Civic Arena landlord SMG and FSN Pittsburgh (FSNP)
filed their plan to save the Penguins yesterday, just one
day before a scheduled hearing in U.S. Bankruptcy Court on
the NHL's plan to dissolve and relocate the franchise,
according to Ann Belser of the PITTSBURGH POST-GAZETTE. The
plan, the third filed in the team's bankruptcy case, is the
first "that both keeps the team in Pittsburgh and has
agreements" on an arena lease and broadcasting rights.
Under the plan, Mario Lemieux would be paid $3M when the
deal is completed and would receive a 5% equity stake in the
team, with another 5% to be added "if he helps the team
achieve its financial goals for the next three seasons."
Lemieux would also receive a yearly salary of $200,000 as
Chair of the team's Management Committee and $5M in cash if
the team is ever sold. However, if Lemieux were to vote
against the plan, "he would be treated as a general
unsecured creditor and receive a minimum payment" of 5.72
cents on the dollar for his $32.5M claim against the team,
or almost $1.9M. SMG President Wes Westley said that the
SMG/FSNP proposal would keep the Penguins playing at Civic
Arena through the current lease, which expires in 2007. It
also "calls for nearly" $5M a year in government subsidies,
which would originate from "not paying the amusement tax,
not paying any rent on the Civic Arena and not repaying any
bonds issued for arena improvements" (POST-GAZETTE, 5/19).
THE INVESTMENT: Both SMG and FSNP will invest a total
of $15M of new equity in the team and "provide for" $5M a
year in concessions on the lease and broadcast revenues. An
additional $12M in equity would come from local investors
for a total of $27M, but Westley declined to identify who
they are. Pittsburgh Mayor Tom Murphy called the SMG/FSNP
proposal "a solid plan," but Lemieux was "critical" of the
plan, saying that the Penguins should "finally be in local
hands and not out of town interests who have financial
investments at stake with many other professional sports
franchises" (PITTSBURGH POST-GAZETTE, 5/19).
WILL NHL OK? FSNP VP & GM Jayne Adair said that there
is still some uncertainty "over whether" the NHL will allow
Fox to make an equity investment in the Pens due to its
current involvement in the NHL Rangers. A source said that
rejection of FSNP's proposal "could see its support become a
pledge of monetary concessions tied to Fox's [Penguins]
broadcast-rights contract" (HOLLYWOOD REPORTER, 5/19).
PLAYING FOR PAY: Bolstered by four sellouts, the team
earned $4.5M during its six home playoff games. The team
plans to set up an escrow account with a local bank for
season-ticket deposits for next season in case the franchise
is not in Pittsburgh (PITTSBURGH POST-GAZETTE, 5/19).
