and take over ownership or management of the team.
After receiving Mr. Balsillie's notice of termination, Penguins president and CEO Ken Sawyer said there was no dispute between Mr. Balsillie and the team. He declined to comment on what led to the withdrawal but confirmed there were "a number of points" of disagreement.
"There's a lot of work that's gone into it," Mr. Sawyer said. "It was almost there, and now it's not there."
The timing of the sale's breakdown could be critical, as gaming officials are scheduled to award the state's licenses for stand-alone slots casinos Wednesday. The prospects for a facility to replace Mellon Arena are tied to that announcement.
Mr. Sawyer said the Penguins will re-evaluate their sale process after that announcement.
The Penguins have a contract with Isle of Capri, which will provide $290 million toward construction of a new arena if it gets the license to build a casino in Uptown and ensure that the team stays.
If the license goes to one of the other two finalists, Forest City Enterprises or PITG Gaming LLC, the Penguins would be left to negotiate an alternate funding arrangement under what state officials have called Plan B. Initial plans call for the team to put up $8.5 million up front, plus about $4 million a year for 30 years, with contributions also coming from the state and casino owner.
If a buyer for the Penguins honors a consent agreement with the league to keep the team here under any circumstances, it might undermine their negotiating leverage if Plan B comes into play.
"There's no question there's a degree of uncertainty back here again, which makes the decision on Wednesday absolutely critical," Mr. Sawyer said. "If Isle of Capri should win, then the team's here and all that is settled. If they don't, then we'll just have to evaluate where we are at that point in time."
Mr. Sawyer declined to speculate whether the current ownership, which includes Hall of Fame player Mario Lemieux, might reconsider selling the team if Isle of Capri gets the license, thus settling the team's future.
"Today's development was unfortunate," NHL commissioner Gary Bettman said in a statement. "If the Isle of Capri is not granted the license on Wednesday, then an already difficult and volatile situation will be aggravated. It is imperative that the Penguins have a new arena on economic terms that make sense for the franchise for the team to remain in Pittsburgh."
Mr. Balsillie was not available to elaborate. It is not known whether he might reinstate his offer, believed to be for about $175 million, if the league softens some language in the consent agreement.
Mr. Balsillie is chairman and co-CEO of Research in Motion, the company based in Waterloo, Ontario, that makes and markets the popular wireless Blackberry devices. He signed a purchase agreement with the Penguins Oct. 4 and was interviewed by the executive committee of the NHL's board of governors Dec. 2.
He apparently was on the verge of closing on the sale late last week or early this week when he received the consent agreement and declined to sign it.
On Wednesday, Mr. Balsillie was in Harrisburg being interviewed by the state Gaming Control Board, and today the local Sports and Exhibition Authority voted to approve the transfer of the Mellon Arena lease to Mr. Balsillie from the Lemieux Group.
If Mr. Balsillie does not reinstate his offer, it's likely that earlier bidders will re-enter the picture.
New York businessman Andrew Murstein counted among his partners Mt. Lebanon native and NBA Dallas Mavericks owner Mark Cuban and Shadyside real estate development company Walnut Capital.
Sam Fingold, a Hartford real estate developer, got as far as signing a letter of intent with the Penguins last summer before things broke down.
Two other finalists were Hartford real estate developer Lawrence Gottesdiener and Ohio mayor and businessman Jim Renacci, a Ringgold High School graduate.
First Published December 15, 2006 12:00 am