U.S. Bankruptcy Judge Bernard Markovitz approved Mario
Lemieux's refinancing plan for the Penguins that will allow
him to trade $32.5M in salary and interest for a controlling
interest in the team while keeping it in Pittsburgh,
according to Mamula & Starkey of the Pittsburgh TRIBUNE-
REVIEW. Lemieux, who will assume his position as a general
partner by July 16: "This is a new life for me. I consider
myself a Pittsburgher. I'm raising my four children here.
This is my town." Lemieux will head up a group of investors
who have raised $50M "to bail out the franchise. Lemieux
plans to reduce ticket prices, and said "it's important to
make it affordable" in order to draw more fans. GM Craig
Patrick will run the hockey side of the business while
Lemieux will start searching for execs to handle the team's
day-to-day financial matters. More Lemieux: "I'm not the
guy who's going to run the franchise on a daily basis."
Lemieux faced some resistance at yesterday's hearing, as SMG
attorney Saul Burian "tried to derail adoption" of his plan,
saying that his financial projections were "more in line
with Swiss cheese." Burian: "This plan will ultimately lead
to litigation and litigation." Under the plan, Lemieux will
be paid $5M by Penguins co-Owner Roger Marino, $7.5M less
than he is owed, and convert $20M into an ownership stake in
the team (TRIBUNE-REVIEW, 6/25). Marino, on his stake with
the new ownership: "We're still going through the numbers,
and we won't have a result for the next few days." Lemieux
attorney Chuck Greenberg, on the group seeking more
investors: "At this point we are not. We are comfortable
with the group of investors we have" ("SportsBeat," 6/25).
MORE DETAILS: FSN Pittsburgh "agreed to pay" $9M for
Penguins games next season, a rate that will increase by 5%
each year. The net also gave up radio rights, which the
team will sell directly to WDVE-FM to air the games. The
Public Auditorium Authority, which owns the arena, "agreed
to give up revenue that may be generated by selling the
naming rights to the facility and to forgive" $12M the team
owes it for improvements made to the arena. Lemieux, who
already has $38M in escrow from investors and is waiting for
$12M, has until July 16 to reach a lease agreement with SMG
(Ann Belser, PITTSBURGH POST-GAZETTE, 6/25). Burian noted
that Markovitz's ruling "only affects SMG's agreement with
the Penguins" and "has no effect on SMG's role as arena
landlord" (Pittsburgh TRIBUNE-REVIEW, 6/25). In Pittsburgh,
Tom Barnes puts the team's potential naming rights revenue
at around $5M (PITTSBURGH POST-GAZETTE, 6/25).
REAX: Lemieux: "I'm not in it to make money, but I'm
not in it to lose money" (N.Y. TIMES, 6/25). More Burian:
"From SMG's perspective, this was the worst possible call.
To lose all your rights, to be out your full investment,
this is your worst possible nightmare" (PHILADELPHIA
INQUIRER, 6/25). In Pittsburgh, Ron Cook writes that "what
was surprising was how quickly Lemieux started talking like
the best owner in the history of professional sports" (POST-
GAZETTE, 6/25). In N.Y., Richard Sandomir writes that
Lemieux's "controlling role is unique" (N.Y. TIMES, 6/25).
