egger66
Guest
The draft has generated a lot of talk about the Penguins and their arena situation. It is obvious most people who post opinions, and talk on TV for that matter, understand zip about what is really going on. Here is the reality.
1. A Little history. To understand where the Pens are, you need to understand how they got there. It all begins with Howard Baldwin trying to buy the team on a shoestring. He had little money, so he sold off most of the revenue streams for up front money so that he could buy the team. This put the team in a shaky financial place from the start. Baldwin was also a jock sniffer who could not say "no" to players. He wildly overpaid but used deferred money, because he had sold off the revenue streams putting him in cash starvation. The biggest error was signing Lemieux to a $45 contract that paid him – now get this – whether he played or not. Lemieux promptly retired 2 years later with $30 million still owed. Still owed for hockey never played. This, among other things, forced the team into bankruptcy. Lemieux can back to buy the team and save his $30 million. If anyone else had bought the team, he would have been just another unsecured creditor who received a few cents on the dollar. This didn’t solve the problem, unfortunately, since the Lemieux group was shallow pocket.
2. The market. Before talking about the arena, it is worth killing the idea that Pittsburgh is not a good hockey market. Before the team started selling off its player the last few years, the Pens had been in the 1/3 of the league in attendance. Unlike places like Edmonton who artificially build up attendance with cheap ticket prices, the Pens tickets were also in the top 1/3 of the league. The Pens had a lot of fans and fans who were willing to pay. With regard to TV, Pgh is in the top 5 stations for Fox local NHL rating, and Fox has the rights to almost all US teams. Again, Pgh must be at least in the top 1/3 for all NHL TV markets. Hockey has grown in Pgh to the point where it is starting produce NHL players. In short, it has been a proven and successful hockey market. It is ridiculous to lump it together with places like Carolina, Florida, Phoenix, Nashville, Atlanta, etc.
3. The Arena. Get one thing straight - the city has nothing to do with any arena. No one has ever expected them to contribute a dime. It didn’t cough up a dime for the Pirates or Steelers and there has never been any expectation that they would contribute money to a new arena. The city is broke. The public money can only come from two places, the county and the state. The state once had $60 million possibly ear marked for a new arena. The governor, however, is from Philly and couldn’t care less what happens in Pgh. That $60 may or may not still exist. But he insisted on local support first .The County isn’t interested in spending money on a new arena. They probably don’t have the money anyway. But if there is political will for a new arena based on public money, it would have to come from the county, not the city. The other problem is that the Pens are unwilling to put up much toward an arena themselves. Pens were willing to put up about 20% The Pirates put up 33% and the Steelers put up 40%. They did not get a free ride, as so many misinformed people say. If the Pens would have moved up to 30-40%, then things might have been different because they provided the state with proof of local support. But the Pens want a free arena. They have made this clear again and again. They not only want an arena, they want full control over it.
4. Where things stand. There is no public money for a new arena. Sidney Crosby isn’t going to change that. The county commissioners are clear that they are not going to play for a new arena. The only plan on the table is based on the awarding of gambling licenses for slot machines. Several bidders tried to get an edge with the politicians awarding the license by saying that they would use a percentage to pay for a new arena. This may have been grandstanding and the status of these bidders is unclear. The Pens then decided that they should go for a slots license themselves. That has become their goal. They not only want a free arena, they want to rake in the hundreds of millions a year that a slot license would give them.
5. So this where things stand. The decision on who gets a slots license is a year away. The arena will hinge on the decision. There is no other magical source of money, Crosby or no Crosby. However, the idea that the Pens are not viable without a new arena is untrue. Naturally, they say that people they want a free arena. The reality is that they have now gotten back all of the revenue streams that Baldwin sold off and the new CBA means that they can at least compete with a $25-30 million payroll. Pittsburgh is a good, if not great, hockey market and they can have again have 15-16K a game. They could survive in Pgh with the current arena, but they would not be rich, which is what they want.
1. A Little history. To understand where the Pens are, you need to understand how they got there. It all begins with Howard Baldwin trying to buy the team on a shoestring. He had little money, so he sold off most of the revenue streams for up front money so that he could buy the team. This put the team in a shaky financial place from the start. Baldwin was also a jock sniffer who could not say "no" to players. He wildly overpaid but used deferred money, because he had sold off the revenue streams putting him in cash starvation. The biggest error was signing Lemieux to a $45 contract that paid him – now get this – whether he played or not. Lemieux promptly retired 2 years later with $30 million still owed. Still owed for hockey never played. This, among other things, forced the team into bankruptcy. Lemieux can back to buy the team and save his $30 million. If anyone else had bought the team, he would have been just another unsecured creditor who received a few cents on the dollar. This didn’t solve the problem, unfortunately, since the Lemieux group was shallow pocket.
2. The market. Before talking about the arena, it is worth killing the idea that Pittsburgh is not a good hockey market. Before the team started selling off its player the last few years, the Pens had been in the 1/3 of the league in attendance. Unlike places like Edmonton who artificially build up attendance with cheap ticket prices, the Pens tickets were also in the top 1/3 of the league. The Pens had a lot of fans and fans who were willing to pay. With regard to TV, Pgh is in the top 5 stations for Fox local NHL rating, and Fox has the rights to almost all US teams. Again, Pgh must be at least in the top 1/3 for all NHL TV markets. Hockey has grown in Pgh to the point where it is starting produce NHL players. In short, it has been a proven and successful hockey market. It is ridiculous to lump it together with places like Carolina, Florida, Phoenix, Nashville, Atlanta, etc.
3. The Arena. Get one thing straight - the city has nothing to do with any arena. No one has ever expected them to contribute a dime. It didn’t cough up a dime for the Pirates or Steelers and there has never been any expectation that they would contribute money to a new arena. The city is broke. The public money can only come from two places, the county and the state. The state once had $60 million possibly ear marked for a new arena. The governor, however, is from Philly and couldn’t care less what happens in Pgh. That $60 may or may not still exist. But he insisted on local support first .The County isn’t interested in spending money on a new arena. They probably don’t have the money anyway. But if there is political will for a new arena based on public money, it would have to come from the county, not the city. The other problem is that the Pens are unwilling to put up much toward an arena themselves. Pens were willing to put up about 20% The Pirates put up 33% and the Steelers put up 40%. They did not get a free ride, as so many misinformed people say. If the Pens would have moved up to 30-40%, then things might have been different because they provided the state with proof of local support. But the Pens want a free arena. They have made this clear again and again. They not only want an arena, they want full control over it.
4. Where things stand. There is no public money for a new arena. Sidney Crosby isn’t going to change that. The county commissioners are clear that they are not going to play for a new arena. The only plan on the table is based on the awarding of gambling licenses for slot machines. Several bidders tried to get an edge with the politicians awarding the license by saying that they would use a percentage to pay for a new arena. This may have been grandstanding and the status of these bidders is unclear. The Pens then decided that they should go for a slots license themselves. That has become their goal. They not only want a free arena, they want to rake in the hundreds of millions a year that a slot license would give them.
5. So this where things stand. The decision on who gets a slots license is a year away. The arena will hinge on the decision. There is no other magical source of money, Crosby or no Crosby. However, the idea that the Pens are not viable without a new arena is untrue. Naturally, they say that people they want a free arena. The reality is that they have now gotten back all of the revenue streams that Baldwin sold off and the new CBA means that they can at least compete with a $25-30 million payroll. Pittsburgh is a good, if not great, hockey market and they can have again have 15-16K a game. They could survive in Pgh with the current arena, but they would not be rich, which is what they want.
