Penguins owners aren't shut out by lockout
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Back when Mario Lemieux was finagling the best deal since the Louisiana Purchase, he probably didn't anticipate that the revenue streams from the Penguins' new ice palace would be so swiftly useful in another hockey lockout.
Yet here in this second puckless winter in the past eight years, the home team isn't buckless the way it was last time around. Cash continues to stream into the Penguins from parking, naming rights and concerts that the team didn't have during the National Hockey League lockout of 2004-05.
That's nothing like the money that can be made by playing and broadcasting hockey games, but the irony is that all those arguments in the recent past of "keeping hockey in Pittsburgh" put in place a system that makes it easier for Penguins ownership to join its peers in taking a hard line against players.
Mr. Lemieux masterfully sold Pennsylvania political powers the story that he'd leave one of the best hockey towns south of Canada unless he received a phenomenal deal. Another NHL team might have taken the Pens' place here before all the ice melted, but Gov. Ed Rendell caved like the most gullible caller on talk radio. The result was the opening of the Consol Energy Center in August 2010 at very little cost to the Penguins.
Such good fortune is not uncommon in the NHL. Penguins officials are under orders from the league not to comment on finances during the work stoppage, but there are things we know.
Eight years ago, the Penguins were a mere sub-tenant in the Mellon Arena. Thus when the likes of Usher, Kanye West, Green Day, Barry Manilow and the Shrine Circus performed there during the last hockey lockout, none of that money trickled down to the Penguins.
Ditto for the parking. Back then, the Penguins got none. Now the team not only gets that revenue from commuters, the demolition of the Mellon Arena allows room for more than 3,000 cars in and around the old site of the Igloo. Drivers pay anywhere from $5.75 to $7 a day to park. Figure conservatively that's $15,000 a day. The city gets about $4,000 of that through the parking tax, but that still leaves about $55,000 in revenue each week.
That's a nice trickle of change even if Carrie Underwood, Madonna, Justin Bieber, The Who, Bruce Springsteen and Eric Church hadn't packed the arena with their concerts in the past few months.
The Penguins planned well for this. The club hired AEG Facilities in August to keep the house as full as possible for the next five years. AEG owns the Los Angeles Kings hockey team, a piece of the Los Angeles Lakers, the Staples Center where those teams play and more than 100 other venues and stadiums worldwide. It also has an entertainment division that manages young Mr. Bieber and acts like the Kellogg's Tour of Gymnastics Champions, which played Consol in November.
AEG also managed the then-new Sprint Center in Kansas City, Mo., when Penguins co-owners Lemieux and Ron Burkle dangled it as the Penguins' credible destination if politicians didn't meet demands for a new arena.
Mark Ganis, president of Chicago-based Sportscorp Ltd., an industry marketing consultant, said, "Many hockey teams are better positioned now than they were eight years ago. No question about that.'' But he thought the Penguins made themselves one of the better deals.
Forbes seems to agree. Ten years ago, the financial magazine put the Penguins' worth at $137 million, ranking 18th in the NHL. Now the team is worth more than twice that at $288 million, ninth in the league.
It's not all inflow. The team pays the arena's operating costs, and it's required to kick in $4.2 million each year as its share for building the arena. In most years that's a token charge. Perhaps as much as half comes from its naming rights deal with Consol, but it will take a lot of parked cars and rock concerts to cover that nut this year.
On top of all this, though, the Penguins -- like the Pirates and Steelers on the North Shore -- have development rights to 28 acres of the old Mellon Arena property. Long term, they're sitting pretty. Short term, they're doing fine.
When I mentioned to Sala Udin, who serves on the Sports & Exhibition Authority board, that I thought the Penguins had made the greatest deal since the Louisiana Purchase, he corrected me.
"They get all the parking, too,'' Mr. Udin said, "which makes it maybe better than the Louisiana Purchase.''
First Published December 6, 2012 12:00 am