The Penguins' five-year plan
There's a really good piece today in the Pittsburgh Post-Gazette that gets into the Penguins' ownership structure with Mario Lemieux and Ron Burkle and just how the two made some of the financial decisions that led to the team winning the Cup this year.
As it turns out, a five-year plan was executed in four, long before the new building was ready:
"To right the ship economically, we needed a new collective bargaining agreement and we needed a new arena, which we got," said team president David Morehouse. "But, under the original plan, we weren't going to have revenues to play to the cap until next season or more likely our first year in the new arena."
Co-owners Mario Lemieux and Ron Burkle, however, anted up when the stars aligned. They opened the purse strings to reach the cap of $56.7 million, which allowed the Penguins to acquire the talent that produced a title.
It's interesting that Burkle's even still involved, as the Beverley Hills billionaire was never seen as much of a hockey fan. He got onboard during desperate times a decade ago — when the Penguins were in bankruptcy for a second time and Lemieux got his piece of the ownership pie — investing $20-million in a team that had done nothing but lost money in recent years.
Even if he's quiet and often absentee, Burkle's the sort of owner the NHL needs, as he's one of the 100 wealthiest people in the U.S. and began to take more of an interest in the club when Sidney Crosby joined the Pens. Now he's doing things like offering his private jet to scoot trade deadline pickups to the team's next game and boosting the Pens' payroll well beyond what they'd planned.
Sure, a lot of it's chump change for him, but that's a good thing. This team is now about as far from underfunded as you can get, and it's worked wonders over the past few years.
It also very well could be that, after some initial uncertainty, the Penguins have turned out to be another of Burkle's many investment gambles gone good, and he's now happily along for the ride. Once the new building's doors open, I imagine he'll see a hefty return on his modest investment, something few in NHL ownership are getting these days.
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Once the new building’s doors open, I imagine he’ll see a hefty return on his modest investment, something few in NHL ownership are getting these days.
Um, I doubt that. Despite the headlines, a lot of NHL owners bought into their teams when the asking price was significantly lower. Most of the troubled ownership situations are either the result of ineptitude or revenues not related to the hockey side. As well, the Penguins did lose a lot of money for several years before they came into the black (and gold) in the past 2-3 years. When you consider annual operating losses vs. the increases in franchise value, most owners have done fairly well by the time they cash out.
Hockey blogging can't get any flatter.
by saskhab on Jul 5, 2009 5:15 PM CDT reply actions 0 recs
True, but I bet few get as large a return as Burkle, who bought in for a song and now owns a big chunk of the best team in hockey with a brand new building on the way.
Blogging on hockey at fromtherink.com
by James Mirtle on Jul 5, 2009 5:22 PM CDT up reply actions 0 recs
Five Year Plan?
It helps when you draft first-second-first-second for four consecutive years. Hell even I can build a team with that. Of course how did they get those picks, by sucking canal water for the first part of the decade. Couple that with Lemieux’s admitted blackmail to get a new arena and I have a hard time getting all hepped up over the Pens. I get the feeling they will become, if they are not close already, the team the rest of the fans will love to hate.
At the risk of rambling I’ll end it here. Later folks.
by VinceCT on Jul 5, 2009 11:11 PM CDT reply actions 0 recs
Pfft. I’ve been hating the Penguins for two decades now.
Hockey blogging can't get any flatter.
by saskhab on Jul 6, 2009 10:07 AM CDT up reply actions 0 recs
ONE of the hated teams, sure. THE team? (don't the Red Wings have to keep *something*?)
It helps when you draft first-second-first-second for four consecutive years.
Really? How’s that worked out for Atlanta?
Maybe they should hire you for GM there.
(insert standard tinhat response about how it’s somehow rigged that the Pens only end up with the talented picks).
“Lemieux’s admitted blackmail”…was basically the standard response I (and many another Pens fan) had right after the arena deal was announced: “They wouldn’t really have left, would they??” and considering it came as the endgame to a DECADE of being jerked around by the local govt., I frankly applaud him for winning.
Unless you’re a Whalers fan, I think your arguments against the Pens are a bit fallacious. Not that that’s ever stopped anyone from hating them; it’s a free country. Later.
by Exceeding repeating on Jul 6, 2009 9:21 PM CDT up reply actions 0 recs
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