Penguins for sale - still and again

From the Pittsburgh Post-Gazette, August 20, 2005:


When the Penguins filed for Chapter 11 bankruptcy Oct. 13, 1998, more than 200 individuals and businesses became unsecured creditors. They were owed varying amounts, totaling in the millions.

They had to wonder how much, if any, money they would recover.

They're not wondering anymore.

In an outcome considered unusual and pleasantly surprising, the Penguins have paid back in full the principal amount to all their creditors, including unsecured creditors. The only remaining debt from the bankruptcy is interest to four former players, and that will be satisfied this fall or next.


The only exception to this was Mario Lemieux, who forgave a portion of the debt and converted a huge chunk into equity in the team, a move that gave him control of the franchise. He was then paid the remaining amount of his claim as a creditor, which was $5 million. Considering this whole deal came about due to his proposal to the bankruptcy court, I think it's fair to say he's satisfied with what he ended up with in financial terms.

Still don't believe me? Here, read the story for yourself:

http://www.post-gazette.com/pg/05232/557229.stm

 

Yeah, I still don't believe you. The story is inaccurate.

A very good friend of mine was working for Spectacor, which was the Penguins' landlord at the Pittsburgh building.

He was there when the bankruptcy was going down and was privvy to all the behind the scenes stuff that was going on. Some people got killed by it. There was a limo company that went out of business because they were owed money by the Penguins. They used to turn down other business to cater to the Penguins. The Penguins ran up a huge tab, and the limo company folded before the Penguins ever started settling accounts. So when it came time to pay, there was no one to pay at that company. They weren't the only ones who met a fate like that.

Here's a test for you. Run up a credit card bill of $100. Don't pay it for six years. Check and see if the tab is still $100 when you get around to paying it. When you withhold peoples' money for years, they lose, even if you pay off on the principal. The ones most likely to get crushed are the small businesses, which need every dime and need it within a reasonable time frame. Otherwise, there's limited cash flow. The year they emerged from bankruptcy, the Penguins were looking for new hotels, bus companies and truck companies, because the ones they'd burned didn't want to risk dealing with them. So now companies have to turn away possible business because of their bankruptcy, too.

Lemieux took his settlement in equity because that was the only way he could come close to matching the actual value of the defaulted contract payments. The plan was he would take ownership, then turn around and sell the team at a profit after it got a new building with public funds. That's why I love it when the fanboys gush that "he saved the franchise." He made the deal that gave him the best chance to recover his money. He never wanted to own this turkey beyond whatever time it took to re-sell it.

Besides, Lemieux's money man in this deal is Ron Burkle, a billionaire who could write a check for a hockey arena tomorrow and not blink.

If you think Lemieux is a "smart businessman" for playing Pittsburgh against KC, you must really admire Art Modell and Al Davis.

 

He did save the franchise. Tell me, would the Penguins still actually be in Pittsburgh without Lemieux, yes or no?

Pens fans like myself could care less about motives if the team is still in Pittsburgh and not some other town, playing in front of fans who haven't seen anything more than minor league hockey in 20 or 30 years. Should they move, they wouldn't be my team anymore, simple as that.

How about this Smasher, rather than spewing second-hand info, come back with some cold hard facts. If you're so convinced that you're right, there must be some story, some blog entry, at least something that would help support your point.

Until then, you've got a one-source story from a friend, but that's it.

 

Who the fuck knows where they'd be if they didn't draft him? What if your parents had never met? The Devils didn't draft him and they're still in business. In fact, I think they won more Cups without him than the Penguins won with him. Check that, will you?

I'm telling you what happened and you want me to cite a fucking <b>blog</b> as proof. Go paint some more banners, will you?

 

Sorry if I can't be more objective about this and be quiet on press row, but you would think that if the Post-Gazette story was so grossly inaccurate, some employees of those companies that didn't get paid would have been more than happy to tell their side of the story and contradict what had been written.

As for the blog reference I said, "some story, some blog entry, at least something that would help support your point." The reason I phrased it like that was because I doubt anything to back your claim actually exists, which is why I gave you the leeway to back it up with something as weak as some random homer blog entry.

Why would no one have talked about a story like this? It seems like too big of a story for no one to have picked up, especially given the scrutiny the Penguins have been under recently with all of the uncertainty there.

 

Give it up, Oz, he'll believe what he wants to believe and not believe what he doesn't want to believe.

I really don't give a shit, as I don't have a dog in the fight over the Penguins. I just think it's funny that I could post all the news stories I wanted and he'd still come back with, "yeah, well, my friend says (the exact opposite)." He sounds like one of our fervent political thread denizens in that sense -- unable to see, accept or acknowledge the opposing viewpoint in spite of the facts that are right in front of his face.

By the way, Smasher, show me a billionaire who would blink while writing a cheque for a hockey arena. Funny thing about billionaires -- they have a lot of stuff called "money" which enables them to buy and pay for things unavailable to the majority of us. Whoda thunk it?

 

And to tie everything together ... plenty of Pittsburgh billionaires could've coughed up the coin long ago to buy this team. And none did.

 

Smasher:

1. The Devils didn't draft Lemieux because the Penguins managed to finish with a worse record than the Devils even though the Devils had a 20-game winless streak during an 80-game season. That still amazes me.

2. I think it was the owner of the Penguins (Howard Baldwin) who paid a lot of money for talent which was a main reason for the bankruptcy. In the early 90s with the Rangers winning the cup, the NHL looked like it might be a better opportunity than the NBA.

3. Deferred contracts might be better in terms of taxes and financial security. Assuming it still gets paid.

4. I don't think Mario got all of the money he was due, but what happened was that he swapped debt for equity. If they sell the team, he might make more than what he was owed.

5. Other than the Steelers, the Penguins and Pirates have seemed shaky propositions. Pittsburgh isn't as important a city in the scheme of things as it was in 1950 or 1960... Phoenix is probably a better market than Pittsburgh right now.

6. As for the limo company, getting payments years later probably wouldn't have been enough to save it. That is what is known as putting all of your eggs in one basket.

 

Kansas City is doing all it can:

 

I saw the arena over Christmas. It looks like a space age wonder, and it's probably 30 percent finished.

Personally, I'd love to have a third pro team in KC. My only concern is if the city would support it. I think there were two previous cracks at an NHL franchise, and I can vaguely remember going to KC Kings games as a kid.

Baseball and football survived in KC for three reasons: their general popularity, fantastic ownership (and I'm talking about Ewing Kauffman when it comes to the Royals, not Dan Glass), and the absolutely brilliant move of building the Truman Sports Complex, which remains far ahead of its time.

The Sprint Center should be a top-notch facility. My only hope is that if the Penguins come to Kansas City, the support is great enough to keep it there for a loooong time.

 

And Kansas Cikty has offered the Penguins free rent.

http://www.globesports.com/servlet/story/RTGAM.20070104.wsptpens4/GSStory/GlobeSportsHockey/home

 

That's what happens when the team you're "competing" with for the No. 1 pick calls up a beer-league goalie.