SBD/August 2, 2012/Facilities

Penguins Hire AEG To Take Over Consol Energy Center Management

In the new deal, the Penguins will continue to control revenues at Consol Energy Center
AEG’s strength as a leading event promoter was the deciding factor for its sister company winning the job to manage Consol Energy Center, according to Penguins COO & General Counsel Travis Williams. The Penguins yesterday announced they had signed a five-year deal with AEG Facilities to take over arena operations starting Sept. 1. SMG, the incumbent, and Global Spectrum, part of Comcast-Spectacor, the owner of the Flyers, also competed for the contract. “We had a great run in our first two years and AEG [Live] is a promoter with a great platform to drive additional events and shows to what we feel is already a world class facility,” Williams said. “We felt AEG would be our best partner.” SMG opened the building in August '10 after running the old Mellon Arena since '91. SMG had reached the end of a 13-year deal signed in '99, and restructured it as part of a bailout plan to rescue the team from bankruptcy. The club was then sold to former Penguins player and Hockey HOFer Mario Lemieux. For the first eight years of the Mellon Arena deal, SMG served as the Penguins’ landlord and controlled arena revenue streams with the obligation to pay building expenses, Williams said. Over the past five years, those roles have been reversed, with the Penguins taking control of arena revenue and SMG paying a fee to serve as the team’s “agent” for running the old and new facilities. Under terms of the new deal with AEG, the Penguins will continue to control revenue and pay expenses at Consol Energy Center with AEG assuming the agent’s role, he said. The future of SMG's Consol Energy Center GM Jay Roberts and three other arena executives employed by SMG has not been determined, Williams said. Otherwise, the Penguins expect to retain 45 full-time employees and about 500 ushers and ticket takers, he said. AEG’s deal to run Consol also provides the firm with an opportunity to help the Penguins develop land across the street where the old arena once stood. The Penguins are currently forming a master plan for the 28-acre property tied to office and residential use with 250,000 square feet reserved for retail and entertainment. That portion of the development could be modeled after Xfinity Live in Philadelphia, compared with the larger L.A. Live district in L.A., where AEG is a partner, Williams said. The Penguins previously hired real estate developer Jones Lang LaSalle as their owner’s representative to develop the property (Don Muret, SportsBusiness Journal).

IMPACT ON FANS, STAFF: Williams said, “The guest experience will be exactly the same as it's always been. To the outside observer, probably nothing noticeable." He added that there “could be some changes or upgrades in non-NHL events.” In Pittsburgh, Shelly Anderson reports workers at Consol Energy Center -- “including ushers, ticket-takers and maintenance crews -- will keep their jobs.” However, those in SMG's senior management “will have their jobs evaluated, including" Roberts. Aramark remains “as the food and beverage provider at the arena” (PITTSBURGH POST-GAZETTE, 8/2). Also in Pittsburgh, Jeremy Boren wrote Williams “declined to disclose financial terms of the five-year deal.” Penguins officials said that they “believe AEG can increase the number of concerts and other shows coming to Consol Energy Center” (TRIBLIVE.com, 8/1).
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