Short-Term Lease Extension Could Have Pens Playing Rent-Free

Short-Term Lease Extension Would Allow Penguins To Play At Mellon Arena Rent-Free

The Penguins could “exercise a short-term lease extension for Mellon Arena this summer that would give them more control over building revenues without paying any rent, perhaps while a new facility is constructed,” according to Mark Belko of the PITTSBURGH POST-GAZETTE. Under the one-year extension, the Penguins would become “master tenants of the arena in place of SMG,” which would become building manager. The Penguins would stop paying rent to SMG, estimated at close to $2M a year, and “would have greater access to such building revenues as concessions and parking, for both hockey and non-hockey events,” which could generate about $20M in gross revenues annually. But there are “costs associated with such an extension as well, including a $5[M] payment due to SMG when the switch is made.” The Penguins also would pay SMG to manage the arena “at an amount to be determined.” The Penguins have until next month to exercise an extension, but it is “unlikely that they will sign on unless they have reached a deal” on funding for a new arena (PITTSBURGH POST-GAZETTE, 1/12).