PITTSBURGH (AP) -The Pittsburgh Penguins' $21 million payment to co-owner Mario Lemieux this month was part of a $100 million refinancing in which the other primary owner, California billionaire Ron Burkle, and additional investors split $25.3 million.
The refinancing, at least the third undertaken by the Penguins since 1995, is common for major pro sports franchises and suggests the NHL team has a value of at least $200 million. Normally, NHL clubs can borrow or have lines of credit totaling half their value.
Terms of the restructuring suggest the Penguins are worth at least $25 million more than they were a year ago, when Canadian businessman Jim Balsillie agreed to buy the team for $175 million. That deal fell through in December 2006 when the NHL told Balsillie he could not relocate the team.
The payment to Lemieux was confirmed by the Penguins on Oct. 19, but team officials previously did not reveal other aspects of the restructuring. The club chose to redo its finances about six months after closing a deal with state and local officials to build a $290 million downtown arena that will open in three years.
Of the $100 million, $21 million goes to Lemieux, or $11 million less than he was originally owed in deferred compensation during his playing days. Burkle and the Penguins' estimated four dozen other minority owners split $25.3 million, according to the team. Burkle originally invested $20 million when he and Lemieux purchased the Penguins in federal bankruptcy court in 1999.
An additional $25 million, team officials said, is a line of credit that has not been spent and is designed to cover any unexpected costs should they occur. The rest of the loan, about $28.7 million, refinances debt or expenses already in place and provides an additional cushion for unexpected events.
The payments to Lemieux and the other investors close out all financial aspects of the 1999 bankruptcy, in which all other creditors were repaid the full amounts owed them by 2005. Lemieux recouped $21 million of his original $25 million investment in 1999, which included $5 million in cash and $20 million in equity.
``It was time to finally offer some return for our other investors and pay back the money owed Mario,'' team president Ken Sawyer said.
When Lemieux, Burkle and their investors bought the club, the Hall of Fame center agreed to forgive $7 million owed to him under the final contract he signed as a player before his 1997 retirement. He later came out of retirement and played again from 2000-05 before retiring again in early 2006.
The Lemieux-Burkle group retains ownership of the team and can sell at any time they choose, though that seems unlikely given the Penguins' strong financial footing.
After being a last-place club for four consecutive seasons, the Penguins made the fourth-best turnaround in NHL history by winning 47 games and making the playoffs last season. They also have the league's best collection of young players in Sidney Crosby, the first teenager in major American pro sports to win a scoring title and the MVP award; Evgeni Malkin; Jordan Staal; and Marc-Andre Fleury.
Also, the arena deal secures the Penguins in Pittsburgh for 30 years and ends ceaseless speculation the team might move to Kansas City or Canada to secure a new building. The arena will be funded largely by casino money and the state.
The Penguins also expect to sell out all home games this season, only four years after they averaged a league-low 11,877 in attendance during the 2003-04 season.
According to Street and Smith's Sports Business Journal, which frequently covers NHL financial dealings, Societe Generale was the lead financial institution in the Penguins' restructuring. In 1999, the French bank loaned the Penguins $20 million to stay in operation during the bankruptcy proceedings.Copyright © 2005 The Associated Press. All rights reserved. The information contained in the AP News report may not be published, broadcast, rewritten or redistributed without the prior written authority of The Associated Press.
